Which of the Following Statements Is Correct

question 97

Multiple Choice

Which of the following statements is correct?

• A) Risk aversion implies that some securities will go unpurchased in the market even if a large risk premium is paid to investors.
• B) When investors require higher rates of return for investments that demonstrate higher variability of returns,this is evidence of risk aversion.
• C) Risk aversion implies a general dislike for risk,thus,the lower the expected return the higher the risk premium.
• D) In comparing two firms that differ from each other only with respect to risk,the expected returns on the stock of the firms should be equal.
• E) None of the above statements is correct.

---

Definitions:

Fitness Maximization

An evolutionary biology principle where organisms are believed to evolve in ways that maximize their genetic fitness or ability to reproduce successfully.

Selective Management

A strategy in management focusing on prioritizing and targeting resources and efforts on key areas or activities to maximize effectiveness and efficiency.

Evolutionary Argument

A rationale derived from evolutionary biology, suggesting that certain traits or behaviors have developed over time due to the advantages they provided for survival and reproduction.

Cultural Organization

An entity that works to promote, preserve, research, or manage the cultural heritage, customs, or entertainment of a specific group or society.