If an Investor's Excess Return Is Negative

question 1

Multiple Choice

If an investor's excess return is negative,

• A)the realized return was less than the return earned by the market
• B)the required return exceeded the realized return
• C)the investor constructed a poorly diversified portfolio
• D)the investor's portfolio had excessive diversification

Understand the definitions and types of agency relationships.

Recognize the duties and responsibilities of agents and principals in agency relationships.

Distinguish between expressed, implied, and apparent agency, as well as ratification in agency creation.

Identify the legal ramifications for agents and principals who breach their duties.

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Definitions:

Net Sales

Net Sales is the amount of sales generated by a company after deducting returns, allowances for damaged or missing goods, and discounts.

Accounts Receivables

Represents money owed to a company by its customers for goods or services delivered but not yet paid for.

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations or those due within one year, calculated by dividing current assets by current liabilities.

Quick Ratio

A liquidity measure that indicates a company's ability to cover its short-term liabilities with its most liquid assets, without selling inventory.