The Profitability Index Is the Ratio of the

question 23

Multiple Choice

The profitability index is the ratio of the

• A)future value of cash flows to investment.
• B)net present value of cash flows to investment.
• C)net present value of cash flows to IRR.
• D)present value of cash flows to IRR.

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Definitions:

Short Transactions

Financial activities where securities are borrowed and sold with the expectation to buy them back at a lower price for a profit, betting on declining market prices.

Street Name

A practice where securities are held in the brokerage firm's name on behalf of a client, facilitating easier trade execution and maintenance.

Commercial Banks

Financial institutions that accept deposits, offer various loans, and provide other financial services to the public.

SEC Investigation

An inquiry conducted by the U.S. Securities and Exchange Commission into potential violations of securities laws or regulations.