Which of the Following Is NOT True

question 19

Multiple Choice

Which of the following is NOT true?

• A) Risk-neutral valuation provides prices that are only correct in a world where investors are risk-neutral
• B) Options can be valued based on the assumption that investors are risk neutral
• C) In risk-neutral valuation the expected return on all investment assets is set equal to the risk-free rate
• D) In risk-neutral valuation the risk-free rate is used to discount expected cash flows

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Definitions:

Normative Guidance

Principles or recommendations based on norms or standards intended to direct or influence behavior and decision-making.

Transactional Leadership

A leadership style focused on supervision, organization, and performance; involves motivating employees through rewards and punishments.

Symbolic Leader

Someone whose words and actions consistently communicate core values.

Cultural Manager

A leader or administrator who is skilled in managing the cultural dimensions of an organization, including values, beliefs, and behaviors.