Question

Investors want a return that satisfies the following expectations: Group of answer choices A return for delaying consumption An additional return for accepting dividends rather than capital gains Both A and B. An additional return for taking on risk

Answer 1

Investors expect a return on bonds and stocks, which includes compensation for delaying consumption, adjustments for inflation, and a risk premium reflecting borrower risk. Stock investors might additionally earn through dividends or capital gains.

Step-by-step explanation:

When an investor purchases a bond or stocks, they are essentially providing financial capital expecting to earn a rate of return. This expected return is multifaceted, incorporating several key components: compensation for delaying consumption, an adjustment for inflation, and a risk premium based on the borrower's risk profile. Additionally, when investing in stocks, dividends and capital gains come into play; shareholders might receive regular dividends or could earn returns through appreciation of the stock's value, selling it for more than the purchase price.

Answer 2

✓ An additional return for taking on risk

✓A return for delaying consumption

Step-by-step explanation:

Return on investment can be regarded as as the net profit from an investment per the cost. When there is highreturn on an investment then the profit is favourable with respect to the cost of the investment. ROI allows investors to know the effeciency of their various investments. It should be noted that an Investors want a return that satisfies the following expectations:

✓ An additional return for taking on risk

✓A return for delaying consumption