The difference between the expected (or required) return for the market portfolio and the risk-free rate of return is referred to as:
A) beta.
B) the geometric mean.
C) the market risk premium.
D) the arithmetic mean.

Question

Quizplus · Accepted Answer

The market risk premium is the difference between the expected return of the market portfolio and the risk-free rate of return. Beta is a measure of the systematic risk of a security relative to the market portfolio. The geometric and arithmetic means are measures of the average return of a portfolio.

The Difference Between the Expected (Or Required) Return for the Market