Which One of the Following Statements Is FALSE

question 83

Multiple Choice

Which one of the following statements is FALSE?

• A)When we compute the return of a security based on the average payoff we expect to receive,we call it the expected return.
• B)The notion that investors prefer to have a safe income rather than a risky one of the same average amount is called risk aversion.
• C)Because investors are risk averse,the risk-free interest rate is not the right rate to use when converting risky cash flows across time.
• D)The more risk averse investors are,the higher the current price of a risky asset will be compared to a risk-free bond.

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Definitions:

Audits

Systematic examinations, reviews, and verifications of financial and operational records and activities.

Magistrate

A judicial officer with limited authority, often responsible for handling minor criminal offenses and preliminary matters in legal cases.

Probable Cause

A reasonable basis, found through evidence or facts, for believing that a person has committed a crime, used as a standard for arrests and issuing search warrants.

First Appearance

The initial appearance of an arrested individual before a judge, who determines whether there was probable cause for the arrest. If the judge ascertains that probable cause did not exist, the individual is freed.