Which is the better investment option?

Q: Differentiate between unacceptable investment alternatives and potentially acceptable ones?

A: An unacceptable investment refers to a financial asset or opportunity that carries significant risks…

Q: Why future value is important to calculate?

A: Future value is the value of what a certain asset/cash/instrument will be worth at a future…

Q: Which is better from the investor's perspective

A: The Answer

Q: Is the project viable or not? Suggest reasons

A: The viability of a project is examined in a feasibility study to ascertain the likelihood of…

Q: How do an investment's required rate of return vary with perceived risk? Explain with an example?

A: Required rate of return refers to the rate which the investors expects from their investments. This…

Q: Are there sources of value in an investment? what they are? and give an example for both?

A: Yes, there are various sources of value in an investment. An investment is a stock or a bond. People…

Q: How does the Broader Diversification Reduce Risk?

A: Portfolio is a pool of different investments/assets. Investors can categorize the risks in two…

Q: For the ORI to be truly optimal, it must maximize present worth over the planning horizon. True or…

A: In this question, we are required to determine whether the statement is true or false.

Q: Define the term Risk-free real return?

A: Risk-free real return is a hypothetical number that mirrors the foreseen return on a venture that…

Q: What are the risks of investing in an ESOP?

A: ESOP stands for Employee Stock Ownership Plan. It is a plan that gives an ownership interest in the…

Q: Is a method of screening out in certain situations an unacceptable investment alternative?

A: Capital budgeting is the technique that is used in business to determine the best investment…

Q: What are the benefits and corresponding risks of Financial Investment?

A: Financial Investments are investments that are made with the expectation to receive future financial…

Q: What is the initial cost of setting up the "stop-loss"  strategy?

A: The Stop-loss strategy is very useful which helps the investors to protect in the market, as the…

Q: What is investment decision making process ? And example

A: An investment decision refers to how a company's finances are to be invested in various assets in…

Q: What is the y risk-free investment?

A: Risk-free rate of return is the rate of return that an investor expects from an investment in any…

Q: What is future value, FV?

A: Future Value: The future value is the value of the present amount compounded at an interest rate…

Q: Does the IRR measure ignore the scale of investment?

A: The internal rate of return (IRR) is a capital budgeting metric used to gauge the benefit of…

Q: How behavorial bias affect investment behavior?

A: Behavioral bias is the belief by the investors that unknowingly affects the investors investment…

Q: 3. What are the different investment strategies available to managers?

A: The various investment strategies available to managers is as follows: Top-down investing: Top-down…

Q: What is opportunity cost rate?

A: The opportunity cost is the cost of the option or alternative missed due to the acceptance of the…

Q: Explain the investment pool?

A: Investment Pool: Investment Pool is the joint funds that is planned financial arrangements for a…

Q: How is it possible to achieve a higher rate of return without significantlyincreasing risk?

A: As we all learnes till now that higher the risk provides higher return and if we want the high…

Q: What are your

A: Alternative finance refers to financial channels, processes, and instruments that have emerged…

Q: What is the potentially acceptable investment alternative?

A: An alternative investment is a financial asset that doesn't can be categorized as one of the…

Q: Which are the benefits of diversification?

A: The question is based on the concept of diversification. Diversification is a technique to spread…

Q: Compare the mutually exclusive alternatives based on the rate of return?

A: Mutually exclusive projects are the projects out of which one best project is selected due to lack…

Q: What is the fair value option?

A: Fair value: Fair value is the price at which, both seller and buyer agree to exchange the asset. So,…

Q: When considering several possible investments, why are rates of return preferable than monetary…

A: The return, often called a financial return, is the sum of money wasted or earned on an investment…

Q: Which project has no rate of return?

A: Answer: IRR is a measure in capital budgeting used to measure the value of the predicted…

Classification Of Risk

Risk means when there could be a possibility that the returns expected from a particular project or investment may or may not match the investor's expectations. In other words, the uncertainty of an income arising from a source that would either be lower than expected or result in losses in risk exposure of the project. The higher the risk involved, the higher is the return expected by the investor as the investor is exposed to a high level of risk. There are various methods by which different types of risk can be assessed and avoided or mitigated.