Consider the Following Two Investment Alternatives

question 47

Multiple Choice

Consider the following two investment alternatives.First,a risky portfolio that pays 15% rate of return with a probability of 40% or 5% with a probability of 60%.Second,a treasury bill that pays 6%.The risk premium on the risky investment is _________.

• A) 1%
• B) 3%
• C) 6%
• D) 9%

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Definitions:

Cognitive Consistency Theory

A psychological theory suggesting that individuals are motivated to maintain consistency among their cognitions, leading to changes in beliefs, attitudes, or behaviors when inconsistencies arise.

Discussion Section

The discussion section of a research paper is where the results are interpreted in the context of the initial hypothesis, implications are explored, and future research directions are suggested.

Practical Applications

Practical applications are the real-world uses or implementations of theories, concepts, or technologies to solve practical problems or improve conditions.

Method Section

A part of a research paper that describes how the study was conducted, including participants, materials, and procedure.