patents premium
competition premium
company's beta
expiry premium
Answer is Right!
Answer is Wrong!
The correct answer is: A. patents premium
A patent premium is a premium that is paid for a stock that is protected by patents. Patents give a company the exclusive right to make, use, and sell an invention for a certain period of time. This can give a company a significant competitive advantage, and can lead to higher profits. As a result, investors are willing to pay a premium for stocks that are protected by patents.
The other options are incorrect because:
- A competition premium is a premium that is paid for a stock that is in a competitive industry. This is because companies in competitive industries are more likely to generate high profits.
- A company’s beta is a measure of its volatility relative to the market. A high beta stock is more volatile than the market, and a low beta stock is less volatile than the market.
- An expiry premium is a premium that is paid for a stock that is about to expire. This is because investors are willing to pay a premium for the opportunity to sell the stock at a higher price before it expires.