James Company Has a Margin of Safety Percentage of 20

question 55

Multiple Choice

James Company has a margin of safety percentage of 20% based on its actual sales.The break-even point is $200,000 and the variable expenses are 45% of sales.Given this information,the actual profit is:

• A)$27,500
• B)$18,000
• C)$22,500
• D)$22,000

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Definitions:

Beta

A measure of a stock's volatility in relation to the overall market; it indicates the risk associated with a particular equity.

Beta Coefficient

An index of a stock's fluctuation compared to the broader market, signifying its comparative risk.

Negative Beta

A measure indicating that an investment's returns are expected to move in the opposite direction of the overall market returns.

Treasury Bills

Short-term government securities with maturity periods typically less than one year, considered low-risk investments.