Ross Wants to Invest Some Money That He Just Inherited

question 286

Multiple Choice

Ross wants to invest some money that he just inherited.He found that his bank offers a savings account paying a guaranteed 3% rate of return.However,he would like to earn a higher return.Ross should keep in mind that to earn a higher return on his money he:

• A)will have to invest overseas.
• B)should invest in a business that has a very stable and predictable rate of return.
• C)will probably have to accept a higher level of risk.
• D)will probably have to engage in illegal activities.

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Definitions:

Leverage Ratio

A financial metric measuring the amount of debt used by a company to finance its assets relative to the value of those assets.

Insolvent

Insolvent refers to the inability of an individual or organization to meet its financial obligations as they become due, due to a lack of sufficient assets.

Reserve Requirements

Regulations set by the central bank determining the minimum amount of reserves each bank must hold against deposits.

Fed

The Federal Reserve System, which is the central banking system of the United States responsible for monetary policy.