The "Value Added" for an Individual Firm Can Be Calculated

question 69

Multiple Choice

The "value added" for an individual firm can be calculated by

• A)subtracting the income that goes to the factors of production used by the firm from the firm's revenue.
• B)adding up the income received by the factors of production used by the firm.
• C)calculating the profit generated by the firm.
• D)adding the cost of the intermediate goods used by the firm.
• E)calculating the revenue generated by the firm.

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Definitions:

Single Factor Model

A financial model that describes an asset's returns as dependent on a single market index or factor.

Fama-French Three Factor Model

The Fama-French Three Factor Model expands on the Capital Asset Pricing Model by incorporating three factors: market risk, size risk, and value risk, to explain stock returns.

Risk Premiums

The extra return expected by investors for holding a risky asset compared to a risk-free asset, as compensation for the additional risk.

Expected Return

The anticipated profit or loss from an investment, taking into account the potential outcomes and their probabilities.