Which of the Following Is TRUE of Cash Flows and Risk

question 37

Multiple Choice

Which of the following is TRUE of cash flows and risk?

• A)Lower cash flow and lower risk result in an increase in share price.
• B)Higher cash flow and lower risk result in an increase in share price.
• C)Higher cash flow and higher risk result in an increase in share price.
• D)Lower cash flow and higher risk result in an increase in share price.

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Definitions:

Complete Stranger

A person whom one does not know or with whom one is not familiar.

Expected Loss

The predicted amount of loss a business might suffer due to risks, calculated as the sum of all possible losses multiplied by their respective probabilities.

Weak Axiom

A principle used in consumer choice theory that stipulates if a consumer chooses bundle A over bundle B when both are affordable, then the consumer should not choose B over A when prices change, holding income constant.

Risk Inconsistency

The phenomenon where an individual's tolerance for risk changes in unpredictable ways over time or across different contexts.