An Investment with a Large Spread Between Possible Payoffs Will

question 57

Multiple Choice

An investment with a large spread between possible payoffs will generally have:

• A) a low expected return.
• B) a high standard deviation.
• C) a low value at risk.
• D) both a low expected return and a low value at risk.

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Definitions:

Compounded Quarterly

A method of calculating interest where the interest is added to the principal amount after every quarter, leading to interest earning interest in subsequent periods.

Future Value

Future value is the value of a current asset or amount of money at a specified future date, based on an expected rate of growth or return.

Annually Deposits

Regularly scheduled payments made into an account or investment every year.

Initial Deposit

The first sum of money placed in an account to begin banking activities or to open a new account.