When Choosing a Benchmark, It Is Best to Use ________

question 4

Multiple Choice

When choosing a benchmark, it is best to use ________.

• A) numerous firms in the same industry
• B) your number one competitor
• C) the aspirational firm you wish to emulate
• D) standards established by the FASB

---

Definitions:

Component Cost

The expense associated with acquiring or manufacturing each individual part of a product or service.

Flotation Cost

The total costs associated with issuing new securities, including underwriting fees and other expenses.

Preferred Stock

A class of ownership in a corporation that has a higher claim on assets and earnings than common stock, typically with dividends that are paid out before those of common stocks.

CAPM

The Capital Asset Pricing Model, a theory that describes the relationship between systematic risk and expected return for assets, particularly stocks.