Question

Why are all approaches such as standard deviation, average return (expected return), beta, constant growth rate, and zero growth rate exercises not sufficient to make a sound investment decision?

A) They lack historical data
B) They don't consider market trends
C) They overlook risk factors
D) They ignore company performance

Answer 1

These approaches are not sufficient to make a sound investment decision because they overlook risk factors.

Step-by-step explanation:

Approaches such as standard deviation, average return (expected return), beta, constant growth rate, and zero growth rate exercises are not sufficient to make a sound investment decision because they overlook risk factors.

These approaches do not consider the potential risks associated with an investment, such as market trends and company performance.

Risk factors are important to consider because they can greatly impact the performance and stability of an investment. By ignoring risk factors, these approaches may not provide an accurate picture of the potential drawbacks and volatility of an investment.