Residual Income Is a Better Measure for Performance Evaluation of an Investment

question 67

Multiple Choice

Residual income is a better measure for performance evaluation of an investment center manager than return on investment because: (CMA adapted)

• A) the problems associated with measuring the asset base are eliminated.
• B) desirable investment decisions will not be rejected by divisions that already have a high ROI.
• C) only the gross book value of assets needs to be calculated.
• D) returns do not increase as assets are depreciateD.
• Residual income indicates those situations with more than a threshold return that should be accepteD.

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Definitions:

Symptom Reduction

This refers to the process or outcome of decreasing the intensity or frequency of manifestations of a disease or disorder.

Standardized Scale

A measurement tool that has been normed and validated across various populations to ensure consistency and reliability in assessing specific variables, such as psychological states or academic achievement.

Closing Phase

The final stage in a project, therapy, or procedure where activities are concluded and efforts are reviewed.

Client Goals

Objectives or outcomes that a client aims to achieve through therapeutic intervention, often set collaboratively with a therapist.