Why is the computation of cost of capital likely to be higher under the Fama-French model than the CAPM?
A) The Fama-French model does not use the difference in the return on a portfolio of small.
B) The Fama-French model does not use return on the value-weighted market portfolio.
C) The CAPM does not measure the market correlation.
D) Fama-French has two additional factors.
Answer: D
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Delmont Movers has a profit margin of 7.1 percent and net income of $63,700. What is the common-size percentage for the cost of goods sold if that expense amounted to $522,600 for the year?
a. 12.19% b. 23.50% c. 53.25% d. 61.06% e. 58.25%
Under the equity method, if an investee company generates net income, the investor company:
(a) does not recognize any share of the net income (b) records its proportionate share of the net income as dividend income (c) records its proportionate share as an increase in its investment account (d) records its proportionate share as an unrealized gain