The excess return is the ________.
A) rate of return that can be earned with certainty
B) rate of return in excess of the Treasury-bill rate
C) rate of return to risk aversion
D) index return

Question

Quizplus · Accepted Answer

Excess return is the rate of return in excess of the Treasury-bill rate. It represents the additional return gained from investing in a risky asset compared to a risk-free investment like treasury bills. Therefore, option B is the correct choice. Option A is incorrect because there is no rate of return that can be earned with certainty. Option C is incorrect because it does not refer to excess return. Option D is also incorrect because index return refers to the return on a market index, not excess return.

The Excess Return Is the ________