Acid Rain Is an Example of a Negative Externality

question 36

True/False

Acid rain is an example of a negative externality.

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Definitions:

Risk Premium

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

Bearing Risk

The act of accepting potential loss from uncertainty in investment or business operations.

Unexpected Returns

Returns on an investment that exceed what is predicted by models or expected based on historical trends, often caused by unforeseen factors or events.

Expected Returns

The anticipated amount of profit or loss an investor predicts to receive from an investment, taking into account the possibility of fluctuating values.