Which of the Following Is True

question 40

Multiple Choice

Which of the following is true?

• A) ROA is always greater than or equal to ROE
• B) an increase in the asset turnover ratio implies a decrease in the asset intensity ratio
• C) a and b
• D) none of the above

Examine how benchmark errors impact the interpretation of CAPM tests.

Assess the impact of market efficiency on the validity of CAPM.

Understand how survivorship bias and other biases affect CAPM and related studies.

Interpret the significance of macroeconomic factors in multifactor models for predicting security returns.

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Definitions:

Tax Treatment

The specific way tax laws are applied to an individual's, company's, or transaction's income, assets, or activities.

Long-term Incentive Pay

Compensation awarded to employees for achieving strategic objectives that contribute to the company's long-term performance.

Loan Loss Provision

An expense set aside as an allowance for uncollected loans and loan payments, reflecting anticipated losses in the loan portfolio.

Bad Debt Expense

An expense reported on the income statement, representing the portion of receivables that is estimated not to be collectible.