When Ranking Security Returns, the Data Shows That the Annualized

question 42

Multiple Choice

When ranking security returns, the data shows that the annualized returns are as follows (ranked from highest return to lowest return) :

• A)Large stocks, small stocks, long-term corporate bonds, long-term government bonds, treasury bills.
• B)Small stocks, large stocks, long-term corporate bonds, long-term government bonds, treasury bills.
• C)Small stocks, large stocks, treasury bills, long-term government bonds, long-term corporate bonds.
• D)Treasury bills, long-term government bonds, long-term corporate bonds, large stocks, small stocks.
• E)Large stocks, small stocks, long-term government bonds, long-term corporate bonds, treasury bills.

Calculate the payback period for investments with both uniform and uneven cash flow patterns.

Understand the significance of the hurdle rate in capital budgeting decisions and its common benchmarks.

Recognize the importance of considering the time value of money in capital investment decisions, particularly through methods like net present value (NPV).

Identify the factors influencing the choice of depreciation method and its impact on capital budgeting and cash flow.

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Definitions:

Adjusted Trial Balance

A trial balance prepared after adjusting entries are made, ensuring the accuracy of financial statements by balancing debits and credits.

Ledger Balance

The closing balance of an account in the ledger at a specific point in time, reflecting all transactions.

Contrast Baths

A form of therapy involving the alternation between hot and cold water baths to manage pain, swelling, or promote healing.

Improved Circulation

Refers to an enhancement in the flow of blood throughout the body, which can contribute to better overall health and function of organs.