For Every Choice a Person Makes It Can Be Assumed

question 145

Multiple Choice

For every choice a person makes it can be assumed that

• A) the chooser has full knowledge of the situation.
• B) some opportunity cost was involved.
• C) there is a fifty-fifty chance the choice was the wrong one.
• D) a good is involved and satisfaction is gained.

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Definitions:

Unsystematic Risk

The risk of price changes in a company's stock due to factors specific to the company, as opposed to market-wide factors.

Treasury Bills

Short-term U.S. government debt obligations maturing in one year or less, considered a safe and liquid investment.

Risky Portfolio

A collection of investments that has a higher standard deviation, but potentially higher returns.

Unsystematic Portion

The segment of risk in an investment portfolio that can be mitigated through diversification, specific to individual securities.