A Legal Principle That Ensures That Previous Judicial Decisions Are

question 22

Multiple Choice

A legal principle that ensures that previous judicial decisions are authoritatively considered and incorporated into future decisions is known as:

• A)Precedent.
• B)Statutory law.
• C)Procedure.
• D)Case law.

Recognize the importance of considering tax implications in investment decisions.

Understand the impact of tax policies on investment returns.

Recognize the investment horizon preferences of various financial institutions.

Identify the typical asset allocation of general pension funds.

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Definitions:

Two-factor Model

A financial model that considers two sources of risk in its valuation or pricing, typically used in evaluating or predicting financial returns.

Market Risk

The risk of losses due to factors that affect an entire market or asset class, also known as systematic risk, which cannot be eliminated through diversification.

Interest Rate Risk

The potential for investment losses resulting from changes in interest rates.

Capital Asset Pricing Model

A model that describes the relationship between systematic risk and expected return for assets, particularly stocks; it is used to determine a theoretically appropriate required rate of return of an asset.