Economists Define Risk as

question 32

Multiple Choice

Economists define risk as

• A)the difference between the interest rate borrowers pay and the interest rate lenders receive.
• B)the degree of uncertainty of an asset's return.
• C)the ease with which an asset can be exchanged for other assets or for goods and services.
• D)the difference between the return on common stock and the return on corporate bonds.

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Definitions:

Normal Balance

The side of an account (debit or credit) where increases in the account are recorded, reflecting the account's usual positive balance.

Expense

Outflows or other using up of assets or incurrences of liabilities during a period from delivering or producing goods, rendering services, or carrying out other activities that constitute the entity's ongoing major operations.

Credit

A bookkeeping entry that increases the value of liabilities or equity accounts, or decreases the value of an asset or expense account.

Journal

A detailed record where all financial transactions of a business are initially recorded.