Which of the Following Statements Are Correct

question 37

Multiple Choice

Which of the following statements are correct?
I.The SML approach is dependent upon a reliable measure of a firm's unsystematic risk.
II.The SML approach can be applied to firms that retain all of their earnings.
III.The SML approach assumes a firm's future risks are similar to its past risks.
IV.The SML approach assumes the reward-to-risk ratio is constant.

• A)I and III only
• B)II and IV only
• C)III and IV only
• D)I, II, and III only
• E)II, III, and IV only

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Definitions:

Subjective theory

A perspective emphasizing the importance of personal perspectives and feelings in interpreting events, as opposed to objective facts.

Universal justification

A philosophical concept proposing that certain principles or reasons for actions are universally applicable and can be justified across different contexts.

Moral values

Fundamental beliefs about what is right and wrong or good and bad, often influencing behavior and decision-making.

Moral reasoning

The process through which individuals make decisions about what is right and wrong, guided by ethical principles and personal values.