Question

Question 7(Multiple Choice Worth 5 points)
(04.02 MC)

With a constant interest rate, which of the following describes the relationship between the term of the investment and the rate of return?

The shorter the term of investment, the lower the rate of return
The longer the term of investment, the lower the rate of return
The longer the term of investment, the higher the rate of return
The shorter the term of investment, the higher the rate of return

Answer 1

The correct option is C). The longer the term of investment, the higher the rate of return.

What is long-term and short term investment?

Long term investments are those assets in which an individual or a company tends to invest for a period of more than three years such as stocks, real estate etc.

Short-term investments are investments that can be converted into cash or can be sold within a short period of time of one -three years such as short-term bonds, Treasury bills etc.

Long term investment requires high rate of return because are often considered less safe than other assets.

Learn more about the long term investment here:-

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