Q801
An estimation by marginal investor, a higher expected return is earned on
A.
more risky securities
AnswerB.
less risky securities
C.
less premium
D.
high premium
Answer: Option A
Solution
Answer: Option A
Solution:
An estimation by marginal investor, a higher expected return is earned on more risky securities. The marginal investor in a firm is the investor who is most likely to be trading at the margin and therefore has the most influence on the pricing of its equity.