A Compound Prospect

question 71

Multiple Choice

A compound prospect:

• A)is the predicted interest rate for present value calculations.
• B)is the view from a millionaire's vacation compound.
• C)has a risky prospect as one of its outcomes.
• D)pays off over several periods at compound interest.

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Definitions:

Passive Management

Buying a diversified portfolio, often a broad-based market index, without attempting to identify mispriced securities.

Index Fund

A mutual fund holding shares in proportion to their representation in a market index such as the S&P 500.

Investment Club

A group of individuals who pool their money to make investments, often operating under a democratic structure to make decisions.

EMH

The Efficient Market Hypothesis, a theory that suggests all known information is already reflected in stock prices, and therefore, beating the market consistently through stock selection or market timing is unlikely.