Which Three of the Following Statements About Using the Accounting

question 29

Multiple Choice

Which three of the following statements about using the accounting rate of return are true?

• A) Managers' performances are often judged using ARR.
• B) Many managers have familiarity with it
• C) It gives the most accurate predictions.
• D) It is easy to understand

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Definitions:

Random Phenomenon

A random phenomenon is a natural or physical event that has an unpredictable outcome, with individual occurrences varying in a non-deterministic manner.

Probability

A numeric evaluation of the chance that an event will happen, specified as a number from 0 to 1.

Law of Large Numbers

A principle that states that as a sample size grows, its mean will get closer to the average of the whole population.

Probability Assignment Rule

A principle used to assign probabilities to outcomes of a random experiment, ensuring the probabilities are non-negative and sum to one.