A Financial Statement That Shows Each Item as a Percentage

question 84

Multiple Choice

A financial statement that shows each item as a percentage of one key item on the statement is referred to as:

• A) benchmarking.
• B) common-size statement.
• C) horizontal analysis.
• D) statement of cash flows.

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Definitions:

Capital Asset Pricing Model

An approach outlining the connection between inherent risks and the expected return of assets, with a focus on stocks.

SML

The Security Market Line, a graphical representation used in the capital asset pricing model (CAPM) to show the relationship between the risk of an investment and its expected return.

Expected Return

The anticipated gain or loss on an investment, considering both the risk and return.

Expected Return

Expected return is the anticipated profit or loss from an investment, based on the potential outcomes and their probabilities, often used to evaluate investment choices.