The Average Accounting Rate of Return

question 29

Multiple Choice

The average accounting rate of return:

• A) Is actually based more on financial values than on accounting values.
• B) Measures net income against the market value of a firm.
• C) Is highly recommended by financial professionals as one of the two best methodologies used in the analysis of independent projects.
• D) Is the primary methodology used in analyzing independent projects.
• E) Is similar to the return on assets ratio.

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Definitions:

Self-Fulfilling Prophecy

A belief or expectation that influences actions in a way that causes the belief to come true.

Meritocracy

A system or society wherein progress, success, and positions are achieved based on abilities and talent rather than on class privilege or wealth.

Flynn Effect

The observed substantial and long-term increase in both fluid and crystallized intelligence test scores measured in many parts of the world over the 20th century.

Generational Impact

The long-term effects and influences that one generation has on the future generations and societal structures.