Questions from General Investment

Q: Explain what is meant by the return on an investment. Differentiate

Explain what is meant by the return on an investment. Differentiate between the two components of return—income and capital gains (or losses).

Q: Define and briefly discuss each of the following sources of risk.

Define and briefly discuss each of the following sources of risk. a. Business risk b. Financial risk c. Purchasing power risk d. Interest rate risk e. Liquidity risky f. Tax risk g. Event risk h....

Q: Paul Chang and Deborah Barry, friends who work for a large

Paul Chang and Deborah Barry, friends who work for a large software company, decided to leave the relative security of their employer and join the staff of Online Speed, Inc., a 2-year-old company wor...

Q: Briefly describe standard deviation as a measure of risk or variability.

Briefly describe standard deviation as a measure of risk or variability.

Q: Grace Hesketh is the owner of an extremely successful dress boutique in

Grace Hesketh is the owner of an extremely successful dress boutique in downtown Chicago. Although high fashion is Grace’s first love, she’s also interested in investments, particularly bonds and othe...

Q: Differentiate among the three basic risk preferences: risk-indifferent,

Differentiate among the three basic risk preferences: risk-indifferent, risk-averse, and risk-seeking. Which of these attitudes toward risk best describes most investors?

Q: Describe the steps involved in the investment decision process. Be sure

Describe the steps involved in the investment decision process. Be sure to mention how returns and risks can be evaluated together to determine acceptable investments.

Q: Can the market really have a measurable effect on the price behavior

Can the market really have a measurable effect on the price behavior of individual securities? Explain.

Q: What role do historical performance data play in estimating an investment’s expected

What role do historical performance data play in estimating an investment’s expected return? Discuss the key factors affecting investment returns—internal characteristics and external forces.

Q: What is a satisfactory investment? When the present value of benefits

What is a satisfactory investment? When the present value of benefits exceeds the cost of an investment, what can you conclude about the rate of return earned by the investor relative to the discount...