The Unexpected Return on a Security, U, Is Made Up

question 40

Multiple Choice

The unexpected return on a security, U, is made up of:

• A) market risk and systematic risk.
• B) systematic risk and idiosyncratic risk.
• C) idiosyncratic risk and unsystematic risk.
• D) expected return and market risk.
• E) expected return and idiosyncratic risk.

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Definitions:

Periodic Inventory System

An inventory system that updates inventory balance after a certain period, typically incorporating physical counts to determine cost of goods sold.

Cost of Goods Sold

Directly incurred costs for materials and labor necessary for the production of goods a business sells.

Cash Flow Considerations

Refers to an evaluation of how a company generates and uses cash in its business activities, including investments, operations, and financing.

Costing Methods

Various approaches used to calculate the cost of inventory and goods sold, such as First-In, First-Out (FIFO), Last-In, First-Out (LIFO), or average cost methods.