When a Household Revises Its Portfolio,it Attempts to Establish a Risk/return

question 30

Multiple Choice

When a household revises its portfolio,it attempts to establish a risk/return strategy that:

• A)Minimizes portfolio risk as much as possible while maintaining the current standard of living
• B)Will not lead to an audit by the tax authorities
• C)Optimizes portfolio income and brings about the highest standard of living possible
• D)All of the above
• E)None of the above

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Definitions:

Commercial Paper

Commercial paper is an unsecured, short-term debt instrument issued by corporations, typically used for the financing of accounts receivable, inventories, and meeting short-term liabilities.

Days' Cash on Hand Ratio

A liquidity metric that calculates how many days a company can operate using its available cash without external financing.

Depreciation Expense

The systematic allocation of the cost of a tangible asset over its useful life, reflecting the decrease in the asset's value over time.

Cash Commitments

Obligations to pay out cash in the future for contracts or other agreed upon transactions.