Identify the risk and the return in each of the following examples. a. Investing $500 in a certificate of deposit at 4.5% interest.b. Placing a $100 bet on an NBA game.c. Investing $10,000 in Microsoft stock.d. Borrowing $20,000 in student loans.
What will be an ideal response?
a. The risk involved is that the investor may need the money in the CD before the CD matures and would have to give up the interest. The return is the 4.5% interest on the $500 invested in the CD.
b. The risk is that the team bet on may not beat the point spread and the bet would be lost. The return would be any winnings based on the odds.
c. The risk is that the value of Microsoft stock could go down. The return would come from increase in the value of the stock.
d. The risk is that the student might not be able to find a job that pays enough to live on and allow for loan payments with interest. The return is that the student would be able to finance an education and earn higher wages.
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International expansion can extend the life cycle of a product that is in its maturity stage in a firm's home country.
Answer the following statement true (T) or false (F)
The issuance price of a bond does not depend on the
a. face value of the bond. b. riskiness of the bond. c. method used to amortize the bond discount or premium. d. effective interest rate.
Transaction exposure
A. cannot be protected against. B. is a currency exchange risk that arises when future payment in a foreign currency is involved. C. is a credit type risk. D. is a currency exchange risk resulting from translating values in foreign currencies to the home-country currency.
Which of the following is not a correct guideline for using humor in presentations?
A) Avoid humor when covering very serious topics. B) Offensive language and singling out one ethnic group are never appropriate. C) "I heard a funny story the other day" is not an effective lead-in to humorous remarks. D) Avoid directing humor at yourself, which hurts your credibility as a speaker. E) Humor is most effective when it comes as a surprise to the audience.