The risk-free rate of return subtracted from the expected market rate of return is called the:
A) Expected rate of return.
B) Real rate of expected return.
C) Risk premium.
D) Unexpected rate of return.
E) Unsystematic rate of risk.

Question

Quizplus · Accepted Answer

The risk-free rate of return subtracted from the expected market rate of return gives the risk premium. This represents the extra return investors expect to earn for taking on additional risk compared to a risk-free investment.

The Risk-Free Rate of Return Subtracted from the Expected Market