What Are the Two Variables That Are Used to Determine

Multiple Choice

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

A) The prime interest rate and the quality of the company in question
B) The amount of debt and the amount of equity the company has
C) The size of the financial returns that must be offered to induce investment and the uncertainty about financial returns on investments
D) The size of the financial returns that must be offered to induce investment and the economic growth prospects over the next year
E) The mix of short- and long-term sources of funds the firm is using