Many Financial Managers Use Market Risk Premiums That Are Closer

question 33

Multiple Choice

Many financial managers use market risk premiums that are closer to 5%, which is lower than historical averages, because ________.

• A) the return investors require as compensation for taking on the risk of investing in equity markets has diminished over a period of time
• B) investors require a higher risk premium for holding risky securities than in the past
• C) investors require a supernormal risk premium for holding risky securities as compared with the past
• D) investors require the same premium for holding risky securities as in the past

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