The Greater the Variability of the Possible Returns on an Investment

question 64

Multiple Choice

The greater the variability of the possible returns on an investment, _____. 

• A)the lesser the expected return
• B)the lower the standard deviation of the investment
• C)the higher the actual return on the investment
• D)the riskier the investment
• E)the lower the beta of the investment

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Definitions:

Rational-Ignorance Effect

The decision by individuals to remain uninformed about an issue because the perceived cost of acquiring the knowledge outweighs the expected benefits.

Externalities

Externalities are consequences of an economic activity experienced by unrelated third parties; they can be either positive (benefits) or negative (costs).

News Media

Organizations and platforms that gather, produce, and distribute news and information to the public.

Government Projects

Initiatives or programs undertaken by a government body, often aimed at achieving specific policy outcomes or providing public services.