A Tracking Signal Is Computed by

question 49

Multiple Choice

A tracking signal is computed by

• A)multiplying the cumulative error by MAD.
• B)multiplying the absolute error by MAD.
• C)dividing MAD by the cumulative absolute error.
• D)dividing the cumulative error by MAD.

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Definitions:

Retained Earnings

The portion of net earnings not paid out as dividends but retained by the company to be reinvested in its core business or to pay debt.

CAPM Approach

The Capital Asset Pricing Model, a formula used to determine the expected return of an investment based on its risk relative to the market.

Cost of Equity

The return a firm theoretically pays to its equity investors, i.e., shareholders, to compensate them for the risk they undertake by investing their capital.

Retained Earnings

The portion of a company's profits not distributed to shareholders as dividends but kept back to reinvest in the business.