Which of the following is false about the expected risk premium of an asset?
A) The expected risk premium is always positive.
B) The risk premium is the expected return of a risky asset minus the risk-free rate.
C) The expected risk premium is the reward for bearing risk.
D) The risk-free asset has no risk premium.
E) All of the above are true.

Question

Quizplus · Accepted Answer

The expected risk premium of an asset can be negative if the expected return of the asset is less than the risk-free rate, contradicting the statement that it is always positive.

Which of the Following Is False About the Expected Risk