Management Short Question | Gkseries

Question

Which one of the following statements is true ?

A Market risk premium is the additional return over the risk-free rate needed to compensate investors for assuming an average amount of risk
B A firm cannot influence its market risk, hence its beta, through changes in the composition of its assets and also through its use of debt
C Market risk premium is the additional return over the risk-free rate needed to compensate investors for assuming greater than average amount of risk
D An asset’s risk consists of market risk which can be eliminated by diversification

Answer & Explanation

Answer: Market risk premium is the additional return over the risk-free rate needed to compensate investors for assuming an average amount of risk

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