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Premium which is considered as difference of expected return on common...

This question belongs to Commerce Financial Management
Financial Management
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Premium which is considered as difference of expected return on common stock and current yield on Treasury bonds is called

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Correct Answer: Option A
Premium which is considered as difference of expected return on common stock and current yield on Treasury bonds is called current risk premium. A risk premium is the return in excess of the risk-free rate of return an investment is expected to yield; an asset's risk premium is a form of compensation for investors who tolerate the extra risk, compared to that of a risk-free asset, in a given investment.
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