The Idea That Claims in One's Self-Interest Are Credible Only

question 99

Multiple Choice

The idea that claims in one's self-interest are credible only if they are supported by actions that would be too costly to take if the claims were untrue is known as the:

• A)pecking order hypothesis.
• B)credibility principle.
• C)lemons principle.
• D)signaling theory of debt.

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Definitions:

Portfolio Expected Worth

The projected value of a portfolio, considering the potential returns of the investments within it over a specific timeframe.

Alpha

A performance measure indicating the excess return of an investment relative to the return of a benchmark index or risk-free rate.

Risk-Free Rate

The return on an investment with no risk of financial loss, often represented by government bonds.

Annualized Return

A rate of return that standardizes an investment's earnings to a one-year period, making comparison with other investments easier.