The More Certain the Return from an Asset, the Less

question 49

True/False

The more certain the return from an asset, the less variability and therefore the less risk.

---

Definitions:

Stock Price

The current market price of a company's shares, as bought and sold by investors on stock exchanges.

Cost of Capital

The mandatory rate of gain a business must realize on its investment schemes to maintain its market identity and attract funds.

Return on Equity

A measure of financial performance calculated by dividing net income by shareholders' equity, indicating how efficiently equity is used to generate profits.

Capital Employed

The total amount of capital used for the acquisition of profits by a firm or project, typically represented by the value of all assets minus current liabilities.