Which of the Following Is a Correct Statement About Interpreting

question 23

Multiple Choice

Which of the following is a correct statement about interpreting an increase in risk premiums?

• A)An increase in risk premiums results only from expectations of greater default risk.
• B)An increase in risk premiums results only from expectations of lower liquidity.
• C)An increase in risk premiums results only from expectations of higher information costs.
• D)An increase in risk premiums can result from expectations of greater default risk, lower liquidity, or higher information costs.

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Definitions:

Social Trap

Situations in which actions that produce rewards for one individual or group in the short term lead to negative consequences for all in the long term.

Fuel-Inefficient Car

A vehicle that consumes a high amount of fuel relative to the distance it travels, reflecting poor energy efficiency.

Greenhouse Gases

Gases in Earth's atmosphere that trap heat, such as carbon dioxide and methane, contributing to global warming and climate change.

Bystander Effect

An occurrence in social psychology where the presence of others decreases an individual's likelihood to aid someone in need.