The Accounting Rate of Return Is a Measure of Profitability

question 184

True/False

The accounting rate of return is a measure of profitability computed by dividing the average annual operating income from an asset by the initial amount invested in the asset.

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Definitions:

Bond Prices

The market price at which a bond is currently trading, influenced by interest rates, the bond's credit rating, and other market factors.

Market Value

The market's current rate for transactions involving an asset or service.

Bond

A fixed income instrument that represents a loan made by an investor to a borrower, typically corporate or governmental, where the issuer owes the holders a debt and is obliged to pay interest and/or to repay the principal at a later date, termed maturity.

Maturity

The date on which a financial obligation or investment becomes due for payment or is to be repaid in full.