When Building a Portfolio, What Are the Two Basic Components

question 43

Multiple Choice

When building a portfolio, what are the two basic components of an investor's investment decision?

• A) Risk and return
• B) Buying and selling
• C) Cash flows and capital gains
• D) Asset allocation and security selection

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Definitions:

Adjusting Entry

An accounting entry made in the books at the end of an accounting period to allocate income and expenditure to the correct period.

Accrued Revenue

Revenue that has been earned through sales or services provided but not yet received by the company.

Adjusting Entry

A journal entry made at the end of an accounting period to record unrecorded income or expenses to ensure that the financial statements comply with the accrual basis of accounting.

Straight-Line Depreciation

A method of allocating the cost of an asset evenly over its useful life.