Investors Generally Are Considered to Be Risk Because They Expect

question 49

Multiple Choice

Investors generally are considered to be risk because they expect to be compensated for assuming risk.

• A)inverse
• B)seekers
• C)averse
• D)takers

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Definitions:

Expected Rate Of Return

The profit or loss an investor anticipates on an investment, expressed as a percentage of the investment's initial cost.

Common Stock

A form of corporate equity ownership, representing a claim on a portion of the corporation's assets and earnings.

CAPM

The Capital Asset Pricing Model is a framework that explains the connection between the expected return on assets, especially stocks, and their systematic risk.

Characteristic Line

A line in finance that shows a security's expected returns as a function of the overall market's returns.