Why Do Investors Require a Higher Expected Rate of Return

question 28

Multiple Choice

Why do investors require a higher expected rate of return on common stock than on bonds?

• A)Common stock is a riskier investment than bonds.
• B)Common stock is a lower risk investment than bonds.
• C)Common stock has a shorter maturity than bonds.
• D)Dividends are considered taxable income, but interest is not.

Identify and explain key sociological concepts through real-life applications.

Analyze the impact of significant personal experiences on individual identity and societal roles.

Distinguish between the concepts of equality, inclusion, equity, and tokenism in social contexts.

Understand the concept of individual differences in cognitive abilities and styles.

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Definitions:

Sarbanes-Oxley Act

A legislation passed in the United States in 2002 designed to safeguard investors through enhancing the precision and trustworthiness of corporate information sharing.

Whistle-Blowers

Individuals who expose illicit activities, unethical behavior, or legal violations within their organization to the public or authorities.

Provision

Provision is the act of supplying or making available goods, services, or funds needed for a specific purpose, or the items supplied themselves.

Governing Boards

Bodies that oversee the strategic direction, accountability, and major policies of an organization, often comprising members elected or appointed to serve.