As Risk Aversion Increases

question 138

Multiple Choice

As risk aversion increases

• A) a firm's beta will increase.
• B) investors' required rate of return will increase.
• C) a firm's beta will decrease.
• D) investors' required rate of return will decrease.

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Definitions:

Creative Destruction

A concept in economics which suggests that new innovations destroy old industries and methods, leading to new sectors and opportunities for growth.

Start-Up Firms

Newly established businesses often characterized by innovation, growth potential, and a scalable business model.

Dominant Firms

Are companies that have a major share of the market sales, setting them apart from their competitors.

Creative Destruction

A concept in economics introduced by Joseph Schumpeter, referring to the process in which technological progress and innovation lead to the demise of outdated industries and economic structures, making way for new ones.