The ____ the Standard Deviation, the ____ the Investment

question 19

Multiple Choice

The ____ the standard deviation, the ____ the investment.

• A) smaller; larger the expected return on
• B) larger; riskier
• C) smaller; riskier
• D) larger; smaller the expected return on

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Definitions:

Collection Time

is the average number of days it takes for a business to convert its receivables into cash, reflecting the efficiency of its credit policies and collections.

Average Daily Float

The average daily float refers to the difference between checks written and checks cleared or deposited, highlighting the average amount of unprocessed checks within a certain timeframe.

Clearing Times

The time taken for the transfer of funds or securities from one party to another to be completed and the transaction to be settled.

Miller-Orr Model

A financial model used for cash management, it helps in determining the optimal level of cash balance and controls the costs associated with cash balances.