The Average Accounting Return (AAR)is Fairly Easy to Calculate and Makes

question 13

Essay

The average accounting return (AAR)is fairly easy to calculate and makes use of information readily prepared by the accounting conventions.Why is the AAR method for evaluating investments flawed?

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Definitions:

Guidelines

Standard rules or instructions set forth for conducting processes or making decisions.

Null Hypothesis

An assertion in statistical analysis that proposes no significant difference or effect exists between certain characteristics or groups.

One-Sample Z Test

Used to compare a sample mean to a population mean.

One-Sample Z-Test

A statistical test used to determine if the mean of a single sample is significantly different from a known or hypothesized population mean.