Question

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

Answer 1

Based on economic analysis, the term excess return refers to " the difference between the rate of return earned and the risk-free rate."

This is because Excess returns are often used in economics to describe the difference between the return earned by stock and the risk-free rate.

Excess returns are often measured through the most current short-term government treasury bill.

Hence, in this case, it is concluded that the correct answer is option A. "the difference between the rate of return earned and the risk-free rate."

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