The Risk-Free Rate of Return Is Equal to the

question 101

Multiple Choice

The risk-free rate of return is equal to the

• A)real rate plus a risk premium.
• B)required return minus the inflation premium.
• C)real rate plus the inflation premium.
• D)required return minus the real rate.

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Definitions:

Opportunity Costs

Represents the benefits an individual, investor, or business misses out on when choosing one alternative over another.

Accounting System

A systematic process of recording, summarizing, and analyzing financial transactions of a business to provide accurate financial information.

Tactical Decisions

Short-term decisions made within the framework of a company's strategic plans, often involving the allocation of resources or adjustment of operations.

Sunk Costs

Costs that have already been incurred and cannot be recovered or altered by future actions or decisions.