Wong Company Utilizes Both Strategic Planning and Operational Budgeting

question 15

Multiple Choice

Wong Company utilizes both strategic planning and operational budgeting. Which one of the following items would normally be considered in a strategic plan?

• A) Setting a target of 12% return on sales
• B) Maintaining the image of the company as the industry leader
• C) Setting a market price per share of stock outstanding
• D) Distributing monthly reports for departmental variance analysis

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Definitions:

Expected Rate of Return

The anticipated return on an investment, comprising both the risk-free rate of return and additional returns expected for taking on extra risk.

Beta

A measure of a stock's volatility in relation to the overall market, indicating the stock's risk compared to the market average.

Risk-Free Rate

Refers to the return on investment with no risk of financial loss, often estimated by the yield of government bonds.

Market Portfolio

A theoretical bundle of all available assets in the market, representing the entire stock market and used as a benchmark to assess investment performance.