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:

Milgram Experiment

A psychological experiment conducted by Stanley Milgram in the 1960s to study obedience to authority, where participants were instructed to administer electric shocks to another person.

Stanford University Prison Experiment

A psychological study conducted by Philip Zimbardo in 1971 at Stanford University, where students were assigned roles of prisoners and guards to explore the effects of perceived power.

Generalization

Drawing a conclusion about a certain characteristic of a population based on a sample from it.

Logical Support

The provision of reasons or evidence to justify a claim or argument.