Asked by Lianna Moricee on Jun 26, 2024
Verified
The minimum return that will make an investment acceptable to an investor is called:
A) the required rate of return.
B) the risk premium.
C) the risk-free interest rate.
D) beta.
Required Rate
The minimum return that investors demand for investing in a specific asset or undertaking a project.
Risk Premium
The additional return an investor expects to receive from an investment by taking on a higher level of risk.
Risk-Free Interest
Risk-free interest is the theoretical rate of return of an investment with zero risk, serving as a benchmark for evaluating the risk and return of other investments.
- Comprehend the principles of anticipated and necessary returns on investments.
Verified Answer
BD
Bradley DeVeauxJul 01, 2024
Final Answer :
A
Explanation :
The required rate of return is the minimum return that an investor expects to receive on an investment in order to compensate for the time value of money and the risk involved. It is also known as the hurdle rate or the minimum acceptable rate of return.
Learning Objectives
- Comprehend the principles of anticipated and necessary returns on investments.