The Difference Between the Market Value of an Investment and Its

question 339

Multiple Choice

The difference between the market value of an investment and its cost is the:

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

---

Definitions:

Utility Function

A representation in economics of how a consumer prefences various goods or services, leading to choices that maximize their satisfaction or utility.

Compensating Variation

A measure of the amount of money needed to compensate an individual for a change in welfare or utility, keeping utility constant.

Pairs

Two things that are designed to be used together or are similar in nature, often considered as a unit.

Demand Function

A mathematical equation that describes the quantity of a good or service demanded at various prices.