Which of the following factors influence an investor's required rate of return?
A) The economy's real risk-free rate (RFR)
B) The expected rate of inflation (I)
C) A risk premium
D) All of the above
E) None of the above

Question

Quizplus · Accepted Answer

An investor's required rate of return is influenced by the economy's real risk-free rate, the expected rate of inflation, and a risk premium. The real risk-free rate is the minimum rate of return that an investor expects to earn. Inflation is the rate at which the general level of prices for goods and services is rising. The risk premium is the additional return that an investor expects to earn for taking on additional risk. Hence, all three factors - real risk-free rate, inflation, and risk premium - together contribute to an investor's required rate of return.

Which of the Following Factors Influence an Investor's Required Rate