A Normative Statement I.can Be Tested as to Whether It Is True or Is

question 324

Multiple Choice

A normative statement
i.can be tested as to whether it is true or false.
ii.is considered negative.
iii.depends on a person's values.

• A) i only
• B) iii only
• C) i and iii
• D) ii and iii
• E) i, ii, and iii

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Definitions:

Risk Premium

The extra return expected by an investor for holding a risky asset compared to a risk-free asset, as compensation for the higher risk.

Diversifiable Risk

A type of risk that can be reduced or eliminated from a portfolio by holding a variety of investments.

Market Risk

The risk of losses in investments due to market conditions such as changes in interest rates, currency exchange rates, and stock prices.

Well-Diversified Portfolio

An investment portfolio that includes a mix of assets (stocks, bonds, etc.) to minimize risk and volatility.