Investors Evaluate an Investment by Estimating Its Average Expected Rate

question 177

Multiple Choice

Investors evaluate an investment by estimating its average expected rate of return, and this estimation process assigns higher weights to

• A) higher returns.
• B) more likely outcomes.
• C) higher risks.
• D) smaller returns.

---

Definitions:

Weighted-Average Method

An inventory costing method that assigns the average cost of goods available for sale to both ending inventory and cost of goods sold, weighing the average by the quantities purchased at different prices.

Conversion Cost

The combination of direct labor and manufacturing overhead costs required to convert raw materials into finished products.

Molding Department

A specific section within a manufacturing facility where the process of shaping materials into desired forms through various molding techniques occurs.

Weighted-Average Method

An inventory costing method that calculates the cost of goods sold and ending inventory based on a weighted average of the costs.