If the Future Return on a Security Is Known with Certainty

question 88

Multiple Choice

If the future return on a security is known with certainty, then the risk premium on that security should be equal to

• A) Zero
• B) The risk-free rate
• C) The market rate
• D) The market rate minus the risk-free rate
• E) The risk-free rate plus one-half of the market rate

---

Definitions:

Psychological Factors

Refer to mental and emotional aspects that influence an individual's behavior and wellbeing.

Physical Factors

Environmental, biological, or chemical elements that can influence the physical condition and health of individuals.

Conventional Medicine

A system of medicine based on the diagnosis, treatment, and prevention of disease using drugs, surgery, and other interventions; also known as Western medicine.

Complementary Medicine

A set of health care practices that are used together with or in addition to standard medical treatments.