When Building a Portfolio, What Are the Two Basic Components

question 43

Multiple Choice

When building a portfolio, what are the two basic components of an investor's investment decision?

• A) Risk and return
• B) Buying and selling
• C) Cash flows and capital gains
• D) Asset allocation and security selection

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Definitions:

Raw Materials

The basic, unprocessed or partially processed materials used to produce goods and finished products in manufacturing.

Work in Process Inventory

Goods partially completed in manufacturing but not yet ready for sale, reported as a current asset.

Manufacturing Overhead Applied

The allocation of manufacturing overhead costs to units of product based on a predetermined rate or base.

Overhead Applied

The allocation of indirect costs to produced goods or services based on predetermined rates.