A Focus on Profit Optimization Orients the Manager Toward ______

question 16

Multiple Choice

A focus on profit optimization orients the manager toward ______.

• A)short-term profits
• B)the interests of ETF shareholders
• C)the interests of a broader collection of constituent interests
• D)all of these

---

Definitions:

IRR

Internal Rate of Return; a financial metric used to estimate the profitability of potential investments, calculating the discount rate that makes the net present value of all cash flows equal to zero.

NPV

Net Present Value is a method used to evaluate the attractiveness of an investment or project by calculating the present value of expected future cash flows using a specific discount rate.

NPV Profiles

NPV profiles are graphical representations that show the relationship between a project’s net present value and the discount rate applied to its cash flows.

Cash Flows

The net amount of cash being transferred into and out of a business, considered essential for assessing its financial health.