Investors Demand a Higher Return for Investments That Have Larger

question 9

Multiple Choice

Investors demand a higher return for investments that have larger fluctuations in values because:

• A)they do not like risk.
• B)they are risk seeking.
• C)they invest for the long term.
• D)they are more expensive.
• E)they have higher transaction costs.

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Definitions:

Stocks

Shares in the ownership of a company, representing a claim on the company’s assets and earnings.

Minority Interest

An ownership stake in a company that is less than 50 percent, indicating that the investor does not have control over business operations.

Outstanding Stock

Shares of a company's stock that have been issued and are currently held by investors, including public shareholders and company insiders.

Parent

In financial terms, this refers to a parent company that owns enough voting stock in another company to control its operations and policies.