Which One of the Following Statements Is Correct

question 46

Multiple Choice

Which one of the following statements is correct?

• A)The expected rate of return on any security,given multiple states of the economy,must be positive.
• B)There is an inverse relationship between the level of risk and the risk premium given a risky security.
• C)If a risky security is priced correctly,it will have an expected return equal to the risk-free rate.
• D)The risk premium on a risk-free security is generally considered to be one per cent.
• E)If a risky security is correctly priced,its expected risk premium will be positive.

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