Kyle Puts a Greater Proportion of His Portfolio into Government

question 3

Multiple Choice

Kyle puts a greater proportion of his portfolio into government bonds.Kyle's action

• A)increases both risk and the average rate of return.
• B)decreases both risk and the average rate of return.
• C)increases risk,but decreases the average rate of return.
• D)decreases risk,but increases the average rate of return.

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Definitions:

Cash Flows

The sum total of financial transactions directed into and out of a corporation, markedly influencing its cash flow.

Depreciable Asset

An asset that loses value over time and for which depreciation can be applied for tax and accounting purposes.

Capital Gain

The profit earned from the sale of an asset that has increased in value over its purchase price.

Selling Price

The price at which a product or service is sold to customers, which can cover the cost of production and include a profit margin.