The Ethical Theory Based on the Concept of Duty That

question 72

Multiple Choice

The ethical theory based on the concept of duty that states that firms have a responsibility to comply with the terms of the sale, inform the customer about the product, not misrepresent anything, and not coerce the customer is

• A) contractual theory.
• B) due care theory.
• C) social costs view.
• D) caveat emptor.

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Definitions:

Diversified Portfolios

Investment strategies that spread investments across various assets to minimize risks associated with any single investment.

Equilibrium Risk Premium

The expected return on a risky asset over the risk-free rate that brings the supply and demand for the asset into balance.

Risk-free Rate

The interest rate at which an investor can invest in an absolutely risk-free security over a specified period.

Arbitrage Opportunity

A situation where a trader can profit from differences in price of the same or similar financial instruments on different markets or in different forms.