Investors Demand a Higher Return for Investments That Have Larger

question 106

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 prefer fluctuations

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Definitions:

P/E Ratios

Price-to-Earnings Ratio, a valuation metric that compares the price of a stock to the company’s earnings per share, indicating how much investors are willing to pay per dollar of earnings.

Company Growth

Refers to the increase in size, revenue, or market share of a company over time.

Ceteris Paribus

A term from Latin that signifies "with all other factors remaining the same," employed in the field of economics to examine the impact of a single variable by keeping the rest unchanged.

Plowback Ratio

The proportion of earnings retained by a company after dividends have been paid out to shareholders.