Asked by DeAnna Schmidt on Apr 29, 2024
Verified
The reward for bearing risk in the financial markets is called:
A) Reward premium.
B) Risk premium.
C) Tolerance premium.
D) Systematic premium.
E) Unsystematic premium.
Risk Premium
The extra return above the risk-free rate that investors require to compensate them for holding a risky asset.
Bearing Risk
The act of accepting potential loss from uncertainty in investment or business operations.
- Acquire an understanding of the basic principles of the Capital Asset Pricing Model (CAPM) and how it affects expected returns.
Verified Answer
MA
Majed AlyousifMay 02, 2024
Final Answer :
B
Explanation :
The reward for bearing risk in the financial markets is known as the risk premium. It represents the extra return above the risk-free rate that investors require to compensate them for the risk of an investment.
Learning Objectives
- Acquire an understanding of the basic principles of the Capital Asset Pricing Model (CAPM) and how it affects expected returns.
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