INSTRUCTIONS: Choose the Word or Phrase in [ ] Which

question 80

Short Answer

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement.
A tax credit is subtracted from your [ taxable income | tax liability ].

Compute and understand the residual income concept and its significance in evaluating investment opportunities.

Grasp the importance of the minimum required rate of return in investment decisions.

Understand how sales, contribution margin ratio, and fixed expenses impact investment opportunities.

Understand how to calculate Return on Investment (ROI) and interpret its value.

---

Definitions:

Strike Price

The pre-determined price at which the holder of an option can buy (in the case of a call option) or sell (in case of a put option) the underlying asset.

Market Price

The prevailing selling or buying price of a service or asset in the market.

Break-Even Price

The price at which total revenues equal total costs, and the business or investor neither makes a profit nor incurs a loss.

Put

An option contract giving the owner the right, but not the obligation, to sell a specified amount of an underlying security at a specified price within a specified time.