Break-Even Analysis Indicates the ____ That Will Be Necessary to Justify

question 18

Multiple Choice

Break-even analysis indicates the ____ that will be necessary to justify a new expense.

• A) increase in sales.
• B) increase in costs.
• C) amount of profit.
• D) volume of activity.

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Definitions:

Discount Rates

The rate of interest applied to calculate the current value of future cash flows.

Market Proxy

A singular asset or portfolio that represents the characteristics of an entire market segment or the market as a whole.

CAPM

The Capital Asset Pricing Model, which describes the relationship between systematic risk and expected return for assets, particularly stocks, suggesting that investors need to be compensated in two ways: time value of money and risk.

Fama and French

Scholars who developed a three-factor model for explaining the risk and return of stocks and other investments.