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.

---

Definitions:

Feelings Of Distress

Emotional suffering characterized by symptoms such as anxiety, depression, and angst.

Decatastrophize Thinking

A cognitive-behavioral therapy technique that involves challenging and reducing irrational fears and catastrophic thinking.

Cognitive Therapy

A form of psychotherapy that focuses on changing maladaptive thinking patterns to improve emotional responses and behavior.

Anxiety-provoking Situations

Scenarios or circumstances that induce a state of apprehension, tension, or fear due to perceived, imminent threats.