Assume That an Investor Is Offered a Choice of a Risk-Free

question 9

Multiple Choice

Assume that an investor is offered a choice of a risk-free government bond that is expected to return 3.5% or a high-risk corporate stock.According to one of the principles of finance,what would induce the investor to purchase the corporate stock?

• A) a return that is substantially lower than 3.5%
• B) cash dividends
• C) a return that is substantially higher than 3.5%
• D) none of the above

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