Which of the Following Is the Best Example of "Creative

question 22

Multiple Choice

Which of the following is the best example of "creative destruction"?

• A) The imprudent use of a credit card by a family that already has a high level of debt.
• B) The virtual elimination of the film camera by the digital camera.
• C) The failure of a business because of poor management.
• D) The failure of a business because of higher cost resulting from government regulation.

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Definitions:

Risk Premium

The extra return expected by investors for holding a risky asset over a risk-free asset, compensating them for the risk of loss.

Treasury Bill

Short-term government securities with maturity periods typically less than a year, considered to be risk-free investments.

Holding-period Return

The total return received from holding an asset or portfolio over a specific period, including dividends or interest and any capital gain or loss.

Cash Dividend

A distribution of profits paid to shareholders in the form of cash, representing a portion of the company's earnings.