The Amount of Compensation an Investor Should Expect for Accepting

question 43

Multiple Choice

The amount of compensation an investor should expect for accepting unsystematic risk:

• A)is $0
• B)is equal to the market risk premium
• C)is equal to beta multiplied by the market rate of return
• D)varies indirectly with the beta of the firm
• E)is equal to the beta of the firm multiplied by the market risk premium

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Definitions:

Heterozygous

Having two different alleles of a particular gene or genes, resulting in a variation in a specific genetic trait.

Purple Eyes

A very rare eye color that is typically a result of a specific mix of genetics or light reflection.

Pleiotropy

The ability of a single gene to have multiple effects.

Single Gene

A genetic locus responsible for a specific trait or disease, often considered in the context of Mendelian inheritance.