A Risk Premium Is the Difference Between

question 33

Multiple Choice

A risk premium is the difference between

• A)the return on an investment and its risk.
• B)the return on an investment and the return on Treasury bills.
• C)the rate of inflation and the return on Treasury bills.
• D)the intrinsic value of an investment and its market price.

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Definitions:

Profit Opportunities

Situations or conditions that allow for the chance to generate earnings above the norm.

Economic Profits

The difference between a firm's total revenue and its total costs, including both explicit and implicit costs.

Industry Supply Curve

A graphical representation showing the total quantity of a good that producers within an industry are willing and able to supply at different price levels.

Enter

To participate or become involved in a particular activity or sphere; in business, it may refer to entering a market, indicating the beginning of efforts to compete within a given market area.