Return on Investment (ROI), Though Widely Used, Is Subject to Which

question 56

Multiple Choice

Return on Investment (ROI) , though widely used, is subject to which one of the following limitations?

• A) ROI cannot incorporate differences in risk across different divisions.
• B) ROI ignores the amount of capital invested in a division.
• C) ROI may not capture value-creation for firms operating in capital-intensive industries.
• D) ROI may motivate managers to take suboptimal decisions from the standpoint of the organization as a whole.
• E) ROI cannot be used to judge the performance of units of different size.

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Definitions:

Maslow

Refers to Abraham Maslow, a psychologist known for creating Maslow's hierarchy of needs, a theory of psychological health predicated on fulfilling innate human needs in priority, culminating in self-actualization.

Rogers

Often refers to Carl Rogers, an influential American psychologist and one of the founders of the humanistic approach to psychology.

Sigmund Freud

was an Austrian neurologist and the founder of psychoanalysis, a method for treating psychopathology through dialogue between a patient and a psychoanalyst.

Innate Drive

A natural impulse or instinctual force that motivates behavior, believed to be born within an organism.