According to market risk premium, an amount of risk premium depends upon investor______________?
Correct answer: B. Risk aversion
- A. Risk taking
- B. Risk aversion
- C. Market aversion
- D. Portfolio aversion
Explanation
Risk premium compensates investors for bearing risk, so the amount demanded generally rises with their degree of risk aversion. A risk-averse investor requires more compensation for accepting the same risk.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? support@testustad.com
About Business Finance
Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
Practise Business Finance
975 free Business Finance MCQs from Management Sciences, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Exams that ask Management Sciences questions like this
Management Sciences is on 2 papers prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for every one of them.
More Business Finance questions
Weighted average of probabilities is classified as____________?
In an individual stock, relevant risk is classified as___________?
Proceeds of company shares of sold stock is recorded in___________?
Portfolio which consists of perfectly positive correlated assets having no effect of___________?
Mostly in financials, risk of portfolio is smaller than that of asset's________?
Coefficient of beta is used to measure stock volatility_____________?