Variable Returns from an Investee Include

question 24

Multiple Choice

Variable returns from an investee include:

• A) fixed interest payments from a bond, as they expose the investor to the credit risk of the issuer of the bond, namely the investee
• B) dividends from ordinary shares that will change based on the profit performance of the investee
• C) fixed performance fees for management of the investee's assets, as they expose the investor to the performance risk of the investee.
• D) all of the options are correct.

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Definitions:

Profits

The financial gain obtained when the revenues generated from business activities exceed the expenses, costs, and taxes needed to sustain the activity.

Decision Problem

A situation that requires a choice to be made among different alternatives.

Leader

An individual who guides or directs a group towards achieving a common goal by influencing or motivating their behavior.

Shared Leadership

A leadership style where leadership roles and responsibilities are distributed within a team or organization rather than being held by a single leader.