Risk premium

1. How does a person’s attitude toward risk affect his or her decision-making process?

2. Contrast expected rate of return on an investment with the actual rate of return on an investment.

3. What is the relationship between risk and return?

1. What is a risk premium? Describe the three factors that generate risk premiums and give an example of each.

2. Explain what is meant by the time value of money.

3. How does simple interest differ from compound interest?


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