Investment a Has an Expected Return of 15% Per Year,while

question 82

Multiple Choice

Investment A has an expected return of 15% per year,while investment B has an expected return of 12% per year.A rational investor will choose

• A)investment A because of the higher expected return.
• B)investment B because a lower return means lower risk.
• C)investment A if A and B are of equal risk.
• D)investment A only if the standard deviation of returns for A is higher than the standard deviation of returns for B.

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Definitions:

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations with its current assets.

Total Current Assets

The sum of all assets that a company expects to convert into cash, sell, or consume within one year or within the normal operating cycle of the business.

Current Liabilities

Obligations a company is expected to pay within a year, including accounts payable, short-term loans, and other short-term debts.

Common Size Income Statement

An income statement in which each line item is expressed as a percentage of sales, facilitating comparison across companies or periods regardless of size.