The Risk Premium for an Individual Security Is Computed By

question 84

Multiple Choice

The risk premium for an individual security is computed by:

• A)multiplying the security's beta by the market risk premium.
• B)multiplying the security's beta by the risk-free rate of return.
• C)adding the risk-free rate to the security's expected return.
• D)dividing the market risk premium by the quantity (1 + β).
• E)dividing the market risk premium by the beta of the security.

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Definitions:

Goblet Cells

Epithelial cells that secrete mucus to lubricate surfaces such as the inside of the intestinal and respiratory tracts.

Tight Junction

A tightly sealed point of contact between two cells, preventing the passage of substances between the cells.

Plasma Membranes

A pair of lipid layers that forms a barrier around the cell's cytoplasm, controlling the import and export of cellular materials.

Adhesion Belt

A protein complex located just below the tight junctions in epithelial cells, contributing to the formation of an adhesive junction that holds cells together.