The Risk/return Trade-Off Investors Assume Means

question 104

Multiple Choice

The risk/return trade-off investors assume means

• A) the less you risk, the more you stand to gain.
• B) the same as diversification of your portfolio.
• C) you will assume added risk, if you believe you can get a greater return.
• D) the goal is to never risk liquidity; your investments should always be liquid and of short duration.

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Definitions:

Liquidation Expenses

Costs associated with the liquidation process, including legal, accounting, and selling expenses necessary to convert assets into cash.

Noncash Assets

Assets that are not in the form of cash or not easily convertible to cash, often including property, plant, and equipment.

Forthcoming Contribution

Expected or promised financial donations or investments that are pledged to be given at a future date.

Cash Account

A type of account where all transactions involve the immediate payment of cash.