What Are the Two Variables That Are Used to Determine

question 53

Multiple Choice

What are the two variables that are used to determine where a specific financial instrument will be placed on the risk-return continuum?

• A) The prime interest rate and the quality of the company in question
• B) The amount of debt and the amount of equity the company has
• C) The size of the financial returns that must be offered to induce investment and the uncertainty about financial returns on investments
• D) The size of the financial returns that must be offered to induce investment and the economic growth prospects over the next year
• E) The mix of short- and long-term sources of funds the firm is using