Keeping your funds in liquid assets is riskier than keeping them in liquid assets and therefore investors require a higher expected rate of return on liquid assets.
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Keeping your funds in liquid assets is riskier than keeping them in liquid assets and therefore investors require a higher expected rate of return on liquid assets.
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- When comparing NPV and IRR, which is incorrect? With NPV, the discount rate can be adjusted to take into account increased risk and the uncertainty of cash flows With IRR, cash flows can be adjusted to account for risk NPV can be used to compare investments of various size or magnitude Both NPV and IRR can be used for screening decisionsWhich of the following is TRUE about liquidity? a. All assets should be put in liquid asset so that it is easy to use when necessary b. In most of the cases, the more liquid asset provides the lower return c. Investors should not care about liquidity in order to have a balanced portfolio investment d. Liquidity requirement does not have any impact on the return.and allow a financial intermediary to offer safe liquid liabilities such as deposits while investing the depositors money in riskier illiquid assets. Multiple Choice O Diversification; high equity returns Price risk; collateral Free riders; regulations
- It is important to diversify your investments to maximize your returns and lower your overall risks. O True FalseWhich of the following investment has the lowest risks and lowest returns! EE savings bonds. Money market savings accounts. Real estate. Exchange-traded funds.Hedging is matching the maturities of assets and liabilities to reduce risk. Hedging is matching the maturities of assets and liabilities to reduce risk. is it true or false?
- Based on your understanding of the fAactors that affect the cost of money, Identify which of the following statement is true. a. higher inflation leads to lower interest rates. b. Interest is the price paid to borrow funds. c. Higher risk leads to lower interest rates.What is the best ways or strategies for a company to hedge the funds in order to eliminate the risk or lose profit?1. Which of the following statements are true?a. The value of any investment is based on the cash flows it is expected to generate in the future.b. Investors are not generally risk averse.c. Uncertain cash flows are preferred to certain cash flows.d. All of the above are true.e. None of the above are true. 2. A basic knowledge of finance will help you with your personal investments by helping you understanda. how to accurately predict changes in the short-term interest rates.b. how to determine the optimal dividend policy for each firm.c. how to determine which technology is most likely to be accepted by consumers.d. how to review companies and industries to determine their prospects for future growth and therisk inherent in those companies and industries.e. how to predict the growth in sales for the firm. 3. Which of the following events would make it more likely that a company would choose to call itsoutstanding callable bonds?a.A reduction in market interest rates.b.The company's…
- 4. The time value of money is significant because it allows investors to make better decisions about how to invest their funds. Which factor (s) below is helpful to apply time value of money in financial planning decision making? A. Interest B. Risk and Return C. Inflation D. All of the aboveExchange-traded funds are popular investments that are easy to sell and have the potential to earn significant income for investors. However, they fluctuate wildly in price, increasing the likelihood that an investment fails. This investment features? low risk, low return, and poor liquidity. low risk, high return, and good liquidity. high risk, high return, and poor liquidity. high risk, high return, and good liquidity.what better to suggest in terms of investing, to invest in a low risk outlet such as the money market or to a high risk outlet such as equity?