Explain the Distinction Between the Effects of a Mistake That

question 55

Essay

Explain the distinction between the effects of a mistake that prevents the creation of a contract and a mistake that renders the purpose or performance of a contract impossible.Provide an example of each.

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Definitions:

Market Risk

The risk of losses in investments caused by factors that affect the entire market, such as economic recession or political instability.

Treasury Bonds

Long-term government bonds issued by the Treasury Department with maturity periods typically longer than 10 years.

Beta Coefficient

The beta coefficient measures the volatility of a stock or portfolio in comparison to the market as a whole, indicating its relative risk.

Systematic Risk Factors

Factors that affect the overall financial market and cannot be mitigated through diversification. These include interest rates, inflation, and economic recessions.