Stock Market · True or False
Is it true that volatility is the price paid for equity risk premium?
True. Higher long-term returns require enduring fluctuations.
The equity risk premium — the extra return stocks provide over safe assets — exists precisely because stocks are volatile; the volatility IS the reason the returns are higher.
Wanting equity returns without accepting equity volatility, which is like wanting to be paid without doing the work.
This scenario is one of 155 in the Skillful Stock Market track. Each card states a situation, you decide true or false, and the explanation follows immediately.
- Answer
- True
- Track
- Stock Market
- Topics
- volatility, investing-principles
Also asked as
Is volatility the price paid for equity returns? Why stocks are volatile but rewarding long-term? What is the equity risk premium?
The scenario in full
Volatility is the price paid for equity risk premium.
Frequently asked questions
Is it true that volatility is the price paid for equity risk premium?
True. Higher long-term returns require enduring fluctuations.
Is volatility the price paid for equity returns?
True. Higher long-term returns require enduring fluctuations. The equity risk premium — the extra return stocks provide over safe assets — exists precisely because stocks are volatile; the volatility IS the reason the returns are higher.
Why stocks are volatile but rewarding long-term?
True. Higher long-term returns require enduring fluctuations. The equity risk premium — the extra return stocks provide over safe assets — exists precisely because stocks are volatile; the volatility IS the reason the returns are higher.
What is the equity risk premium?
True. Higher long-term returns require enduring fluctuations. The equity risk premium — the extra return stocks provide over safe assets — exists precisely because stocks are volatile; the volatility IS the reason the returns are higher.
Where does this stock market question come from?
It is one of 155 scenarios in the Skillful Stock Market track. Each card states a realistic situation, you decide true or false, and the explanation follows immediately.
How do I practise more questions like this?
Start the Stock Market quiz. It runs about two minutes per session, the first 150 questions are free across every category, and your progress saves automatically.