The Payback Rule Is Based on the Idea That an Opportunity

question 101

True/False

The payback rule is based on the idea that an opportunity that pays back its initial investment quickly is a worthwhile opportunity.

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Definitions:

Individual Security

A specific financial instrument, such as a stock or bond, representing an investment in assets or rights to ownership.

Covariance

A statistical measure that indicates the extent to which two variables change together; if the covariance is positive, the variables move together, while a negative covariance means they move inversely.

Securities' Returns

The profit or loss derived from investing in a security, including dividends, interest, and capital gains.

Correlation Coefficient

The correlation coefficient is a statistical measure that calculates the strength of the relationship between the relative movements of two variables.