The Two Cardinal Rules That Financial Analysts Should Follow to Avoid

question 15

True/False

The two cardinal rules that financial analysts should follow to avoid errors are: (1)in the NPV equation,the numerator should use income calculated in accordance with generally accepted accounting principles,and (2)all incremental cash flows should be considered when making accept/reject decisions for capital budgeting projects.

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Definitions:

Situational Attributions

The process of explaining the behavior of others based on external factors or circumstances, rather than attributing their actions to internal characteristics.

Biological Trait

A characteristic or feature of an organism that is inherited from its parents and can be physically observed or measured.

External

Referring to or situated on the outside of something; coming or deriving from a source outside the subject affected.

Out-Group

A group of people excluded from or not belonging to one's own group, often leading to us vs. them mentality.