Favorable Price Variances Can Occur Because of

question 6

Multiple Choice

Favorable price variances can occur because of

• A) Rising prices of finished goods
• B) Increases in raw materials efficiency
• C) Price decreases in raw materials
• D) Efficiency in the production department

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Definitions:

Buy Stocks on Margin

The practice of borrowing money from a broker to purchase stock, using the bought securities as collateral for the loan.

Risk Free Asset

An investment that is expected to return its original value without any loss and with a certain rate of interest; considered to have zero default risk.

Rate of Return

The increase or decrease in the value of an investment during a set time frame, represented as a proportion of the investment's original price.

Level of Risk

The degree of uncertainty associated with an investment or decision, often regarding the potential for loss.