What Factors Must Be Considered in Choosing Between Investment Alternatives

question 78

Multiple Choice

What factors must be considered in choosing between investment alternatives?

• A)Risk and liquidity
• B)Interest or dividends versus capital gains
• C)Time frame for managing funds and evaluating performance and tax effects
• D)Safety of principal
• E)All of the above

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Definitions:

Contract Rate

The agreed upon interest rate specified in the terms of a contract, often relating to loans or bonds.

Effective Rate

The effective rate, often referred to as the annual equivalent rate, measures the real return on savings or the real cost of a loan, taking into account the effect of compounding interest.

Semiannual Interest

Interest calculated or paid twice a year, often related to bond or loan agreements.

Straight-Line Method

A method of calculating depreciation of an asset where the expense is uniformly spread over its useful life.