Which of the Following Investments Would You Expect to Have

question 228

Multiple Choice

Which of the following investments would you expect to have the highest rate of return in the long run?

• A) real estate
• B) owning your own Major League Baseball franchise
• C) an index fund (such as the S&P 500)
• D) art

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Definitions:

Acid-Test Ratio

A liquidity ratio that measures a company's ability to pay off its current liabilities with its most liquid assets, excluding inventory.

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations with its current assets.

Accounts Receivable Turnover

A financial ratio indicating how efficiently a company collects its accounts receivable, calculated as net credit sales divided by average accounts receivable.

Inventory Turnover

A ratio showing how many times a company's inventory is sold and replaced over a period, indicating the efficiency of inventory management and sales performance.