A Significant Problem in Comparing Profitability Measures Among Companies Is

question 58

Multiple Choice

A significant problem in comparing profitability measures among companies is the:

• A)Lack of general agreement over which profitability measure is best.
• B)Differences in the size of the companies.
• C)Differences in the accounting methods used by the companies.
• D)Differences in the dividend policies of the companies.
• E)Effect of interest rates on net income.

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Definitions:

Active Portfolio Managers

Investment professionals who make regular buy, hold, and sell decisions in an attempt to outperform standard benchmarks.

Active Portfolio

An investment portfolio actively managed by a portfolio manager or investor aiming to outperform a benchmark index through regular buying and selling of securities.

Systematic Risk

This refers to the inherent risk that affects the entire financial market or a whole market segment, unpreventable through diversification.

Benchmark Risk

The risk that a portfolio's performance deviates from its benchmark index.