Which of the Following Statements Is True About the Spending

question 74

Multiple Choice

Which of the following statements is true about the Spending Potential Index?

• A) It compares the local average expenditure by product to the national average amount spent.
• B) It compares sales predictions based on various retail locations.
• C) It is an index that provides retailers who are thinking of expanding into international markets with data on what consumers spend.
• D) It compares what retailers spend on real estate in a given market and compares it to the national average.
• E) It offers retailers information on property values as well as local tax information so they are better able to compare prior to purchasing.

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Definitions:

Total Leverage

A measure that combines both operating and financial leverage to assess a company's total sensitivity to changes in output levels affecting its earnings before interest and taxes.

Stock Prices

The current market price at which shares of a company are bought and sold.

Leverage

Use of borrowed capital for investment with the aim to multiply the potential returns, while also increasing the risk of loss.

Independence Hypothesis

In capital structure theory, the original restrictive model by Modigliani and Miller that shows stock price to be independent of capital structure.