Corporate Finance
Corporate Finance
3rd Edition
ISBN: 9780132992473
Author: Jonathan Berk, Peter DeMarzo
Publisher: Prentice Hall
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Chapter 3.A2, Problem 1CC

Why does the expected return of a risky security generally differ from the risk-free interest rate? What determines the size of its risk premium?

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How does interest rate risk differ from reinvestment rate risk? Why is the difference important?
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