The statement is True . When computing the present value, the interest rate will vary depending on the amount of risk. Riskier investments, such as FDIC-insured bank deposits, command higher interest rates.
A high-risk investment is, therefore, one wherein the probabilities of underperformance, or of a few or all the investments being lost, are higher than average. Those investment opportunities often offer traders the capability for large returns in exchange for accepting the related stage of hazard.
High-risk investments encompass foreign exchange, REITs, and initial public offerings (IPOs). There are different types of excessive-chance investments inclusive of assignment capital investments and making an investment in the cryptocurrency market.
Broadly speaking, there are main categories of hazards: systematic and unsystematic. Systematic hazard is the market uncertainty of funding, which means that it represents external factors that affect all (or many) companies in an industry or group.
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Question: When computing the present value, the interest rate will vary depending on the amount of risk. Riskier investments, such as FDIC−insured bank deposits, command higher interest rates.
True
False
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