The market risk premiumthe concept that investors should be rewarded for taking on extra riskis illustrated as the

A.y-access intersection of the SML.B.peak of the SML.C.x-access intersection of the SML.D.slope of the SML.

Which of the following asset classes did Roger Ibbotson and Rex Sinquefield find as having the highest historical return, on average?

A.All assets classes had ups and downs, but in general, all had similar average returns.B.Long-term corporate bonds, because debt holders have priority in the event a firm is liquidatedC.Small company stocks, because small stocks are the most volatile and riskiest asset in this list, and therefore have the higher risk premiumD.U.S. Treasury bills, because the historical risk is lower and returns are steadier

What degree of variability would you expect from a stock of a newer firm with a negative cash flow, but a promise of large future cash flows, when compared with stocks from firms with established positive cash flows?

A.There isn't enough information to speculate.B.A greater degree of variability in the firm's stock priceC.A lesser degree of variability in the firm's stock priceD.The same degree of variability in the two firms's stock prices