The Figure Given Below Shows the Demand Curves [D₁ and D₂]

question 12

Multiple Choice

The figure given below shows the demand curves [D₁ and D₂] and the supply curve [S₁] of capital.Figure 17.1

-A pervasive tradeoff in financial markets relates risk to expected returns. Which of the following statements reflects this relationship?

• A)The higher the risk of an asset, the lower the expected return on the asset.
• B)There is usually no relationship between risk and return.
• C)The higher the risk of an asset, the higher the expected return on the asset.
• D)The return on an asset is normally positively related to the risk of comparable assets.
• E)The return on a risky asset cannot be compared with the return on a risk free asset.

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Definitions:

Unconditioned Response

An Unconditioned Response is an automatic, natural reaction to an unconditioned stimulus, not learned through previous experience.

Blinking

A rapid, involuntary action of the eyelids that helps to lubricate and protect the eyes.

Conditioned Stimulus

A previously neutral stimulus that, after becoming associated with an unconditioned stimulus, eventually comes to trigger a conditioned response.

Unconditioned Stimulus

In behavioral psychology, a stimulus that naturally triggers a response without any need for prior learning.