If William Earns a 10 Percent Return and Kate Earns

question 36

Multiple Choice

If William earns a 10 percent return and Kate earns a 7 percent return on investments with the same risk, the additional 3 percent return on William's investment is a(n) _____. 

• A)risk adjusted return
• B)justified return
• C)abnormal return
• D)efficient return
• E)premium return

Distinguish between systematic and nonsystematic risk in the context of the single-index model and portfolio management.

Interpret the security characteristic line (SCL) and its components, including alpha and beta.

Analyze factors influencing beta coefficients of stocks.

Understand the key principles and methods of accounting for business combinations as per AASB 3/IFRS 3.

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Definitions:

Output

Refers to the total quantity of goods or services produced by an individual, company, or economy.

Expand

The process of increasing the scale, scope, or reach of an operation, business, or system, often aiming for growth or diversification.

Fixed Cost

Costs that do not vary with the level of output or activity, remaining constant regardless of production volume.