Last year, t-bills returned 2 percent while your investment in large-company stocks earned an average of 5 percent. which one of the following terms refers to the difference between these two rates of return?
a. risk premium
b. geometric return
c. arithmetic
d. standard deviation
e. variance

A. risk premium

Explanation:

Based on the information provided within the question it can be said that the term being mentioned is risk premium. This term refers to the difference or excess of a the rate of return that a specific investment is expected to return, also seen as a type of compensation for investors who decide to take on the extra risk associated with this investment.

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