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:

Ribs

Long, curved bones that form the rib cage, providing protection to the thoracic organs and support to the upper body.

Sternum

The sternum, or breastbone, is a long flat bone located at the center of the chest, connecting to the ribs and supporting the thoracic region.

Epiphysis

The end part of a long bone, which is initially growing separately from the shaft during development.

Diaphysis

The diaphysis is the main or midsection (shaft) of a long bone, distinguished from the bone's ends or epiphyses.