Investors Who Use Accounting Information to Guide Trading in Foreign

question 53

Multiple Choice

Investors who use accounting information to guide trading in foreign securities

• A)should carefully compare expenses, but not revenues to companies in the same industry in the United States.
• B)must adjust the numbers of foreign-based companies' financial statements and thoroughly understand the foreign environment.
• C)must contact the foreign CEO before any investment in stock occurs.
• D)should contact the foreign company's auditors to find out how much dividends will be paid.

---

Definitions:

Capital Allocation Line

A graph line that represents all possible combinations of risk-free and risky assets for an investor.

Mean Standard Deviation Graph

A graphical representation that shows the variability of a dataset around its mean value, often used in statistics.

Expected Return

Expected return is the weighted average of the probable returns of an investment, accounting for all possible scenarios.

Risky Asset

An asset that carries a significant chance of losing part or all of its investment value.