Among the Six Principles of Finance, All Are Included Except

question 73

Multiple Choice

Among the six principles of finance, all are included except:

• A)All decisions are ultimately financial decisions.
• B)Higher returns are expected for taking on more risk
• C)Diversification of investments can reduce risk
• D)Financial markets are efficient in pricing securities
• E)all of the above are included

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Definitions:

Economic Profits

The difference between a firm's total revenues and its total costs, including both explicit and implicit costs.

Normal Profits

The level of profit that is necessary for a company to remain competitive in the market, often seen as the minimum acceptable return.

Short Run

Refers to a period in economics where certain inputs or resources are fixed and cannot be changed, contrasting with the long run where all factors are variable.

Long Run

A period in which all factors of production and costs are variable, allowing for adjustment to changes in the market or economy.