Managers Should Discontinue a Business If Its Contribution Margin Is

question 127

Multiple Choice

Managers should discontinue a business if its contribution margin is less than the sum of:

• A) Relevant fixed costs and opportunity costs
• B) Relevant fixed costs and sunk costs
• C) Relevant opportunity costs and sunk costs
• D) Relevant opportunity costs and profits

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Definitions:

Portfolio Beta

A measure of the volatility, or systematic risk, of a portfolio in comparison to the overall market.

Market Portfolio

A theoretical bundle of investments that contains all available assets in the market, used as a benchmark to assess individual investment performance.

Risk-Free Asset

A financial investment that promises a certain return without any chance of monetary loss.

Portfolio

An assortment of financial assets owned by a person or an organization.