The Difference by Which the Required Discount Rate Exceeds the Risk-Free

question 39

Multiple Choice

The difference by which the required discount rate exceeds the risk-free rate is called the ________.

• A) excess return
• B) risk premium
• C) inflation premium
• D) maturity premium

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Definitions:

Antibodies

Proteins produced by the immune system that recognize, bind to, and help neutralize foreign substances such as bacteria and viruses.

Thalidomide

A medication once used during pregnancy that led to severe birth defects, now used under strict controls for some diseases, including multiple myeloma and certain skin conditions.

Birth Defects

Abnormalities of structure, function, or body metabolism present at birth that can lead to physical or mental disability, or sometimes death.

Preeclampsia

A pregnancy complication characterized by high blood pressure and signs of damage to another organ system, most often the liver and kidneys.