Capital is allocated by financial markets by _______________.
A. a lottery system between investment dealers.
B. pricing securities based on their risk and expected future cash flows
C. by pricing risky securities higher than low-risk securities.
D. by a government risk-rating system based on AAA for low risk and CCC for high risk.
Answer:B
Capital is allocated by financial markets by _______________.
A. a lottery system between investment dealers. B. pricing securities based on their risk and expected future cash flows C. by pricing risky securities higher than low-risk securities. D. by a government risk-rating system based on AAA for low risk and CCC for high risk.