The basic trade-off in the investment process is between understanding the natur
ID: 2823880 • Letter: T
Question
The basic trade-off in the investment process is
between understanding the nature of a particular investment and having the opportunity to purchase it.
between the anticipated rate of return for a given investment instrument and its degree of risk.
None of the above.
between high returns available on single instruments and the diversification of instruments into a portfolio.
between the desired level of investment and possessing the resources necessary to carry it out.
a.between understanding the nature of a particular investment and having the opportunity to purchase it.
b.between the anticipated rate of return for a given investment instrument and its degree of risk.
c.None of the above.
d.between high returns available on single instruments and the diversification of instruments into a portfolio.
e.between the desired level of investment and possessing the resources necessary to carry it out.
Explanation / Answer
The basic trade-off in the investment process is between the anticipated rate of return for the given investment instrument and its degree of risk
The answer (b) is correct
The immediate determinants of the investment are these two one is expected rate of return and the second one is real interest rate
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