Which of the Following Statements Is Correct

question 83

Multiple Choice

Which of the following statements is correct?

• A) The greater the risk associated with an investment, the lower the return investors expect from it.
• B) When choosing between two investments that have the same level of risk, investors prefer the investment with the higher return.
• C) If two investments have the same expected return, investors prefer the riskiest alternative.
• D) When choosing between two investments that have the same level of risk, investors prefer the investment with the lower return.

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Definitions:

Simple Interest

A method of calculating interest whereby it is applied only to the principal amount, not including any previously earned interest.

Deposit Maturity

The end of a deposit term at which point the deposited funds plus any accrued interest are available to the account holder.

Deposit Date

The specific day on which funds are placed into an account.

Maturity Value

The total amount payable to an investor at the end of a fixed term investment, including the principal and the interest.