Which of the Following Investments Typically Has the Largest Potential

question 136

Multiple Choice

Which of the following investments typically has the largest potential investment return?

• A) Government bonds
• B) Cash
• C) Cash equivalents
• D) Certificates of deposit
• E) Stocks

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Definitions:

Weighted Average Cost of Capital

A calculation of a company's cost of capital in which each category of capital is proportionately weighted, used to evaluate the cost of funding projects.

Bond Issue

The process by which a company or government raises funds by selling bonds to investors, which then are obliged to pay back with interest.

Cost of Equity

The return a company theoretically pays to its equity investors, i.e., shareholders, to compensate for the risk they undertake by investing their capital.

Annual Dividend

The total dividend payment a company makes to its shareholders in a single year.