Which One of the Following Statements Concerning Formula Plans Is

question 92

Multiple Choice

Which one of the following statements concerning formula plans is correct?

• A) The use of subjective judgment is important to the routine administration of most formula plans.
• B) Formula plans are based on the adherence to a mechanical set of rules with regard to when to buy and/or sell.
• C) The objective of most formula plans is to maximize profits.
• D) Securities with very stable prices are best suited to nearly all formula plans.

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Definitions:

Contingency Planning

The process of preparing for potential future situations or emergencies, particularly those that might disrupt operations.

NPV

Net Present Value, a method used in capital budgeting to assess the profitability of an investment or project by calculating the difference between the present value of cash inflows and outflows.

Conventional Capital Budgeting

A process of planning and evaluating large-scale investments and expenditures to optimize a company's capital expenditures and investments.

Forecasting Risk

The potential for a forecast to be inaccurate, which can lead to incorrect business decisions and financial performance assessments.