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Commerce · Q443

Financial Management

Graduate and Post Graduate · Commerce · question 443

Q443

Risk free rate is subtracted from expected market return is considered as

A.
country risk
B.
diversifiable risk
C.
equity risk premium
Answer
D.
market risk premium

Answer: Option C

Solution

Answer: Option C
Solution:
Risk free rate is subtracted from expected market return is considered as equity risk premium. Equity risk premium refers to the excess return that investing in the stock market provides over a risk-free rate.