When Two Securities Have the Same Expected Cash Flows, the Value

question 47

Multiple Choice

When two securities have the same expected cash flows, the value of the ____ security will be higher then the value of the ____ security.

• A)high-risk; low-risk
• B)low-risk; high-risk
• C)high-risk; high-risk
• D)low-risk; low-risk
• E)none of the above

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Definitions:

Financial Calculator

A tool used to perform financial functions and calculations, including interest rates, loan payments, investment values, and more.

Compounded Semi-annually

Interest computation technique where the sum earns interest twice annually, compounding the overall growth over time.

Monthly Payment

A fixed payment amount made by a borrower to a lender at agreed upon intervals, commonly used in loan agreements.

Interest

The cost of borrowing money or the income received from lending money, usually expressed as a percentage of the principal.