The Risk-Free Rate of Return (RF)equals

question 5

Multiple Choice

The risk-free rate of return (RF) equals:

• A)0.0%.
• B)the rate on the bonds of financially sound corporations.
• C)the average of the last 3 years' inflation rate.
• D)the return on Treasury securities.

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Definitions:

Unit Product Cost

The total cost, including materials, labor, and overhead expenses, divided by the total number of units produced.

Absorption Costing

Absorption costing is a method in accounting that includes all manufacturing costs - both direct and indirect - in the cost of a product.

Variable Costing

An accounting method where only variable production costs are included in product costs, with fixed overhead treated as a period cost.

Net Operating Income

A monetary measurement that determines an organization's profit by deducting operational costs from its operational revenue.