The Average Expected Rate of Return of a Financial Asset

question 100

Multiple Choice

The average expected rate of return of a financial asset equals:

• A) the rate that compensates for time preference plus the rate that compensates for risk.
• B) the rate that compensates for time preference plus the rate of inflation.
• C) beta plus the rate that compensates for risk.
• D) the risk-free interest rate plus the rate of inflation.

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Definitions:

Attribution Theory

A concept in psychology that explains how individuals infer causes for their own and others' behaviors.

Behaviour

The actions or reactions of an individual or group in response to external or internal stimuli.

Workplace

A location or virtual space where individuals are employed and engage in tasks related to their job responsibilities.

Halo Effect

A cognitive bias in which an observer's overall impression of a person, company, brand, or product influences their feelings and thoughts about that entity's character or properties.