Consider These Two Investment Strategies: Strategy __________ Is the Dominant

question 5

Multiple Choice

Consider these two investment strategies: Strategy __________ is the dominant strategy because __________.

• A)1; it is riskless
• B)1; it has the highest reward/risk ratio
• C)2; its return is greater than or equal to the return of Strategy 1
• D)2; it has the highest reward/risk ratio

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Definitions:

Consolidated Retained Earnings

The accumulated profits of a corporation and its subsidiaries after dividends have been paid out to shareholders.

Consolidated Statement

A financial statement that aggregates the financial position and operations of a parent company and its subsidiaries, presenting them as a single economic entity.

Income Tax Calculations

The process of determining the tax payable to the government based on earned income, after allowances and deductions are applied.

Outstanding Common Shares

Refers to the total number of shares of a corporation that are currently owned by all its shareholders, including share blocks held by institutional investors and restricted shares.