The required rate of return includes the risk-free rate and a risk premium.

Question

Quizplus · Accepted Answer

The required rate of return is the minimum return that an investor expects for taking on a certain level of risk. It includes the risk-free rate (which compensates for the time value of money and inflation) and a risk premium (which compensates for the additional risk taken by investing in a particular security or asset). Therefore, the statement is true.

The Required Rate of Return Includes the Risk-Free Rate and a Risk