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If the Future Return on a Security Is Known with Absolute

Question 20

Multiple Choice

If the future return on a security is known with absolute certainty, then the risk premium on that security should be equal to:


A) zero.
B) the risk-free rate.
C) the market rate.
D) the market rate minus the risk-free rate.
E) the risk-free rate plus one-half the market rate.

Correct Answer:

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