The Following Information Pertains to Bundy Company If Invested Capital Is Defined as Total Assets, the Return

question 16

Multiple Choice

The following information pertains to Bundy Company: $$\begin{array} { l l } \text { Total assets } & \$ 50,000 \\\text { Total current liabilities } & 30,000 \\\text { Total expenses } & 60,000 \\\text { Total liabilities } & 35,000 \\\text { Total revenues } & 80,000\end{array}$$ If invested capital is defined as total assets, the return on investment is:

• A) 40%
• B) 60%
• C) 70%
• D) 160%

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Definitions:

Inverse Floaters

A type of bond or other debt instrument whose coupon rate has an inverse relationship to short-term interest rates, thus fluctuating oppositely to market rates.

Short Hedge

A risk management strategy used to protect against the decline in the price of a commodity or asset, involving the sale of futures contracts or other derivatives.

Marked-To-Market

Occurs when the value of a security is valued at its current market value rather than its original price or its exercise value.

Credit Default Swap

A financial instrument that enables an investor to transfer or mitigate their credit risk by exchanging it with another investor.