The Variation in the Rate of Return One Can Expect

question 222

Multiple Choice

The variation in the rate of return one can expect from ownership of stocks will generally be smaller if

• A) all of the funds are invested in a specific sector of the economy such as the automobile industry.
• B) a diverse set of stocks is held over a lengthy period of time such as 30 or 40 years.
• C) all of the funds are invested in a single stock.
• D) the funds are invested for a relatively short period of time.

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Definitions:

Frustration Theory

A psychological theory suggesting that frustration, resulting from blocked goals, can lead to aggressive behavior.

Sequential Theory

A theory suggesting that understanding and behavior result from sequences of stimuli and responses, often emphasizing the importance of order in learning processes.

Extinction Contrast Effect

The phenomenon wherein the cessation of a previously reinforced behavior is accelerated when an alternative behavior continues to be reinforced.

Nonreward

A situation where an expected reward is not given, leading to extinction of the conditioned response over time.