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.

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Definitions:

Income Effect

The change in an individual's or economy's consumption patterns due to a change in real income, reflecting how increases or decreases in income can affect buying habits.

Substitution Effect

The alteration in purchasing behavior caused by variations in the relative costs of products, prompting buyers to opt for less expensive alternatives over pricier ones.

Price Change

An adjustment in the cost of a good or service in the market, which can be an increase or decrease due to various factors.

Income

The remuneration accrued, notably in a recurrent manner, from labor or the investment of resources.