Using a Single Performance Evaluation Criterion for an Investment Center

question 94

Multiple Choice

Using a single performance evaluation criterion for an investment center

• A)is most effective because a manager can concentrate on a single goal.
• B)can result in manipulation of the performance measure.
• C)allows multinational investment centers' performances to be equitably compared.
• D)is only appropriate if the criterion is non-monetary.

---

Definitions:

Option Contract

A contract which grants the buyer the right, but not the obligation, to buy or sell an underlying asset at a set price within a specific time period.

Underlying Asset

The specific financial instrument (e.g., stock, bond, commodity) on which a derivative's value is based.

Puts

A type of option contract that gives the holder the right, but not the obligation, to sell a specified amount of an underlying asset at a predetermined price within a specific time frame.

Strike Price

The fixed price specified in an options contract at which the holder can buy or sell the underlying asset.