Blume's Formula Is Used To

question 9

Multiple Choice

Blume's formula is used to:

• A)predict future rates of return.
• B)convert an arithmetic average return into a geometric average return.
• C)convert a geometric average return into an arithmetic average return.
• D)measure past performance in a consistent manner.
• E)compute the historical mean return over a multi-year period.

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Definitions:

Gross Profit

The difference between revenue and the cost of goods sold before deduction of overheads, payroll, taxation, and interest payments.

Price-Earnings Ratio

The price-earnings ratio (P/E ratio) is a valuation ratio of a company's current share price compared to its per-share earnings.

Market Price

The present trading value for assets or services within the scope of a commercial market.

Shares Of Stock

Units of ownership interest in a corporation or financial asset, giving shareholders a proportion of the corporation's assets and profits.