Which of the Following Investments Has the Highest Risk

question 45

Multiple Choice

Which of the following investments has the highest risk?

• A)preferred stock
• B)common stock
• C)corporate bonds
• D)options
• E)real estate

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Definitions:

Net Income

The total revenue minus expenses, taxes, and costs, representing the profit of a company over a specific time period.

Direct Method

The direct method in accounting refers to a way of reporting cash flows from operating activities by directly listing major classes of gross cash receipts and payments.

Indirect Method

A technique used in cash flow statement preparation where net income is adjusted for non-cash transactions and changes in working capital to arrive at operating cash flow.

Financing Activity

Transactions and events where cash is raised or repaid to investors, such as issuing stock, borrowing money, or paying dividends.