A Measure of the Performance of Investments on a Common-Size

question 82

Multiple Choice

A measure of the performance of investments on a common-size basis which eliminates the distortion caused by the size of the initial investment is referred to as:

• A)rate of return
• B)risk premium ratio
• C)return of capital
• D)rate of inflation

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Definitions:

Other Revenues

Income from activities that are not part of a company's core business operations.

Interest Expense

The cost incurred by an entity for borrowed funds over a period of time.

Goodwill

An intangible asset representing the excess of the purchase price over the fair market value of an acquired company’s net assets.

Cost Method

An accounting method used to record investments at their original purchase cost, with any changes recognized only when dividends are received or upon sale of the investment.