This is typically considered the return on U.S. government bonds and bills and equals the real interest plus the expected inflation premium.
A) required return
B) risk-free rate
C) risk premium
D) market risk premium

Question

Quizplus · Accepted Answer

The risk-free rate is the return on U.S. government bonds and bills, which are considered to have no default risk. It is often used as a benchmark for other investments, as it represents the minimum return an investor would expect to receive without taking on additional risk. The risk-free rate is typically used in calculations of required return or cost of capital for a company or investment. The other answer choices are not correct because they refer to different concepts. The required return is the minimum return an investor requires to invest in an asset or portfolio, and includes both the risk-free rate and a risk premium. The risk premium is the additional return an investor expects to receive for taking on additional risk, above the risk-free rate. The market risk premium is the difference between the expected return on a market portfolio and the risk-free rate.

This Is Typically Considered the Return on U