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26 September, 00:08

Last year, T-bills returned 2 percent while your investment in large-company stocks earned an average of 5 percent. Which one of the following terms refers to the difference between these two rates of return?

A. risk premium

B. geometric return

C. arithmetic

D. standard deviation

E. variance

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Answers (1)
  1. 26 September, 03:31
    0
    A. risk premium

    Explanation:

    Based on the information provided within the question it can be said that the term being mentioned is risk premium. This term refers to the difference or excess of a the rate of return that a specific investment is expected to return, also seen as a type of compensation for investors who decide to take on the extra risk associated with this investment.
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