If the Total Rate of Return Is Multiplied by 1/N,where

question 181

Multiple Choice

If the total rate of return is multiplied by 1/N,where N is the number of years for which the investment was held,the result is the

• A)serialized rate of return.
• B)annualized rate of return.
• C)tax-free rate of return.
• D)capitalized rate of return.

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Definitions:

Financial Leverage

The use of borrowed funds to increase the potential return of an investment, amplifying both gains and losses.

Earnings Per Share (EPS)

A financial ratio that measures the portion of a company's profit allocated to each outstanding share of common stock.

EBIT

EBIT stands for earnings before interest and taxes, and it's a measure of a firm's profit that includes all expenses except interest and income tax expenses.

Operating Leverage (DOL)

A measure of how revenue growth translates into growth in operating income, indicating the fixed versus variable costs of a business.