Which of the following is NOT a concept that you need to understand to make rational financial decisions?
A) More value is preferred to less value.
B) Less risky assets are preferred to riskier assets.
C) Current cash is more valuable than cash in the future.
D) Discount rate is a decreasing function of risk.
E) All of the above are needed.

Question

Quizplus · Accepted Answer

The correct concept is that the discount rate is an increasing function of risk, not decreasing. Higher risk typically requires a higher return to compensate, which is reflected in a higher discount rate.

Which of the Following Is NOT a Concept That You