Which of the Following Is True of Risk

question 33

Multiple Choice

Which of the following is true of risk?

• A) Risk and return are inversely proportionate to each other.
• B) Higher the risk associated with a security the lower is its return.
• C) Risk is a measure of the uncertainty surrounding the return that an investment will earn.
• D) Riskier investments tend to have lower returns as compared to T-bills which are risk free.

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Definitions:

Decreasing Average Cost

A situation where the average cost of production decreases as the quantity of output increases, often due to economies of scale.

Market Structures

The organization and characteristics of a market, including the number and size of producers, product differentiation, and the ease of entry and exit, which affect competition and pricing strategies.

Close Substitutes

Products or services that can easily replace each other in the eyes of the consumer, due to their similar features and functionalities.

Diamond Mines

Sites or locations where diamonds are extracted from the earth.