Which of the Following Is NOT One of the More

question 36

Multiple Choice

Which of the following is NOT one of the more common reasons senior management understate business performance?

• A) To defer "surplus" earnings to the next accounting period.
• B) To take all possible write-offs in one "big bath" now so future earning will be consistently higher.
• C) To preserve a trend of consistent growth and avoid volatile results.
• D) To enhance the earnings per share.

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Definitions:

Monthly Excess Returns

Returns from an investment over and above the risk-free rate of return on a monthly basis, used to evaluate investment performance.

Nondiversified Investor

An investor who concentrates their investment in a limited selection of assets, increasing risk compared to diversified strategies.

Expected Excess Return

The return expected on an investment over and above the risk-free rate, taking into account both the risk involved and the time value of money.

Beta

A measure of a stock's volatility in relation to the overall market; it indicates the risk associated with a particular equity in comparison to the market as a whole.