Which Refers to the Ability of an Asset to Generate

question 39

Multiple Choice

Which refers to the ability of an asset to generate returns, the returns of which are then reinvested in order to generate their own returns?

• A) buy and hold
• B) compounding
• C) simple returns
• D) extrapolation

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Definitions:

Retained Earnings

Cumulative net income minus dividends paid to shareholders, representing the portion of profit reinvested in the business.

Depreciation Expense

The distribution of a physical asset's cost across its anticipated lifespan to reflect its depreciation over time.

Net Income

The total profit of a company after all expenses and taxes have been deducted from revenue, also known as the bottom line.

Private Corporation

A company owned by non-governmental organizations or a relatively small number of shareholders or company members which does not offer or trade its company stock (shares) to the general public.