If a Company Has a Strong Rate of Return on Common

question 146

True/False

If a company has a strong rate of return on common stockholders' equity, that is an indication of strong profitability.

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Definitions:

Positive Externality

A benefit that is enjoyed by a third-party as a result of an economic transaction.

Spillover Benefit

An advantage that results from an activity or product but benefits those who are not directly involved in its production or consumption.

Pollution Abatement

The reduction or elimination of pollution to protect the environment, typically involving strategies and technologies to control emissions and contaminants.

Diminishing Returns

A principle stating that as investment in a particular area increases, the rate of profit from that investment, after a certain point, cannot continue to increase if other variables remain constant.