It Is Important to Separate the Evaluation of the Manager

question 128

Multiple Choice

It is important to separate the evaluation of the manager from the evaluation of the division in a multinational firm. A manager's evaluation should NOT include

• A)revenues.
• B)income taxes.
• C)operating costs.
• D)cost of goods sold.

Recognize the disclosure requirements for provisions, contingent liabilities, and contingent assets.

Understand the principles and assumptions behind the Treynor-Black model in portfolio management.

Calculate the standard deviation of returns on an active portfolio given its beta, the standard deviation of the market index, and its nonsystematic variance.

Describe the optimal weighting of securities within an active portfolio according to the Treynor-Black model.

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Definitions:

Price Elasticity

The responsiveness of the quantity demanded of a good or service to a change in its price.

Demand

The volume of goods or services that consumers can and want to buy across a range of prices within a certain period.

Price Elasticity

A metric indicating the responsiveness of the quantity of a good demanded to its price change, presented in percentage terms.

Demand

In economics, the desire and ability of consumers to purchase goods and services at given prices.