The Ethical Theory Based on the Concept of Duty That

question 19

Multiple Choice

The ethical theory based on the concept of duty that suggests that if a product causes harm, the firm should pay the costs of any injury is

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

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Definitions:

Capital Market Line

A line used in the capital asset pricing model to depict the rates of return for efficient portfolios depending on the risk-free rate of return and the level of risk (standard deviation) for a particular portfolio.

Characteristic Line

In finance, a line that describes the relationship between the return on an investment and the return on the market as a whole, used in the Capital Asset Pricing Model.

Systematic Risk

Systemic risk associated with the overall market or a particular segment of the market, widely known as market risk, remains even after diversification efforts.

Unsystematic Risk

The risk of price change due to the unique circumstances of a specific security, as opposed to the overall market.