A Limitation of ROI as a Measure of International Performance

question 7

Multiple Choice

A limitation of ROI as a measure of international performance is that

• A) it is a single comprehensive figure examining only one facet of the firm.
• B) it provides disincentive to use existing assets efficiently.
• C) it provides an incentive to acquire new assets.
• D) it is very sensitive to depreciation policy.
• E) it does not provide the basis for common comparison.

---

Definitions:

Cross-Hedging

A risk management strategy that involves hedging a position in one asset by taking a position in another asset with similar price movements.

Risk Profile

A description of an individual's or organization's willingness to take risks, as well as the threats to which they are exposed.

American Put Option

A type of options contract that gives the holder the right to sell a specified amount of an underlying security at a specified price within a specified time frame.

Exercise Price

The price set for buying or selling an asset under the terms of an option contract.