Which Financial Ratio Measures the Rate of Return on the Book

question 7

Multiple Choice

Which financial ratio measures the rate of return on the book value of shareholders' total investment in the company?

• A) return on investment
• B) return on equity
• C) gross profit margin
• D) net profit margin
• E) earnings per share

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Definitions:

Exercise Price

The price at which the holder of an option can buy or sell the underlying security, as specified in the option contract.

Uncovered Put

A type of options strategy where the seller (or writer) of a put option does not hold a short position in the underlying stock, leading to higher risk if the option is exercised.

Uncovered Call

An uncovered call is an options strategy where the seller sells call options without owning the underlying securities, exposing the seller to unlimited risk.

Strike Price

The price at which a derivative contract can be exercised, specifically referring to the price at which the holder of an option can buy (call option) or sell (put option) the underlying asset.