Many financial managers use market risk premiums that are closer to 5%,which is lower than historical averages,because investors require a ________ risk premium for holding risky securities than in the past.
A)lower
B)higher
C)similar
D)specific
E)consistent

Question

Quizplus · Accepted Answer

The correct answer is A) lower because the statement indicates that financial managers are using market risk premiums closer to 5%, which is lower than historical averages. This implies that investors are requiring a lower risk premium for holding risky securities than they did in the past.

Many Financial Managers Use Market Risk Premiums That Are Closer