What are the two variables that are used to determine where a specific financial instrument will be placed on the risk-return continuum?

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The two variables used to determine where a specific financial instrument will be placed on the risk-return continuum are the size of the financial returns that must be offered to induce investment and the uncertainty about financial returns on investments. These variables determine the trade-off between risk and return, with higher returns being associated with higher levels of uncertainty and risk. Factors such as the prime interest rate, quality of the company, amount of debt and equity, economic growth prospects, and mix of short- and long-term sources of funds may also affect the risk-return profile of a financial instrument, but they are not the primary variables used to determine its position on the continuum.

What Are the Two Variables That Are Used to Determine