Which of the Following Is a TRUE Statement Regarding Expenses

question 31

Multiple Choice

Which of the following is a TRUE statement regarding expenses?

• A)Expenses represent future assets.
• B)The expense recognition principle is also called the matching principle.
• C)Expenses must be paid immediately.
• D)Expenses must always be less than revenues.

Understand and calculate covariance between two securities.

Understand and calculate the correlation coefficient between two securities.

Calculate the expected return of a portfolio based on its constituents and their weights.

Understand the concept of perfectly negatively correlated securities and their impact on portfolio risk and return.

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Definitions:

World Price

The worldwide cost of a product or service, set by the conditions of international supply and demand.

Domestic Price

The price of goods or services within a particular country, unaffected by international market variables.

Oil Barrels

Standardized units measuring volumes of crude oil and its products, with one barrel equivalent to 42 U.S. gallons.

Comparative Advantage

A concept in international trade that describes how a country can produce a particular good at a lower opportunity cost compared to other countries.