Your friend Ricky took a finance class and learned about the risk-return trade-off. Wanting a high return, Ricky
invested in a risky, start-up technology company. A year later the company went bankrupt and Ricky lost his
entire investment.
Ricky is furious with his finance professor for misleading him, claiming he was taught that
higher return goes with higher risk. Explain how Ricky misinterpreted the risk-return trade-off.
The risk-return trade-off deals with expected returns, not actual returns. For risk averse investors, higher expected
returns are required before they will take on higher risks. However, higher expected returns do not always materialize.
Risky projects sometimes result in lower actual returns. This is what makes them risky.
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Jenning Co adjusts its books each month but closes its books at the end of the year. The trial balance at July 31 before adjustments is as follows: Debit Credit Cash $12,920 Accounts Receivable 9,620 Supplies 1,400 Prepaid Insurance 3,120 Equipment 26,000 Accumulated Depreciation—Equipment $10,400 Unearned Service Revenue 6,500 Capital Stock 7,190 Retained Earnings 23,500 Dividends 1,560
Service Revenue 16,510 Wages and Salaries Expense 7,800 Utilities Expense 380 Rent Expense 1,300 $64,100 $64,100 Refer to the trial balance of Jenning Co On July 1, Tracy paid four months in advance for insurance. Which of the following is included in the adjusting entry at July 31? a. A debit to Prepaid Insurance for $780 b. A credit to Prepaid Insurance for $2,340 c. A debit to Prepaid Insurance for $2,340 d. A credit to Prepaid Insurance for $780
Evaluating capital investment proposals prior to making a decision falls under which stage of the management process?
A) Planning B) Performing C) Evaluating D) Communicating
Which of the following are tools used by hackers and Internet criminals to disrupt individual computers and entire company systems?
A) encryption and authentication B) worms and viruses C) sniffers and webinars D) firewalls and decoders E) passwords and private exchanges
Virtual corporations are also called
A. anti-organizations. B. virtual network. C. modular network. D. modular corporation. E. corporate network.