Final answer:
The recommended approach to compare corporate opportunities is to consider various aspects, including the expected rate of return, risk, and actual rate of return, and not solely focus on one aspect like standard deviations or expected returns. This comprehensive analysis helps balance personal risk tolerance with the investment's potential outcomes.
Step-by-step explanation:
When comparing corporate opportunities, the recommended approach is to C) Compare various aspects beyond expected returns. This involves analyzing different factors such as the expected rate of return, the level of risk, and the actual rate of return. It's important to remember that each investment will have a different level of risk associated with it, and the tradeoff between return and risk must be balanced according to personal preferences and different time frames considered.
For instance, evaluating potential risks should not be based solely on standard deviations because this quantitative measure does not always capture all the risks involved in an investment, like default risk or interest rate risk. Similarly, considering only the expected returns ignores the potential volatility and actual outcomes that investments may experience. Therefore, it is essential to conduct a comprehensive assessment that includes examining both the expected and actual rates of return along with the types of risk involved.
Ultimately, an investor might prefer a low-risk investment with returns closely aligned to the expected rate of return or may choose to accept a higher risk for the chance of higher returns. The choice will be influenced by their individual risk tolerance, investment goals, and the time horizon they are considering for their investment.