Which of the Following Is True of Risk Aversion

question 186

Multiple Choice

Which of the following is true of risk aversion?

• A) Greater risk aversion results in lower required returns for each level of risk.
• B) A reduction in risk aversion causes the required return for each level of risk to increase.
• C) In general, widely shared expectations of hard times ahead tend to cause investors to become less risk averse.
• D) Changes in risk aversion, and therefore shifts in the SML, result from changing preferences of investors.

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Definitions:

Comparative Negligence

A legal principle that reduces the plaintiff's damages based on their percentage of fault in an accident.

Strict Product Liability

A legal doctrine that holds sellers or manufacturers liable for defective products regardless of fault or intent, as long as the product was used as intended.

Manufacturer Actions

Refers to the measures or steps taken by a manufacturer in response to product design, production, marketing, and safety concerns.

Defective Condition

A state of imperfection or malfunction in a product that makes it hazardous or unfit for its intended use.