Which of the Following Makes This a True Statement: the Shape

question 55

Multiple Choice

Which of the following makes this a true statement: The shape of the efficient frontier implies that

• A) diminishing returns apply to risk-taking in the investment world.
• B) increasing returns apply to risk-taking in the investment world.
• C) returns are not impacted by risk-taking in the investment world.
• D) None of these choices complete the sentence to make it true.

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Definitions:

Preferred Share

Equity shares in a corporation, which provide dividends to its holders before dividends are distributed to common shareholders, and typically have no or restricted voting rights.

Specific Dividend

A dividend paid out in forms other than cash, such as stocks or other assets, to shareholders.

Par-value Share

A type of stock with a nominal face value that companies define in their corporate charter.

Debenture

An acknowledgment of debts by a corporation normally involving more than one creditor; often used interchangeably with “bond,” but whereas a bond is typically secured against a specific asset, a debenture may be unsecured or secured by a floating charge against inventory.