The risk premium for an investment:
A. is zero (0) for risk-averse investors.
B. increases with risk.
C. is negative for U.S. treasury securities.
D. is a fixed amount added to the risk-free return, regardless of the level of risk.
Answer: B
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Which of the following is likely to happen when the Fed raises the federal funds rate?
A) The long-run interest rate will fall. B) The labor demand curve shifts to the left. C) The volume of economic activity will increase. D) The labor demand curve shifts to the right.
The inclusion of external benefits in the decision making process determining equilibrium price and quantity leads to
A) lower priced items and increased quantity. B) lower priced items and a decline in quantity. C) higher priced items and increased quantity. D) higher priced items and a decline in quantity.
Under a floating rate system, exchange rates are determined by supply and demand in the foreign exchange market without government intervention
a. True b. False
Rational voter ignorance occurs because the marginal cost of obtaining information is higher than the marginal benefit from obtaining the information
a. True b. False Indicate whether the statement is true or false