A Business Cycle Is

question 18

Multiple Choice

A business cycle is:

• A)the period of time in which the expansion and contraction of economic activity are equal.
• B)the period of time in which there are three phases, which are: peak, depression and recovery.
• C)the recurring growth and decline in real GDP.
• D)the period of time in which a business is established and ceases operations.

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Definitions:

ROE

Return on Equity, a financial ratio that measures the profitability of a corporation in relation to stockholders' equity.

EPS

Earnings Per Share, a financial metric that divides a company's profit by the number of its shares outstanding.

Market Capitalization Rate

The expected return on an investment in a market portfolio, based on the market price of risk.

Constant-Growth DDM

A model for valuing a company's stock by using predicted dividends and discounting them back to present value assuming a constant growth rate.