If Vasaliki Is Induced to Enter into a Contract as a Consequence

question 49

True/False

If Vasaliki is induced to enter into a contract as a consequence of a statement made by Lampros with reckless indifference as to its truth, Vasaliki has an automatic right to rescission and may also get damages if the statement is fraudulent.

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Definitions:

Risk Aversion

The reluctance of a person or entity to take risks.

Expected Returns

The projected return on an investment, taking into account both the probability and the impact of known risks.

Risky Securities

Financial instruments that carry a high degree of investment risk due to their significant exposure to market volatility.

Diversifiable Risk

The risk that a borrower will not pay theinterest and/or principal on a loan as it becomes due. Ifthe issuer defaults, investors receive less than the promised return on the bond. Default risk is influenced byboth the financial strength of the issuer and the terms ofthe bond contract, especially whether collateral has beenpledged to secure the bond. The greater the default risk,the higher the bond’s yield to maturity.