Which of the Following Statements Is CORRECT

question 3

Multiple Choice

Which of the following statements is CORRECT?

• A) The primary difference between EVA and accounting net income is that when net income is calculated, a deduction is made to account for the cost of common equity, whereas EVA represents net income before deducting the cost of the equity capital the firm uses.
• B) MVA gives us an idea about how much value a firm's management has added during the last year.
• C) MVA stands for market value added, and it is defined as follows:
• MVA = (Shares outstanding)(Stock price) + Book value of common equity.
• D) EVA stands for economic value added, and it is defined as follows:
• EVA = EBIT(1- T) -(Investor-supplied op. capital) * (A - T cost of capital).
• E) EVA gives us an idea about how much value a firm's management has added over the firm's life.

---

Definitions:

Learned Helplessness

Passive behavior produced by exposure to unavoidable aversive events.

Pessimistic Explanatory Style

A tendency to explain negative events as being pervasive, permanent, and personal.

Depression

A common mental disorder characterized by persistent sadness, a lack of interest in activities, and a decreased ability to enjoy life.

Passive Attribution

The tendency to explain someone's behavior by attributing it to the situation or environment rather than to the individual's own traits or choices.