The risk premium is the

realized rate of return in excess of the average return

expected rate of return to risk aversion

rate of return that can be earned with certainty

the expected rate of return in excess of the risk$-$free rate

Consider a Treasury bill with a rate of return of $5\%$ and the following risky securities:

Security $A$:$E(r)=\mathrm{.}15$; variance $=\mathrm{.}0400$

Security $B$:$E(r)=\mathrm{.}10$; variance $=\mathrm{.}0225$

Security C: $E(r)=\mathrm{.}12$; variance $=\mathrm{.}1000$

Security $D$:$E(r)=\mathrm{.}13$; variance $=\mathrm{.}0625$

The investor must develop a portfolio by combining the risk$-$free asset with exactly one of the securities mentioned above. The security any rational investor should choose would be

C

D

B

A