As the Risk of a Stock Investment Increases

question 43

Multiple Choice

As the risk of a stock investment increases,

• A) return will increase.
• B) return will decrease.
• C) required rate of return will decrease.
• D) required rate of return will increase.
• E) the beta approaches zero.

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Definitions:

Public Interest

The welfare or well-being of the general public, often considered in the formulation of laws and governmental policies.

Exculpatory Clause

An Exculpatory Clause is a contract provision that relieves one party from liability for harm or damage that could occur to the other party under the agreement.

Public Policy

Principles and standards considered to be in the public interest, which guide lawmakers and regulators.

Negligence Liability

Legal responsibility that arises from failing to act with the level of care that someone of ordinary prudence would have exercised under the same circumstances.