Long-Term Investments ________

question 106

Multiple Choice

Long-term investments ________.

• A) include all trading debt investments and held-to-maturity debt investments
• B) are investments in debt and equity securities that are readily marketable and that the investor intends to sell in one year or less
• C) include debt and equity securities that the investor expects to hold longer than one year or debt or equity securities that are not readily marketable
• D) are investments in debt securities or equity securities in which the investor holds less than 20 percent of the voting stock and that the investor plans to sell in the very near future

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Definitions:

Stable Equilibrium

A state in which a system, once disturbed, returns to its original condition because the equilibrium is stable.

Expected and Required Returns

The returns that investors anticipate or demand from an investment considering its risk, often guiding investment decisions.

SML

Stands for Security Market Line; it represents the relationship between the expected return of an investment and its risk in the capital asset pricing model (CAPM).

Beta of the Portfolio

An assessment of a portfolio's volatility or inherent risk, relative to the overall market.