Milton Friedman Espoused the View That

question 16

Multiple Choice

Milton Friedman espoused the view that:

• A) A corporation's sole duty is to make money, regardless of the means utilized
• B) A corporation should sacrifice profit maximization if doing so is necessary to comply with legal mandates
• C) A corporation has a compelling obligation to engage in socially responsible activities, even at the sacrifice of profits
• D) All of the above

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Definitions:

Risk-Free Rate

The risk-free rate is the theoretical rate of return of an investment with zero risk, often represented by the yield of a short-term government bond.

Beta

A measure of a stock's volatility in relation to the overall market, used in the Capital Asset Pricing Model to determine the expected return of an investment.

Risk Aversion

The reluctance of a person to accept a bargain with an uncertain payoff rather than another bargain with a more certain, but possibly lower, payoff.

High-Beta Stocks

Stocks with a beta value higher than 1, indicating they are more volatile than the overall market and potentially offering higher returns.