Question: 1. Assume that the owner investment transaction on December 1 was $40,000 cash instead of $56,000 and that Hamilton Electric obtained another $16,000 in cash by borrowing it from a bank. Explain the effect of this change on total assets, total liabilities, and total equity.
2. All business decisions involve aspects of risk and return.
Required: Identify both the risk and the return in each of the following activities:
1. Investing $1,000 in a 4% savings account.
2. Placing a $1,000 bet on your favorite sports team.
3. Investing $10,000 in Yahoo! stock.
4. Taking out a $10,000 college loan to earn an accounting degree.