In Calculating Accounting Profit, Accountants Normally Do Not Include

question 177

Multiple Choice

In calculating accounting profit, accountants normally do not include:

• A)explicit costs of production
• B)opportunity costs that do not involve an outflow of money
• C)long-run costs
• D)sunk costs

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Definitions:

Required Returns

Required Returns are the minimum expected returns on an investment that investors demand, considering the risk level of the investment relative to the risk-free rate.

Betas

Measures the volatility of a stock or portfolio in relation to the overall market, indicating the level of risk associated with the investment.

Diversifiable Risk

A type of investment risk that can be reduced or eliminated in a portfolio through diversification, unlike systemic risk.

Market Risk

The risk of losses in financial markets due to factors such as market volatility, interest rate changes, and economic downturns that affect the entire market.