A General Rule in Choosing Among Alternative Investments Is the Greater

question 9

Multiple Choice

A general rule in choosing among alternative investments is the greater the risk taken,the

• A) lower the potential expected.
• B) lower the profits expected.
• C) greater the return required.
• D) greater the price of the investment.

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Definitions:

Present Value

The present calculation of a future monetary amount or series of cash inflows, using a particular return rate.

Cash Flows

The sum of all money transfers into and from a business, significantly altering its capacity to handle liquid assets.

Annuity

A financial product delivering fixed payments to an individual, typically over a period of time or for life, often used for retirement savings.

Sinking Fund

An arrangement to guarantee that funds are available to pay off a bond’s principal at maturity.