To Determine the Risk Premium Associated with an Asset's Expected

question 23

Multiple Choice

To determine the risk premium associated with an asset's expected return,two components of the return are usually cited,only the first,the covariance of the asset's return with the market portfolio,is used,because ________.

• A) the risk associated with the asset depends on the market risk
• B) it is the only part of the asset's expected return that has risk
• C) the risk of the second component can be diversified away
• D) the market risk is the most difficult to calculate

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Definitions:

Toxins

Poisonous substances produced by living organisms that can cause harm to humans or other organisms.

Severely Injured

A condition characterized by serious harm or damage to the body, requiring immediate medical attention and care.

Peristalsis

A series of wave-like muscle contractions that moves food through the digestive tract.

Neurotransmitters

Chemical agents that facilitate communication from one neuron to another across a synaptic gap in the nervous system.