A Firm Whose Primary Business Is in a Line of Regional

question 72

Multiple Choice

A firm whose primary business is in a line of regional grocery stores would be most likely to have to include which of the following facts, if true, in the firm's management discussion and analysis (MD&A) ?

• A) that a large number of funds were allocated to advertising to increase awareness of the firm's brand in new areas it had expanded into this year
• B) that some senior members of the management team have retired in this financial year
• C) that the company has lost a class action suit brought against the firm by its employees and is expected to have to pay a large amount of damages
• D) that the firm has plans to expand into the organic food business in the next financial year by purchasing several small organic food retailers

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Definitions:

Risk-Free Rate Of Return

The assumed rate of return on an investment that carries no risk, typically illustrated by the return on government securities.

Strike Price

The fixed price at which the holder of an option can buy (in the case of a call) or sell (in the case of a put) the underlying asset.

Market Value

The total value of a company, measured through the market price of its outstanding shares.

Equity

The value of an asset after deducting the amount of liabilities or the ownership interest in a firm.