Which of the Following Would Not Satisfy the Safety Factor

question 11

Multiple Choice

Which of the following would not satisfy the safety factor of investing?

• A) Savings accounts
• B) Blue-chip stocks
• C) Certificates of deposit
• D) Highly rated municipal bonds
• E) Antiques and collectibles

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Definitions:

Residual Income

Residual income is the amount of net income generated beyond the minimum return expected by an entity or on an investment, often used as a measure of corporate and individual performance.

Return on Investment

A measure used to evaluate the efficiency or profitability of an investment, calculated as return divided by the cost of the investment.

Support Department Allocation Rate

A rate used to allocate the costs of support departments to producing departments or directly to products based on relevant factors or usage measures.

Cost Drivers

Factors that cause the cost of an activity or product to change, such as production volume or raw material prices.