Which of the Following Factors Should Be Considered When Investing

question 22

Multiple Choice

Which of the following factors should be considered when investing in foreign stocks?
I. exchange rates
II. differing accounting standards
III. tax systems
IV. ADRs

• A) I and II only
• B) I and III only
• C) I, II and III only
• D) I, II, III and IV

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Definitions:

DuPont Formula

A formula that breaks down Return on Equity (ROE) into three components: profit margin, asset turnover, and financial leverage, to analyze a company's financial performance.

Profit Margin

Profit margin is a financial metric showing the percentage of revenue that remains as profit after all operating expenses are deducted from sales.

Investment Turnover

A ratio that measures the efficiency of a company’s use of its assets in generating sales or revenue; the ratio of net sales to average total assets.

Transfer Prices

Prices charged for the selling of goods and services between subsidiaries or divisions within the same company.