If the Expected Return of Stock a Is 12% and That

question 6

True/False

If the expected return of stock A is 12% and that of stock B is 14%,and both have the same variance,then nondiversified investors would prefer stock B to stock A.

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Definitions:

Activity-Based Costing

A cost allocation system that first identifies overhead expenses, assigns them to specific activities, and then distributes these costs to various products.

Traditional Costing Method

An accounting method that assigns indirect costs to products based on a predetermined overhead rate, often not reflecting the actual consumption of resources by each product.

Direct Labor-Hours

The total number of hours worked directly on the production of goods.

Overhead Assigned

The process of allocating manufacturing overhead costs to specific products or cost objects based on a predetermined rate or method.