All of the Investment Appraisal Methods Below Use Cash Flows

question 52

Multiple Choice

All of the investment appraisal methods below use cash flows exclusively except:

• A) internal rate of return.
• B) net present value.
• C) accounting rate of return.
• D) payback.

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Definitions:

Beta

A way of measuring the level of erratic behavior, or systemic threat, in a security or investment group in perspective of the general market.

Expected Return

The average of all possible returns for an investment, weighted by their respective probabilities.

Portfolio Standard Deviation

A measure of the dispersion of returns from a portfolio, indicating the portfolio's risk.

Cyclical Stock

Shares of companies whose earnings and stock price are heavily influenced by the ups and downs of the economy at large.