Studies Have Found That People Like to Have Choices,but When

question 49

Multiple Choice

Studies have found that people like to have choices,but when exposed to many alternatives they become:

• A) Ineffective in understanding the choices
• B) Efficient decision makers
• C) Cognitive misers by engaging in less optional decision making
• D) None of the options listed here is correct

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Definitions:

Expected Return-Beta Relationship

The concept that the expected return of an investment is dependent on its beta, which measures its systemic risk relative to the overall market.

Efficient Frontier

Graph representing a set of portfolios that maximize expected return at each level of portfolio risk.

Market Portfolio

The portfolio encompassing all assets in which each asset is held in proportion to its market value.

Beta

The measure of the systematic risk of a security. The tendency of a security’s returns to respond to swings in the broad market.