Bob Expects to Retire in a Few Years and His

question 57

Multiple Choice

Bob expects to retire in a few years and his primary goal is to avoid major losses in his 401-K account.Which of the following bond characteristics should he be seeking?
I.Long maturities
II.High ratings
III High yields
IV.Short maturities

• A) I and III only.
• B) I, III, and III only
• C) II and IV only
• D) II, III, and IV only.

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Definitions:

Overall WACC

A comprehensive measure of a company's cost of capital, incorporating the weighted costs of its equity and debt financing.

Risk Projects

Investment initiatives or projects that carry a significant degree of uncertainty or risk regarding their outcomes or potential returns.

Capital Sources

Capital sources refer to the origins of the financial resources that businesses use to fund their operations and growth, including debt and equity.

Average-Risk Projects

Investments that present a level of uncertainty and potential returns that are typical or normal compared to other projects within the same industry.