Which of the Following Is Not a Benefit Associated with Financial

question 75

Multiple Choice

Which of the following is not a benefit associated with financial intermediaries?

• A) reduced costs
• B) fund indivisibility
• C) financial flexibility
• D) diversification of risk

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Definitions:

Average Accounting Return (AAR)

An investment’s average net income divided by its average book value.

Return on Equity (ROE)

A measure of financial performance calculated by dividing net income by shareholders' equity, reflecting the profitability relative to the equity.

Return on Assets (ROA)

A financial ratio indicating how profitable a company is relative to its total assets, calculated as net income divided by total assets.

Discounted Payback

The period of time it takes for the cash flows from an investment to equal the initial cost of the investment, accounting for the time value of money.