chapter 8 Question 1 2 - Question 1 Risk is the possibility...

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Question 1 Risk is the possibility of incurring future financial losses because of one’s investment decisions. Return on invested capital is a measure of how much profit a company generates for each dollar invested in its business. The relationship between risk and return can be analyzed as buying a brand new vehicle from a car dealership. When you buy a brand new vehicle and pay $30,000 for the vehicle once you drive the vehicle off the car lot the vehicle has already depreciated in value. The value you would receive if you returned the vehicle would have dropped tremendously from the original price you paid for the vehicle. Some expectations in regard to high risk investments are you are taking a risk of losing a lot of money. An example of a high risk investment is the stock market. The stock market is constantly changing on a daily basis. On any giving day a company investment can be high, and then on the next day the company investment is low. Some expectations in regard to low risk investments are you can save money over
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This note was uploaded on 10/21/2011 for the course INTRO TO B BBA 2010 taught by Professor Profjones during the Spring '11 term at Columbia Southern University, Orange Beach.

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