If Managers Are Evaluated Using Return on Investment, They Are

question 112

True/False

If managers are evaluated using return on investment, they are often over aggressive of accepting new investments because the investment will provide an increase in net income.

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Definitions:

Benchmark

A standard or point of reference against which things may be compared or assessed, often used in finance to measure the performance of investments.

Hedge Fund

An investment fund that employs diversified strategies to achieve high returns, including leverage, derivatives, and short selling.

Local Currency

The currency that is legally accepted in a particular country or jurisdiction, used for the settlement of financial transactions within its borders.

S&P 500

A U.S. stock market index reflecting the market value of 500 major companies with common stock on the NYSE or NASDAQ.