Assume that an investor is offered a choice of a risk-free government bond that is expected to return 3.5% or a high-risk corporate stock. According to one of the principles of finance, what would induce the investor to purchase the corporate stock

Question

09-07-2021
Business

contestada

Assume that an investor is offered a choice of a risk-free government bond that is expected to return 3.5% or a high-risk corporate stock. According to one of the principles of finance, what would induce the investor to purchase the corporate stock

Respuesta :

Otras preguntas

Which expressions are monomials? – 4 + 6 b + 2b + 2 (x – 2x)2 (rs)/(t) 36x2yz3 ax x(1)/(3)

TO BILL CUSTOMERS FOR WATER USAGE ONE CITY CONVERTS THE NUMBER OF GALLONS USED INTO UNITS THIS RELATIONSHIP IS REPRESENTED BY THE EQUATION G=748 U WHERE G IS TH

Do you believe kinship relationships still have significance in contemporary America?

Juliana is planning a vegetable garden. She has 27 tomato plants, 45 bean plants, and 54 carrot plants. She wants each row of her garden to have the same num

Convert the radian measure to degree measure. Use the value of π found on a calculator, and round answers to two decimal places. eleven pi divided by four

Miles rode his mountain bike over some trails in a state park. He biked a total of 5 1/2 miles. How many yards did miles bike? There are 1,760 yards in a mile.

What was the major crop of the southern states

Explain how adaptive traits ]are important in our constantly-changing the world.

Explain how to write a function rule from table below. Then write function rule. (X) 2, 4, 6 (Y) 1, 0, -1

HELP GEOMETRY question,!!!

amcool amcool · Answer 1 · 2021-07-11T03:07:40+02:00

Answer:

What would induce the investor to purchase the corporate stock is a rate of return that is significantly higher than 3.5% of a risk-free government bond.

Explanation:

A high-risk investment can be described as an investment in which the level of risk is high and the probability of losing a significant portion or all of the money invested is high. As a result, underperformance is more likely in high-risk Investments than in other types of investments.

According to one of the principles of finance, the only incentive for inventors to invest in high-risk investment is the rate of return that is significantly higher than the rate of return of risk-free investments.

Therefore, what would induce the investor to purchase the corporate stock is a rate of return that is significantly higher than 3.5% of a risk-free government bond.