The Risk Premium for an Individual Security Is Equal to The

question 16

Multiple Choice

The risk premium for an individual security is equal to the:

• A)beta times the market return.
• B)difference between the market return and the risk free rate times the security's beta.
• C)weighted average of the individual security betas in a portfolio.
• D)the security's variance divided by the variance of the market.

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Definitions:

Trial Balance Totals

The sum of all debit and credit balances in a trial balance, used to verify that the total debits equal total credits in double-entry bookkeeping.

Salary Expense

The total amount paid by a company to its employees as wages or salaries before any deductions.

Errors

Mistakes or inaccuracies in the accounting process that can affect financial records and statements.

Horizontal Analysis

A financial analysis technique that compares historical financial information across multiple periods.