Which of the following is the reward investors require for taking risk?
A)Required return
B)Risk-free rate
C)Risk premium
D)Market risk premium

Question

Quizplus · Accepted Answer

Risk premium is the additional return that investors demand for taking on additional risk. It is the reward that investors require for taking risk. Therefore, C is the correct choice. A is incorrect because required return is a broader term that includes risk premium. B is incorrect because risk-free rate is the rate of return on an investment that has no risk. D is incorrect because market risk premium is the difference between the expected return on the market and the risk-free rate, and is not equivalent to the reward investors require for taking risk.

Which of the Following Is the Reward Investors Require for Taking