Terry Worked at an Auto-Manufacturing Plant for Over 30 Years

question 65

Multiple Choice

Terry worked at an auto-manufacturing plant for over 30 years. Imagine his shock when he and his coworkers were informed that the factory was closing down and relocating to Mexico. What underlying factor precipitated the unemployment of Terry and his coworkers?

• A) rising corporate and personal taxes
• B) a decreased demand for Canadian-manufactured automobiles
• C) more skilled and professional workers in Mexico
• D) free trade agreements with the United States and Mexico

Understand the fundamentals of the Capital Asset Pricing Model (CAPM) including the definition of alpha (α) and beta (β).

Identify and interpret regression parameters in financial analysis, especially beta adjustments and the intercept values.

Grasp the concepts of diversification, systematic risk, and unsystematic risk in portfolio management.

Recognize the use of regression analysis in estimating the index model for stocks.

---

Definitions:

Management Effectiveness

The degree to which managerial actions achieve the desired outcomes and objectives through efficient resource use.

Sole Proprietorships

A type of enterprise that is owned and operated by a single individual, with no legal distinction between the owner and the business.

Partnerships

A formally approved business entity where several individuals come together to share in the management and the financial gains.

Corporations

Legal entities established by shareholders who invest money or assets for a common purpose and enjoy limited liability protection.