You Must Add One of Two Investments to an Already

question 78

Multiple Choice

You must add one of two investments to an already well- diversified portfolio. If you are a risk-averse investor,which one is the better choice?

• A)Security A
• B)Security B
• C)Either security would be acceptable.
• D)cannot be determined with information given

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Definitions:

Investments

Assets or items acquired with the goal of generating income or appreciation over time.

Interest Rate

The proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage of the loan balance.

Non-interest Bearing

A financial term indicating a debt or deposit that does not accrue interest over time, identical in concept to its prior mention but explained with different wording.

Compounded Monthly

A method of calculating interest where the interest earned each month is added to the principal, compounding the amount on which future interest is calculated.