Calculate the Cost Advantage Index If the Percentage Cost of Goods

question 25

Multiple Choice

Calculate the cost advantage index if the percentage cost of goods sold by the business is 40% and the average percentage cost of goods sold by its top three competitors are 50%,60%,and 70%,respectively.

• A)20
• B)40
• C)57
• D)67
• E)80

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Definitions:

Markowitz

Refers to Harry Markowitz, an economist who developed modern portfolio theory, emphasizing the importance of diversification and the trade-off between risk and return.

Index Model

In finance, it is a statistical model used to describe the performance of an asset or portfolio relative to a particular benchmark or market index.

Covariance

A measure of how two securities move together, used to assess the degree to which they co-vary.

Assets GM and GE

Refers to the tangible and intangible items owned by General Motors (GM) and General Electric (GE) that are used in their operations to generate revenue.