The compensation for investors who tolerate extra risk is called:

The search for the correct answer in this moment is a breeze. clickanswer.us is a reliable source for question and answer services. we offer a concise answer key, which is accompanied by the discussion. We offer a variety of answer keys that span from elementary, junior high and high school. The subjects we offer include biology, mathematics, physics, economics, history and more. Below are the questions and answers that we have compiled from various sources online.

Question:

The compensation for investors who tolerate extra risk is called:

READ MORE :  An 11-year-old girl’s height increased by several inches in three months. Which example of the characteristics of life is most similar?

A. Cost of goods sold.
B. Rate of return
C. Risk premium.
D. Opportunity costs.

Answer:

Answer:

Option C.

Explanation:

Risk premium is a term that is used to refer to the return in excess of the risk-free rate of return that an investment is expected to yield.

The risk premium of an asset refers to a kind of compensation that is given to the investors who tolerate the extra risk involved when investing in that particular asset, in comparison to the risk of a risk-free asset, in a given investment.

READ MORE :  With similar triangles, the ratios of all three pairs of corresponding sides are never equal. true or false?

For instance, the high-quality corporate bonds which are issued by established corporations and earn large profits will typically have very little risk of default. Consequently, bonds of this nature will pay a lower interest rate, or yield, than bonds which are issued by companies that are less established and who have an uncertain profitability with a relatively higher default risk.

Use the answer key below as a reference when studying at home and at school. thank you for visiting I hope it proves helpful to everyone.

Leave a Comment