Which of the Following Statements Is True

question 13

Multiple Choice

Which of the following statements is true?

• A) The lower the risk in an investment, the higher the expected return will be.
• B) The higher the risk in an investment, the higher the expected return will be.
• C) The higher the principal amount of an investment, the lower will be the rate of interest offered on the investment.
• D) The higher the principal amount of an investment, the higher will be the rate of interest offered on the investment.

---

Definitions:

Average Cost

Average Cost refers to the total cost of production divided by the number of units produced, effectively calculating the cost per unit.

Entire Market

The total sales volume of all competitors within a particular industry or sector.

Demand Conditions

Refers to the nature and scale of demand in the industry which affects the competitiveness and strategy of firms.

Potential Competitors

Firms or individuals that are not currently in the market but have the ability to enter and compete in the future.