Which of the following statement is true for compensation of risk? a. Higher the risk, zero is the return b. Higher the risk, lower is the return c. Lower the risk, higher is the return d. Higher the risk, higher is the return

Which of the following statement is true for compensation of risk? a. Higher the risk, zero is the return b. Higher the risk, lower is the return c. Lower the risk, higher is the return d. Higher the risk, higher is the return

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter9: Metric-analysis Of Financial Statements

Section: Chapter Questions

Problem 3SEQ

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Concept explainers

Classification Of Risk

Risk means when there could be a possibility that the returns expected from a particular project or investment may or may not match the investor's expectations. In other words, the uncertainty of an income arising from a source that would either be lower than expected or result in losses in risk exposure of the project. The higher the risk involved, the higher is the return expected by the investor as the investor is exposed to a high level of risk. There are various methods by which different types of risk can be assessed and avoided or mitigated.

Question

q19

Which of the following statement is true for compensation of risk?

Higher the risk, zero is the return

Higher the risk, lower is the return

Lower the risk, higher is the return

Higher the risk, higher is the return

q20

Which of the following is used generally for raising cash for settling the creditors?

Short Term Loan

All the options are wrong

Line of Credit

Long -Term Loan

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