All of the Following Are Factors Needed When Calculating the Future

question 42

Multiple Choice

All of the following are factors needed when calculating the future value of money except

• A)the principal amount
• B)the number of periods
• C)the maturity value
• D)the interest rate

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Definitions:

Reward To Risk Ratio

A measure that evaluates the anticipated gains from an investment against the level of risk assumed to achieve these gains.

Security Market Line

A graphical representation of the expected return of all risky marketable securities as a function of their beta, or systemic risk, according to the capital asset pricing model.

Diversifiable Risk

Relates to the risk that can be reduced or eliminated from a portfolio by holding a variety of investments.

Non-Diversifiable Risk

A type of investment risk that cannot be eliminated through diversification, arising from factors that affect all companies.