When We Are Explaining Our Own Behavior, We Tend to Invoke

question 28

Multiple Choice

When we are explaining our own behavior, we tend to invoke what kind of explanation?

• A) We base it on traits of our character.
• B) A situational explanation
• C) A cause-and-effect explanation
• D) Justification
• E) Refutation

Explain the impact of changes in expected inflation and the market risk premium on required returns.

Apply the principles of portfolio diversification and understand its effect on risk reduction.

Understand the concept of the Security Market Line (SML) and its implications for required returns based on beta.

Analyze the effects of changes in investor risk aversion on the market risk premium and the slope of the SML.

---

Definitions:

Check

A check is a written, dated, and signed instrument that directs a bank to pay a specific sum of money to the bearer or the person or entity whose name is written on the check.

Drawer

In financial contexts, refers to the person who writes or issues a cheque or draft instructing the bank to pay a specific amount of money.

Draft

An order or bill of exchange instructing the payment of a specified sum of money from one party to another, often used in international trade.

Promissory Note

A financial instrument that contains a written promise by one party to pay another party a definite sum of money either on demand or at a specified future date.