Generally, the Return on an Equity Investment Is Higher Than

question 43

Multiple Choice

Generally, the return on an equity investment is higher than the return on debt or preferred stock because:

• A)equity's risk is higher.
• B)people are more willing to invest in debt.
• C)the cost of preferred stock is usually between the cost of debt and that of equity.
• D)All of the above

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Definitions:

Standard Deviation

A measure of the dispersion or variation within a set of numerical data, indicating how spread out the values are from the average.

Correlation Coefficients

A measure that determines the degree to which two variables' movements are associated.

Correlation Coefficient

A statistical measure that calculates the strength and direction of a linear relationship between two variables on a scatterplot.

Expected Return

The probable return on an investment, considering all possible outcomes and their probabilities, representing the average of all possible returns.