When High Growth Is Expected in the Economy, an Investor

question 39

Multiple Choice

When high growth is expected in the economy, an investor should receive higher returns from:

• A) cyclical investments.
• B) countercyclical investments.
• C) stocks with negative correlations.
• D)stocks with low standard deviations.

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Definitions:

Margin Of Safety

The difference between actual sales and break-even sales, indicating the cushion a company has before it incurs a loss.

Contribution Format

A type of income statement where costs are divided into variable and fixed, highlighting the contribution margin.

Income Statement

A financial report detailing a company's incomes, costs, and net earnings during a defined timeframe.

Contribution Margin

The amount by which a product's selling price exceeds its total variable costs, contributing towards covering fixed expenses and generating profit.