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samualson samualson
wrote...
Posts: 2459
6 years ago
An investor is considering two equally risky investments. Investment A is expected to return $1,000 per year for the next 5 years. Investment B is expected to return $6,000 at the end of 5 years. Which of the following statements is MOST correct if both investments A and B have the same cost?
A) A risk averse investor will select investment B because it is expected to provide the most cash ($6,000 > $5,000).
B) A risk averse investor will select investment A because it provides cash earlier than investment B.
C) The investor will select investment A only if the cost is less than $1,000.
D) The investor may select investment A or investment B depending on the opportunity cost of money.
Textbook 
Foundations of Finance

Foundations of Finance


Edition: 9th
Authors:
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wrote...
6 years ago
 D
 
samualson Author
wrote...
6 years ago
Brilliant
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