Which of the Following Statements Is FALSE

question 92

Multiple Choice

Which of the following statements is FALSE?

• A) Investments with higher volatility have rewarded investors with higher average returns.
• B) Investments with higher volatility should have a higher risk premium and, therefore, higher returns.
• C) Volatility seems to be a reasonable measure of risk when evaluating returns on large portfolios and the returns of individual securities.
• D) Riskier investments must offer investors higher average returns to compensate them for the extra risk they are taking on.

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Definitions:

Excise Taxes

A tax levied on specific goods or commodities produced or sold within a country, such as alcohol, cigarettes, and gasoline.

Government Intervention

Actions taken by a government to influence or regulate various activities within its economy, such as imposing taxes, subsidies, and regulations.

External Costs

Costs incurred by society as a whole due to economic activities but not reflected in the market price or borne by the producer or consumer involved.

Pollution Abatement

Actions or measures taken to reduce, control, or eliminate pollution and its negative impacts on the environment.