Which of the Following Will Always Be a Relevant Cost

question 9

Multiple Choice

Which of the following will always be a relevant cost?

• A) Sunk cost
• B) Fixed cost
• C) Variable cost
• D) Opportunity cost

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Definitions:

Total Risk

Represents the full spectrum of all types of risk associated with an investment, including both systematic and unsystematic risks.

Market Risk

The risk of losses in investments caused by factors that affect the entire market or economy, such as geopolitical events or changes in interest rates.

Slope of the SML

Measures the trade-off between risk and return in financial markets as depicted by the Security Market Line.

Investors' Risk Aversion

Refers to the level of reluctance exhibited by investors to engage in investments with uncertain outcomes, preferring lower risk options.