The Term Investment Horizon Refers to ________

question 38

Multiple Choice

The term investment horizon refers to ________.

• A) the proportion of short-term to long-term investments held in an investor's portfolio
• B) the planned liquidation date of an investment
• C) the average maturity date of investments held in a portfolio
• D) the maturity date of the longest investment in the portfolio

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Definitions:

Depreciation

The accounting method of allocating the cost of a tangible asset over its useful life, reflecting wear and tear or obsolescence.

Time Value

A financial principle acknowledging that receiving money now is more advantageous than receiving the same amount in the future due to its earning potential.

Payback Method

A capital budgeting technique that calculates the time required to recoup the initial investment through cash inflows.

Accounting Rate

Often refers to the accounting rate of return (ARR), a financial ratio used to measure the profitability of an investment, calculated by dividing the average annual profit by the initial investment cost.