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3. Michael has an investment with the following annual returns for four years: Year 1: 12% Year 2: -5% Year 3: 8% Year 4.18% What
3. Michael has an investment with the following annual returns for four years: Year 1: 12% Year 2: -5% Year 3: 8% Year 4.18% What is the arithmetic mean (AM) and what is the geometric mean (GM)? a. AM - 8.25%, GM - 7.91%. b. AM - 8.25%, GM - 10.64%. 6. AM = 10.75%, GM - 7.91%. d. AM - 10.75%, GM - 10.64%. 5. The type of risk which CANNOT be eliminated through diversification is: a. Unsystematic Risk. b. Company Specific Risk. 6. Systematic Risk. d. Business Risk. 6. Municipal bonds that are backed by the income from specific projects are known as a. Income bonds. b. Revenue bonds. 6. General obligation bonds. d. Debenture bonds. 7. Tom Taylor wants to accumulate wealth, but he has told his financial planner that he is risk-averse. What should the financial planner advise Tom to do regarding his current asset investment choices, considering his risk tolerance and his goal of accumulating wealth? a. Invest in products which bring the highest return regardless of risk. b. Invest in products producing high income because fixed income products are generally safe. c. Put Tom's assets in 100% cash equivalents because he is risk-averse. d. Determine Tom's true risk tolerance
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