Day: November 21, 2024

Accounting Multiple Choice Question – 21 November 2024

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

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The following statements have been made about risk attitudes.

Statement 1 – A risk-seeking attitude means that an investment should not be undertaken if there
is an alternative investment offering a higher risk

Statement 2 – A risk neutral attitude means an investment should not be undertaken if there is an
alternative investment offering a lower return

Are the statements true or false?

Select ONE answer:

  1. Statement 1 = True / Statement 2 = False
  2. Statement 1 = False / Statement 2 = True
  3. Statement 1 = True / Statement 2 = True
  4. Statement 1 = False / Statement 2 = False

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

  1. Correct == > If there are two investments offering different risks, a risk-seeking investor will always prefer the one with the higher risk. If there are two investments offering different returns, a risk neutral investor will always prefer the one with the higher return, not a lower return, regardless of the risk.
  2. Not correct
  3. Not correct
  4. Not correct

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