At the Economic Order Quantity

question 18

Multiple Choice

At the economic order quantity,

• A) the annual ordering cost for an item is greater than the annual holding cost. .
• B) the annual ordering cost and annual holding cost for an item are equal.
• C) the annual ordering cost for an item is less than the annual holding cost.
• D) none of these answers are true.

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Definitions:

Sharpe Measure

A method to evaluate the risk-adjusted return of an investment, comparing portfolio excess return to the standard deviation of the portfolio.

Excess Returns

The return on an investment above the return expected from risk-free investments or the market's benchmark.

Risk-free Asset

An investment that is assumed to have no risk of financial loss, often exemplified by government bonds.

Kurtosis

A statistical measure that describes the shape of a distribution's tails in relation to a normal distribution, indicating the potential for extreme outcomes.