Which Statement About the Use of the Profile Model Is

question 85

Multiple Choice

Which statement about the use of the profile model is BEST?

• A)The profile model requires careful calculation of the percentage risk for each possible project.
• B)The scale used for the profile model can be any two numerical variables that a company deems important.
• C)The efficient frontier in the profile model is where return is 100% (or greater)and risk is 0%.
• D)For a given level of risk,a positive move on the return axes would indicate a superior project.

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Definitions:

Contribution Margin

The gap between a product's sales revenue and its variable expenses, which serves to offset fixed costs and produce earnings.

Variable Cost

Expenses that adjust in direct correlation with changes in production or sales levels.

Fixed Costs

Expenses that do not change with the level of production or sales activities within a certain range, such as rent, salary, insurance, and loan payments.

Break-even Point

The break-even point is the level of production or sales at which total revenues equal total costs, resulting in no net profit or loss.