The reward for bearing risk is called the: a. geometric return b. average return c. real...

The reward for bearing risk is called the:

a. geometric return

b. average return

c. real return

d. risk premium

e. total retum .

Solutions

Expert Solution

d. risk premium

because the investor gets the premium in terms of higher return for the risk taken

jeff jeffy answered 2 years ago

Next > < Previous

Related Solutions

1. The risk premium is _____. Check all that apply: the reward for bearing risk the...

1. The risk premium is _____. Check all that apply: the reward for bearing risk the difference between the expected rate of return on an asset and the risk-free rate normally zero for risky assets normally positive for risky assets 2. An investor wants to invest money in Treasury bills and a risky fund managed by Infinity Capital. The investor wants to achieve an expected return of 10% on his complete portfolio. Infinity Capital has an expected return of 9%...

According to CAPM, the amount of reward an investor receives for bearing the risk of an...

According to CAPM, the amount of reward an investor receives for bearing the risk of an individual security depends upon the: beta of the security and the market rate of return. risk free rate, the market rate of return, and the standard deviation of the security. market risk premium and the amount of systematic risk inherent in the security. standard deviation of the security and the risk-free rate of return. amount of total risk assumed and the market risk premium.

The systematic principle states that the reward for bearing risk depends only on the diversifiable risk...

The systematic principle states that the reward for bearing risk depends only on the diversifiable risk of an investment. True or false? Securities and portfolios lie above SML are underpricing. True or false? When we apply WACC to evaluate projects with different levels of risk, we could correctly reject low risk and accept high risk projects. True or false?

Which of the following statement is correct about risk? A. Financial markets reward you for bearing...

Which of the following statement is correct about risk? A. Financial markets reward you for bearing systematic risk. B. Fluctuation in oil price is an unsystematic risk. C. Systematic risk can be eliminated by proper diversification. D. As you invest more in Coca Cola stocks, your return will increase due to higher risk.

Portfolio Return Risk A & B 1.64% 4.49% B & C 1.59% 3.54% A & C...

Portfolio Return Risk A & B 1.64% 4.49% B & C 1.59% 3.54% A & C 1.62% 4.77% C & D 1.15% 3.66% A & D 1.21% 4.59% B & D 1.18% 3.30% Q1. By computing the ratio of (R_p/?_p ) select the best investment that you should undertake, assuming you are a risk averse investor. Explain the rationale for your choice of investment. Q2. Draw a portfolio graph (showing Risk on the X-axis and Return on the Y-axis) for...

Given the following price and dividend information, calculate the arithmetic average return, the geometric average return,...

Given the following price and dividend information, calculate the arithmetic average return, the geometric average return, the sample variance and the sample standard deviation for the returns, holding period return, the $1 invested equivalent, the probability of losing money, the upper bound to the 95th confidence interval, the lower bound to the 99th confidence interval, the lower bound to the 68th confidence interval. (Enter percentages as decimals and round to 4 decimals) Year Price Dividend 0 50.72 1 43.54...

Define the following terms with examples (a) Absolute return (b) Nominal rate of return (c) Real...

Define the following terms with examples (a) Absolute return (b) Nominal rate of return (c) Real rate of return

A portfolio's performance is summarized in the table below. What is the geometric average return for...

A portfolio's performance is summarized in the table below. What is the geometric average return for the entire period? Year Beginning of Year Price 2017 $40 2018 $45 2019 $41 2020 $44 Multiple Choice 3.23% 10.00% 6.48% 2.41% 4.88%

What's the difference between the arithmetic and geometric average return (conceptually, not mathematically), and when is...

What's the difference between the arithmetic and geometric average return (conceptually, not mathematically), and when is it best to use each?

(Calculating the geometric and arithmetic average rate of return) The common stock of the Brangus Cattle...

(Calculating the geometric and arithmetic average rate of return) The common stock of the Brangus Cattle Company had the following end-of-year stock prices over the last five years and paid no cash dividends: Time Brangus cattle Comapny 1 $1313 2 99 3 1111 4 2323 5 2929 a. Calculate the annual rate of return for each year from the above information. b. What is the arithmetic average rate of return earned by investing in Brangus Cattle Company's stock over this...

Subjects