A Risk-Return Trade-Off Is the Idea That

question 11

Multiple Choice

A risk-return trade-off is the idea that:

• A)there is always a risk to selling weapons to other states.
• B)states can get the best deal by threatening all-out war with another state.
• C)states can minimize the chance of war by exchanging diplomatic missions.
• D)states can reduce the risk of war during a crisis by returning diplomatic messages quickly.
• E)states want to minimize the chance of war but also get the best deals they can.

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Definitions:

Ski Slope

A graded and usually groomed path down a mountainside for snow skiing, snowboarding, or other mountain sports.

Moral Hazard

The risk that a party to a transaction has not entered into the contract in good faith, or has an incentive to take unusual risks in a desperate attempt to earn a return before the contract settles.

Contract Changes

Amendments or modifications to the terms and conditions of an existing agreement.

Behavior Cost

The non-financial costs associated with actions or decisions, including effort, time, and opportunity costs that impact individuals' or companies' behaviors.