The Primary Objective of Financial Reporting Is to

question 39

Multiple Choice

The primary objective of financial reporting is to

• A)determine taxable income and income tax of a business.
• B)provide management with information needed to run the day-to-day operations of a business.
• C)keep businesses from going bankrupt.
• D)provide information useful for making economic decisions.

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Definitions:

Systematic Risk

This refers to the inherent risk that affects the entire financial market or a whole market segment, unpreventable through diversification.

Benchmark Risk

The risk that a portfolio's performance deviates from its benchmark index.

Portfolio Difference

The distinct variations and diversifications in an investment portfolio that aim at minimizing risk and maximizing returns.

Alpha

A measure of investment performance on a risk-adjusted basis, representing the excess return of an investment relative to the return of a benchmark index.