All Other Things Being Equal,which of the Following Best Describes

question 32

Multiple Choice

All other things being equal,which of the following best describes the effects of leverage on an investment's risk-return characteristics (assuming the expected return is greater than the lending rate) ?

• A)Lower expected return,lower risk
• B)Lower expected return,higher risk
• C)Higher average return,higher risk
• D)Higher average return,lower risk
• E)Risk-return characteristics have no role in investment decision making

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Definitions:

Idiosyncratic

Pertaining to traits or characteristics that are unique to an individual, often diverging from the norm or general expectations.

Productive

Referring to the ability to produce significant amounts of output, work, or results efficiently.

Collective Behaviour

The actions, thoughts, and feelings of a relatively spontaneous and unstructured group of people in response to similar stimuli or conditions.

Social Modelling

The process of learning behaviors, attitudes, or emotional reactions through observing and imitating others.