You Own a Stock with an Average Historical Risk Premium

question 78

Multiple Choice

You own a stock with an average historical risk premium of 7.4 percent. The risk-free rate next year will be 4.1 percent. What do you expect the stock return to be next year?

• A) 4.1%
• B) 7.4%
• C) 9.8%
• D) 10.6%
• E) 11.5%

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Definitions:

Profile Sign

A clinical indicator used to assess finger clubbing by viewing the fingers from the side to detect any abnormal curvature or swelling.

Early Clubbing

The initial phase of clubbing, where there are subtle changes in the angle between the nail and the nail bed, often related to various medical conditions.

Barrel Chest

A condition characterized by an increased anteroposterior diameter of the chest, often due to chronic obstructive pulmonary disease or congenital disorders.

Great Saphenous Vein

The longest vein in the body, running along the length of the leg, used often as a site for grafts in coronary artery bypass surgery.