The Risk Premium for an Investment

question 79

Multiple Choice

The risk premium for an investment:

• A) is negative for U.S. treasury securities.
• B) is a fixed amount added to the risk-free return, regardless of the level of risk.
• C) increases with risk.
• D) is zero (0) for risk-averse investors.

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Definitions:

Sigmund Freud

Austrian neurologist and the founder of psychoanalysis, a clinical method for treating psychopathology through dialogue between a patient and a psychoanalyst.

John Watson

An American psychologist who established the psychological school of behaviorism, emphasizing the study of observable behavior.

Abraham Maslow

An American psychologist known for creating Maslow's hierarchy of needs, a theory of psychological health predicated on fulfilling innate human needs in priority, culminating in self-actualization.

Carl Jung

A Swiss psychiatrist and psychoanalyst who founded analytical psychology, known for his theories of the Collective Unconscious and archetypes.