Identify Which One of the Following Statements Regarding the Risk

question 118

Multiple Choice

Identify which one of the following statements regarding the risk of an investment is true.

• A) The higher the risk, the higher the minimum desired rate of return.
• B) The higher the risk, the lower the hurdle rate.
• C) The higher the risk, the lower the cost of capital.
• D) The lower the risk, the higher the discount rate.

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Definitions:

Negligence

Failure to take reasonable care to avoid causing injury or loss to another person.

Insurer

An entity that provides insurance policies to individuals or organizations, offering financial protection against losses from specified risks.

Fraud

Intentional deception or misrepresentation made by a person with the knowledge that the deception could result in some unauthorized benefit to oneself or some other person.

Recover Money

The process of obtaining funds that were lost or owed through legal or other means.