Small Company Stocks Are Yielding 10

question 21

Multiple Choice

Small company stocks are yielding 10.7% while the U.S.Treasury bill has a 1.3% yield and a bank savings account is yielding 0.8%.What is the risk premium on small company stocks?

• A)10.7%
• B)9.4%
• C)12.0%
• D)9.9%

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Definitions:

Economic Pressures

External financial challenges that affect individuals, businesses, or economies, including inflation, unemployment, and market fluctuations.

Strike Vote

is a formal decision made by union members on whether to proceed with a strike action if negotiations with the employer fail to meet their demands.

Bargaining Power

The ability of a party to exert influence over another party in negotiations to obtain favorable terms.

Continue Operations

The process of maintaining business activities without interruption.