You Own a Stock Which Is Expected to Return 14

question 11

Multiple Choice

You own a stock which is expected to return 14 percent in a booming economy and 9 percent in a normal economy.If the probability of a booming economy decreases,your expected return will:

• A) decrease.
• B) either remain constant or decrease.
• C) remain constant.
• D) increase.
• E) either remain constant or increase.

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Definitions:

Discussion

The act of talking about something with another person or a group in order to exchange ideas or decide something.

Groupthink

A phenomenon that occurs within a group of people, where the desire for harmony in a decision-making group overrides a realistic appraisal of alternatives.

Realistic Appraisal

The process of objectively evaluating situations, possibilities, and potential outcomes based on factual and rational analysis.

Prevailing Inclinations

Dominant tendencies or preferences that are widespread or common in a particular time or place.