What Is the Primary Shortcoming of the Average Accounting Rate

question 6

Multiple Choice

What is the primary shortcoming of the average accounting rate of return from a financial perspective?

• A)The lack of use in the business world
• B)The lack of a clear-cut decision rule
• C)The degree of the calculation difficulty
• D)The degree of estimation involved with the initial cost
• E)The use of net income rather than cash flows

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Definitions:

Scatterplot

A type of graph used in statistics to visually display and compare two variables for a set of data, showing how much one variable is affected by another.

Two-Way Table

A table that displays data about two categorical variables; used to explore the relationship between the two variables.

Scatterplot Strength

Indicative of the degree of correlation between two variables represented in a scatterplot, showing how closely the data points fit a trend line.

Curve Following

The practice of tracing the path or line that best fits the pattern of a dataset, often used in trend analysis.