Which One of the Following Statements Is Consistent with Hull's

question 9

Multiple Choice

Which one of the following statements is consistent with Hull's notion of how both habit and drive affect performance?

• A) "Sometimes I get so nervous that I'm all butterfingers."
• B) "I've walked that route so often that I could probably do it in my sleep."
• C) "I won't do it-I don't want to, and I don't know how."
• D) "You can do anything if you try hard enough."

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Definitions:

No Arbitrage

A principle stating that it is impossible to achieve risk-free profits from inconsistent or mispriced asset prices in efficient markets, as arbitrage opportunities are quickly exploited and corrected.

Risk Premium

The extra return over the risk-free rate that investors require to compensate them for the risk of holding a risky asset.

Risk Aversion

A person's or entity's reluctance to take risks, preferring lower returns with known risks over higher returns with unknown risks.

Total Risk

The complete range of possible risks, including both systematic and unsystematic risks, that can affect the value of an investment.