What Is Risk Propensity

question 8

Multiple Choice

What is risk propensity?

• A) The predisposition to take on more risk than the average person
• B) The predisposition to take on the same financial risk as the average person
• C) The predisposition to take on less risk than the average person
• D) All of these choices

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Definitions:

Common Stock

Equity ownership in a corporation, with voting rights and the potential for dividends.

Retained Earnings

The part of net profits not allocated for dividend distribution but held back by the firm for the purposes of reinvesting in its main business or settling debts.

Dividends Paid

The portion of a company's earnings that is distributed to its shareholders as a payment, typically in the form of cash or additional shares.

Statement of Stockholders' Equity

A financial document that shows changes in the value of shareholders' equity in the company over a specific period.