The Balance Sheets at the End of Each of the First

question 110

Multiple Choice

The balance sheets at the end of each of the first two years of operations indicate the following: If net income is $115,000 and interest expense is $30,000 for 2012 what is the rate earned on total assets for 2012 (round percent to one decimal point) ?

• A) 9.3%
• B) 10.1%
• C) 8.0%
• D) 7.4%

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Definitions:

Mean-Variance Efficient Portfolio

An investment portfolio that aims for the highest expected return for a given level of risk or the lowest level of risk for a given expected return.

Single-Index Structure

A model used in finance that relates the returns of a stock to the returns of a market index through a single beta factor.

Covariances

A measure indicating the extent to which two variables change in tandem over time.

Well-Diversified Portfolio

A collection of investments that spans various assets to minimize risk while maximizing returns.