he equity risk premium (ERP) is ________________________.

Select one:

a.

the difference between the return on the market and the risk-free rate

b.

the difference between the return on the market and the bank-bill rate

c.

the difference between the holding period return on a given share and the risk-free rate

d.

the difference between the return on a portfolio of all risky assets and the risk-free rate

Clear my choice

Question 20

The interest earned on both the original investment and the accumulated interest, over time is called ______________.

Select one:

a.

simple interest

b.

growth rate

c.

cost of capital

d.

compound interest

Clear my choice

Question 21

Not yet answered

The term structure of interest rates _________________________.

Select one:

a.

plots coupons versus time to maturity

b.

describes how interest rates vary over coupons

c.

ranks security yield according to the default risk structure

d.

describes the relationship between maturity and yield for similar securities