Asked by
Jacob Bourgault
on Dec 02, 2024
Verified
The return on equity investments:
A) is the risk free rate plus the return on debt investments.
B) consists of the risk free rate and the market premium.
C) consists of dividend and capital gains yields.
D) can never be negative.
Risk Free Rate
The rate of return on an investment with no risk of financial loss, typically represented by the yield on government bonds.
Market Premium
The additional return an investor expects to receive from a market portfolio compared to the risk-free rate.
Equity Investments
Financial investments in shares of companies, giving the holder ownership interest in the company.
- Familiarize oneself with the theories regarding expected and obligatory returns on investments.
- Comprehend the association between risk and return in financial markets.
Verified Answer
GK
Learning Objectives
- Familiarize oneself with the theories regarding expected and obligatory returns on investments.
- Comprehend the association between risk and return in financial markets.