Which of the Following Definitions Is Correct

question 31

Multiple Choice

Which of the following definitions is correct?

• A)Accounting profit + economic profit = normal profit
• B)Economic profit - accounting profit = explicit costs
• C)Economic profit = accounting profit - implicit costs
• D)Economic profit - implicit costs = accounting profit
• E)Economic profit - accounting profit = normal profit

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Definitions:

Time Value of Money

The understanding that money present right now has a higher worth compared to the same sum obtained at a later date, as it has the ability to accrue more earnings.

Market Risk

The risk of losses in investments caused by factors that affect the overall performance of the financial markets.

Characteristic Line

A line used in finance to illustrate the rate of return of an asset as a function of the return of the market as a whole.

Systematic Risk

The risk inherent to the entire market or market segment, not diversifiable through portfolio diversification.