To be attractive the new investment project must have an expected return ________ that of a comparable investment opportunity.
A) bigger than
B) smaller than
C) different than
D) equal to

Question

Quizplus · Accepted Answer

To be attractive, the new investment project should have an expected return that is equal to that of a comparable investment opportunity. If the expected return is smaller than that of a comparable investment opportunity, then investors would choose the latter, leading to the failure of the new project. If the expected return is bigger than that of a comparable investment opportunity, then the project may be deemed too risky, leading to the same result. Different returns make it difficult to compare and evaluate investment opportunities, and investors prefer certainty and predictability.

To Be Attractive the New Investment Project Must Have an Expected