Which of the Following Is a Benefit of Budgeting

question 194

Multiple Choice

Which of the following is a benefit of budgeting?

• A) It helps investors to value stocks.
• B) It helps managers gather information for improving future performance.
• C) It helps managers to take marketing decisions.
• D) It helps in increasing market capitalization of the company.

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Definitions:

Market Portfolio

An investment portfolio that theoretically includes all assets in the market, with each asset weighted according to its market capitalization.

Expected Return-Beta Relationship

A concept in the Capital Asset Pricing Model (CAPM), indicating that the expected return on an investment is related to its beta, which measures the investment's volatility relative to the market.

CAPM

Capital Asset Pricing Model, a financial model that describes the relationship between systematic risk and expected return for assets, particularly stocks.

Marginal Price

This is the cost of producing one additional unit of a good or service.