One Perspective on Risk Asserts That the Longer an Investment

question 32

Multiple Choice

One perspective on risk asserts that the longer an investment is held,the

• A)greater its risk because there is less chance of earning the long-run average return.
• B)less its risk because there is a greater chance of earning the long-run average return.
• C)greater the risk because the long-run average return will be lower.
• D)less the risk because the long-run average return will be higher.

---

Definitions:

CCA Rate

Capital Cost Allowance rate; a method of depreciation used for tax purposes in Canada, allowing a business to deduct the cost of certain assets.

Required Rate of Return

The minimum percentage return an investor expects to achieve by investing in a specific asset or project.

Net Working Capital

The gap between a firm's current assets and its current liabilities, showcasing the business's liquidity and its ability to operate efficiently.

Project Analysis

The process of evaluating the financial viability, stability, and profitability of a project before committing resources.