The Proper Denominator to Use in Computing Return on Common

question 77

Multiple Choice

The proper denominator to use in computing return on common equity is

• A) Beginning total shareholders' equity, including both common and preferred shares
• B) Beginning total shareholders' equity, including common but not preferred shares
• C) Average total shareholders' equity, including both common and preferred shares
• D) Average total shareholders' equity, including common but not preferred shares

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Definitions:

Independent Contractor

An individual or entity contracted to perform work for— or provide services to—another entity as a non-employee.

Vicarious Liability

A legal principle where one party is held liable for the actions or negligence of another party, often in employer-employee relationships.

Cost-Versus-Benefits

An analysis or comparison between the costs of an action and the benefits derived, used to evaluate the feasibility or value of a project or decision.

Organizational Activity

Actions or tasks undertaken by an organization in pursuit of its objectives.