If One Security Has a Greater Risk Than Another Security

question 44

Multiple Choice

If one security has a greater risk than another security, investors will most likely require a [blank] rate of return for the investment that has the [blank] risk.

• A)lower; greater
• B)higher; lower
• C)higher; greater
• D)lower; lesser

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Definitions:

Ending Retained Earnings

This is the total amount of net income left over for a company after it has paid out dividends to its shareholders, shown at the end of a financial period.

Net Income

The earnings a company has left after subtracting all costs, taxes, and expenses from its overall revenue.

Adjusting Entry

A journal entry made at the end of an accounting period to record revenue or expenses in the period they occur rather than when cash is received or paid.

Unearned Subscription Revenue

Refers to the money received for services or products that have not yet been delivered or performed, often recognized as a liability on the balance sheet.