rate of return
rate of exchange
rate of intrinsic stock
rate of extrinsic stock
Answer is Right!
Answer is Wrong!
The correct answer is: A. rate of return.
An investor’s attitude towards risk determines the rate of return they expect from an investment. Investors who are willing to take on more risk expect a higher rate of return, while investors who are more risk-averse expect a lower rate of return.
The rate of exchange is the price of one currency in terms of another. The rate of intrinsic stock is the value of a stock based on its underlying assets and earnings potential. The rate of extrinsic stock is the value of a stock based on factors such as investor sentiment and market conditions.
Here is a more detailed explanation of each option:
- Option A: The rate of return is the amount of money an investor makes on an investment, expressed as a percentage. It is calculated by dividing the total profit or loss by the initial investment. The rate of return is an important factor in determining an investor’s risk tolerance. Investors who are willing to take on more risk expect a higher rate of return, while investors who are more risk-averse expect a lower rate of return.
- Option B: The rate of exchange is the price of one currency in terms of another. It is determined by supply and demand in the foreign exchange market. The rate of exchange can fluctuate significantly, which can make it difficult for businesses and investors to plan for the future.
- Option C: The rate of intrinsic stock is the value of a stock based on its underlying assets and earnings potential. It is calculated by taking the sum of the company’s assets and subtracting its liabilities. The rate of intrinsic stock is a useful tool for investors who want to make long-term investments in companies with strong fundamentals.
- Option D: The rate of extrinsic stock is the value of a stock based on factors such as investor sentiment and market conditions. It is often referred to as the “market price” of a stock. The rate of extrinsic stock can be volatile, and it is not always a good indicator of the true value of a company.