12) A risk-free investment offers 4 percent return. The overall market offers 7
ID: 2709758 • Letter: 1
Question
12) A risk-free investment offers 4 percent return. The overall market offers 7 percent in addition to the risk-free rate of 4 percent. What is this 7 percent of additional return called?
Required return
Real return
Average return
Market risk premium
13) PMI insurance is required when ______________.
Your down payment does not reach 20% of the entire value of the house.
Your house is financed on 30-year FRMs.
Your house is financed on 15-year ARMs.
Your monthly payment goes over 30% of your gross income.
A.Required return
B.Real return
C.Average return
D.Market risk premium
Explanation / Answer
12= Market risk premium
13= Your down payment does not reach 20% of the entire value of the house.
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