Making Assumptions Can Have Both Positive and Negative Implications

question 12

True/False

Making assumptions can have both positive and negative implications.

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Definitions:

Averaging

A strategy of reducing market risk in investment portfolios by consistently investing a fixed dollar amount over a period, regardless of the asset's price.

Securities

Assets signifying either an equity stake in a company listed on the stock market, a debt investment in a government entity or a business, or entitlement to ownership through an option.

Capital Structure

The mix of different forms of capital financing used by a company, including debt, equity, and other financial instruments.

Debt

Amount of money borrowed by one party from another, used by many corporations to grow beyond what they could from earnings alone.