You are certain that a normal rate of return is 18% for the computer industry. What do you expect for a normal rate of return in the computer software industry, which is considered to be much riskier than the computer industry?
A) 18%
B) Less than 18%
C) Above 18%
D) The rate on government bonds

Question

Quizplus · Accepted Answer

Since the computer software industry is considered to be much riskier than the general computer industry, investors would expect a higher rate of return to compensate for the increased risk.

You Are Certain That a Normal Rate of Return Is