An Investment Requires a Total Return That Comprises

question 48

Multiple Choice

An investment requires a total return that comprises:

• A)a real rate of return and compensation for inflation.
• B)a real rate of return, compensation for inflation, and a risk premium.
• C)compensation for inflation and a risk premium.
• D)a real rate of return, compensation for inflation, a risk premium, and compensation for time and effort devoted to researching alternative investments.
• E)None of the above

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Definitions:

Heuristic

A problem-solving approach that employs a practical method or various shortcuts to produce solutions that may not be perfect but are sufficient for the immediate goals.

Divergent

Thinking or a thought process that generates creative ideas by exploring many possible solutions, contrasting with convergent thinking.

Subgoals

Intermediate objectives set as part of a strategy to achieve a larger goal, helping to organize efforts and measure progress.

Working Backwards

Working backwards is a problem-solving strategy that involves starting with the conclusion or desired outcome and then deducing the steps needed to reach that outcome.