By Using the Rate of Return on Investment as a Divisional

question 37

True/False

By using the rate of return on investment as a divisional performance measure, divisional managers will always be motivated to invest in proposals that will increase the overall rate of return for the company.

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Definitions:

Statistical Arbitrage

A quantitative approach to equity trading involving complex statistical models to identify price inefficiencies between pairs of securities.

Directional Strategy

An investment approach that involves taking long or short positions based on predictions of market or security movement direction.

Management Fees

Management fees are charges levied by investment managers for the administration and operation of an investment fund, typically a percentage of the fund's assets.

Merger Arbitrage

An investment strategy that aims to profit from the price discrepancies that occur before and after a merger or acquisition is announced and completed.