Which of the Following Observations Is True

question 69

Multiple Choice

Which of the following observations is true?

• A)Sunk costs are irrelevant for any future action.
• B)Sunk costs should not be ignored when making decisions.
• C)Sunk costs should be included when weighing the marginal costs of production against the marginal benefits received.
• D)Sunk costs can be recovered using corrective measures.
• E)Sunk costs are the same as social marginal costs.

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Definitions:

Margin Call

A demand by a broker that an investor deposits further cash or securities to cover possible losses on trades.

Initial Margin

The minimum amount of capital required to open a new position in a securities account.

Maintenance Margin

The minimum amount of equity that must be maintained in a margin account to avoid a margin call, expressed as a percentage of the current market value.

Rate of Return

The upward or downward movement in the value of an investment across a chosen timeframe, expressed as a percentage of the investment's initial investment.