A Return on Assets of 5

question 66

Multiple Choice

A return on assets of 5.15% means that a company is earning:

• A) a $5.15 return on every $100 of total assets.
• B) a $5.15 return on every $100 of assets minus liabilities.
• C) a $5.15 return on every $100 of current assets.
• D) a $5.15 return on every $100 invested in long-term assets.

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Definitions:

Beta

A measure of a security's or portfolio's volatility, or systematic risk, in comparison to the market as a whole.

Risk-free Rate

The risk-free rate is the theoretical return on an investment with zero risk, often represented by the yield on short-term government securities.

CAPM

Capital Asset Pricing Model; a model that describes the relationship between systematic risk and expected return for assets.

Holding Period

The duration of time an investment is held before it is sold, impacting the capital gains tax implications.