Consider the Following Information on Three Securities

question 42

Multiple Choice

Consider the following information on three securities:
Security ______ has the greatest total risk,and security _______ will have the highest risk premium.

• A)B;C
• B)A;B
• C)C;B
• D)C;A
• E)A;A

---

Definitions:

Diminishing Marginal Product

The principle that says the marginal product of a factor of production decreases as the quantity of the factor is increased, holding all else constant.

Economies of Scale

Cost advantages reaped by companies when production becomes efficient, as the scale of production and the cost per unit of production decrease.

Average Total Cost

The total cost of production divided by the number of units produced, representing the per-unit cost of production.

Total Revenue

The total income generated by a company from the sale of goods or services before any expenses are subtracted.