Which One of the Following Statements Is False

question 41

Multiple Choice

Which one of the following statements is false?

• A) When we compute the return of a security based on the average payoff we expect to receive, we call it the expected return.
• B) The notion that investors prefer to have a safe income rather than a risky one of the same average amount is call risk aversion.
• C) Because investors are risk averse, the risk-free interest rate is not the right rate to use when converting risky cash flows across time.
• D) The more risk averse investors are, the higher the current price of a risky asset will be compared to a risk-free bond.

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Definitions:

Trivialize

To make something seem less important or serious than it actually is.

Neutral Statement

A statement that is unbiased, not favoring any side or opinion.

Common Ground

Shared interests, beliefs, or understanding among individuals or groups that can serve as a basis for communication.

Obscuring

The act of making something unclear or difficult to understand, often by covering it up or disguising the true nature of the information.