Since the Market Return Represents the Expected Return on an Average

question 47

True/False

Since the market return represents the expected return on an average stock, the market return reflects a certain amount of risk.As a result, there exists a market risk premium, which is the amount over and above the risk-free rate, that is required to compensate stock investors for assuming an average amount of risk.

---

Definitions:

Mnemonics

Memory aids or strategies that improve recall through the use of organizational techniques or visual, auditory, and other sensory cues.

Retrieval Cue

A hint or signal that helps one to recall a memory.

Mnemonic

A tool or strategy designed to help remember information, often by association with something easier to remember.

Flashbulb

Refers to vivid, detailed memories of significant events, which seem to be recorded in the mind just as a flashbulb captures a moment in photography.