What is the purpose of return on investment?
What will be an ideal response?
Answer: The return on investment communicates several pieces of important information. First the potential return signals the risk associated with the investment. Principle 8: Risk and Return go hand in hand tells us that the higher the potential return, the more risk associated with the investment. Secondly, the return signals the opportunity cost of the investment. An investment with a potential return of 6% means that you would be giving up the opportunity to earn a higher or lower return on another investment option. You would need to analyze the risk associated with each return to determine if one was more appropriate than the other. Lastly, the potential return communicates how likely it will be for you to obtain your financial goals. A low return may signal an investment that is to conservative for you to reach your long term goals. A high return may signal that the investment is to risky and inappropriate for your needs.
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The basic form of an account.
What will be an ideal response?
Gabrielle is the chief marketing officer of Boyd Pharmaceuticals. She is meeting with Trent, the chief financial officer to decide on the company's marketing communications budget
After extensive discussions, they decide that the size of the budget will be calculated as a fraction of the overall turnover. What method did Gabrielle and Trent use to arrive at the marketing communications budget? A) affordable method B) objective-and-task method C) competitive-parity method D) activity-based method E) percentage-of-sales method