An Investment's Average Net Income Divided by Its Average Book

question 183

Multiple Choice

An investment's average net income divided by its average book value defines the average:

• A) Net present value.
• B) Internal rate of return.
• C) Accounting return.
• D) Profitability index.
• E) Payback period.

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Definitions:

Marginal Rate of Substitution

The rate at which a consumer is willing to give up one good in exchange for another good, while keeping overall utility constant.

Substitution Effect

A shift in consumer behavior as a result of alterations in the comparative costs of products, resulting in the replacement of one product for another.

Indifference Curves

Graphical representations in economics showing different combinations of two goods that give a consumer equal satisfaction and utility, thus marking consumer preferences.

Concave

A shape or curve that is curved inward, resembling the interior of a circle or sphere, often used to describe functions or geometric objects.