In Financial Investment, a Riskier Asset Typically Has

question 215

Multiple Choice

In financial investment, a riskier asset typically has:

• A) a higher expected return.
• B) a lower expected return.
• C) the same expected return as a less risky asset.
• D) a higher or lower expected return, depending on the industry.

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Definitions:

Repossession

The process by which a creditor takes back property from the borrower, due to failure to make required payments.

Security Interest

A legal claim or right granted in an asset as collateral to ensure the fulfilment of an obligation, typically repayment of a loan.

Legal Remedy

The means through which a court of law enforces a right, imposes a penalty, or makes another court order to impose its will.

Purchase-Money Security Interest

A legal claim that allows a creditor priority in reclamation over the bought property if the debtor defaults on a loan used to purchase the property.