If an Investor Wants a Higher Level of Return on an Investment,he

question 80

Multiple Choice

If an investor wants a higher level of return on an investment,he or she should expect __________. ​

• A)a higher risk exposure
• B)a lower market risk exposure
• C)a lower tax liability
• D)a highly volatile security

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Definitions:

Leveraged Firm

A company that uses a high level of debt to finance its operations.

Call Option

A financial contract that gives the buyer the right, but not the obligation, to buy an asset at a specified price within a specific time.

Bond

A fixed income instrument that represents a loan made by an investor to a borrower, typically corporate or governmental.

American Options

A type of options contract that allows the holder to exercise it at any time before the expiration date.