Reference no: EM133001840
Problem 1: An investment requires a total return that comprises:
A. real rate of return, compensation for inflation, a risk premium, and compensation for time and effort devoted to researching alternative investments.
B. compensation for inflation and a risk premium.
C. a real rate of return, compensation for inflation, and a risk premium.
D. None of these answers are correct.
E. a real rate of return and compensation for inflation.
Problem 2: Which of the following is NOT a problem associated with proving the validity of the security market line?
A. The additional return required for each additional increment of risk in the market place
B. The stability of beta on an individual security over time
C. All of these are associated problems
D. The appropriate risk-free and market rates