Indexes Are Similar to Scales in That Both

question 42

Multiple Choice

Indexes are similar to scales in that both

• A) are composite measures of concepts.
• B) reflect an arbitrary combination of items.
• C) are designed and tested for unidimensional measurement.
• D) rely exclusively on survey data.

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Definitions:

Profitability Index

A financial metric used to evaluate the desirability of an investment or project, calculated as the present value of future cash flows divided by the initial investment cost.

Investment Projects

Initiatives undertaken by businesses or individuals involving the allocation of resources with the expectation of future returns.

Cash Outflows

Money spent or costs incurred by a business or individual, resulting in a decrease in cash reserves.

Straight-Line Depreciation

A manner for spreading out the cost of a tangible asset across its useful life in regular yearly installments.