What Kind of Information Does the Rate of Return on Common

question 126

Multiple Choice

What kind of information does the rate of return on common stockholders' equity provide?

• A) What proportion of each dollar of sales revenue generates net income
• B) How much profit a company generates relative to its stockholders' equity
• C) How much profit each shareholder makes when he sells his shares of stock
• D) How much merchandise is returned by customers

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Definitions:

Marginal Cost

The rise in sum total expense from the production of one extra unit of a product or service.

Market Price

The current price at which a good or service can be bought or sold in a marketplace.

Average Total Cost

The cost per unit is calculated by dividing the sum of fixed and variable production costs by the total quantity of units produced.

Market Price

The current price at which an asset or service can be bought or sold in a particular marketplace.