The market allocates capital to firms based on all of the following except:
A) Higher risk requires lower returns due to higher expectations
B) The level of efficiency
C) Expected returns
D) The degree of past performance

Question

Quizplus · Accepted Answer

Higher risk typically requires higher returns due to higher expectations, not lower returns. This is because investors demand higher compensation for taking on more risk.

The Market Allocates Capital to Firms Based on All of the Following