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 vs.capital gains
• C)Time frame for managing funds and evaluating performance and tax effects
• D)Safety of principle
• E)All of the above

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Definitions:

CAPM

The Capital Asset Pricing Model, a theory that describes the relationship between systematic risk and expected return for assets, often used in the pricing of risky securities.

Financial Managers

Professionals responsible for managing the financial health of an organization, including planning, organizing, controlling, and monitoring financial resources.

Time-Weighted Returns

An investment performance measure that eliminates the influence of cash flows into or out of the portfolio, focusing solely on the manager's performance.

Geometric Average Return

The average rate of return on an investment that is compounded over multiple periods, considering the compounding effect.