The term excess return refers to ________.
A) returns earned illegally by means of insider trading
B) the difference between the rate of return earned and the risk-free rate
C) the difference between the rate of return earned on a particular security and the rate of return earned on other securities of equivalent risk
D) the portion of the return on a security that represents tax liability and therefore cannot be reinvested

Question

Quizplus · Accepted Answer

Excess return refers to the difference between the rate of return earned and the risk-free rate. It is a measure of how much return an investor has earned over and above the return on a risk-free investment, such as a Treasury bond.

The Term Excess Return Refers to ________