The Following Are Disadvantages of Using EVA as a Performance

question 67

Multiple Choice

The following are disadvantages of using EVA as a performance measure EXCEPT:

• A)EVA does not measure present values.
• B)EVA rewards the choice of projects with quick paybacks and penalizes projects with longer payback periods.
• C)EVA reduces explicit monitoring by top management.
• D)EVA is difficult to apply to start-up ventures.

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Definitions:

Coupon Rate

The annual interest rate paid by the issuer of a bond to the bondholder, typically expressed as a percentage of the bond's face value.

Secondary Market

A marketplace where previously issued securities and financial instruments such as stocks, bonds, options, and futures are bought and sold.

Interest Rates

The proportion of a loan charged as interest to the borrower, typically expressed as an annual percentage.

Bond Prices

The amount of money for which a bond is sold, which can fluctuate based on interest rates, credit quality, and other factors.