What is cost-benefit analysis? Describe the process of cost-benefit analysis
What will be an ideal response?
Cost-benefit analysis is an attempt to compare the costs and benefits of a program. Typically, this will be undertaken when a program is in the planning stages to see whether the program should go forward. The first step in cost benefit analysis is enumerating the options available. For some goals, only one option might be feasible but for others multiple options might be feasible, with one more cost-effective than the others. The second step is to enumerate the costs and benefits of each option. This involves enumerating all of the primary and significant secondary effects, making sure not to double count any costs or benefits. The third step is converting the costs and benefits to dollar terms. Finally, if benefits or costs occur in future periods, they need to be discounted to the current period.
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If a number greater than the mean (average) of a series of observations is added to the series, the new mean is:
A) greater than the original mean. B) smaller than the original mean. C) same as the original mean. D) either greater or smaller than the original mean depending on the number of observations in the series.
Evidence against market efficiency includes
A) failure of technical analysis to outperform the market. B) the random walk behavior of stock prices. C) the inability of mutual fund managers to consistently beat the market. D) the January effect.