The Process by Which Management Plans, Evaluates, and Controls Long-Term

question 46

Multiple Choice

The process by which management plans, evaluates, and controls long-term investment decisions involving fixed assets is called

• A) absorption cost analysis
• B) variable cost analysis
• C) capital investment analysis
• D) cost-volume-profit analysis

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Definitions:

Covariances

Covariance is a measure used in statistics to determine how much two random variables vary together.

Portfolio Variance

A measurement of the dispersion of returns of a portfolio, indicating the degree of investment risk.

Risky Securities

Financial instruments that carry a higher degree of uncertainty and a higher risk of loss, such as stocks.

Weighted Sum

A calculation that takes various quantities into account, multiplying each by a factor that reflects its importance and then adding these products together.