Which of the Following Is True

question 314

Multiple Choice

Which of the following is true?

• A) Risky assets on average do not earn a risk premium.
• B) There is a reward for bearing risk, on average.
• C) On average, the greater the risk, the lower the reward.
• D) When comparing the common stock of two firms, the riskier one will have the lower price.
• E) If a market is not efficient, then all assets in that market will have the same reward to risk ratio.

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Definitions:

Elaboration

The addition of more detail, explanation, or information to a concept, idea, or proposal.

Automaticity

The ability to perform tasks without occupying the mind with the low-level details, achieved through repetition and practice.

Elaboration

The process of adding more information or detail to a concept, idea, or argument in order to enhance understanding or clarity.

Medusa

A jellyfish-like animal; a free-swimming, umbrella-shaped stage in the life cycle of certain cnidarians. Compare with polyp.