Blume's Formula Is Used To

question 24

Multiple Choice

Blume's formula is used to:

• A) predict future rates of return.
• B) convert an arithmetic average return into a geometric average return.
• C) convert a geometric average return into an arithmetic average return.
• D) measure past performance in a consistent manner.
• E) compute the historical mean return over a multi-year period of time.

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Definitions:

Direct Costs

Expenditures directly traceable to the production of specific goods or services, such as raw materials and labor.

Gross Margins

The difference between revenue and cost of goods sold divided by revenue, expressed as a percentage, indicating the financial health and profitability of a business.

Value Basis

The underlying worth of an asset from which sale prices or depreciation is derived.

Joint Costs

Costs that are incurred from producing two or more products at the same time.