Briefly explain the holding period return (HPR) and give several characteristics of this measure
What will be an ideal response?
Answer: HPR is the total return earned from holding an investment for a specified period of time.
HPR =
(a) HPR takes into account both current income and capital gains.
(b) HPR should be used for holding periods of one year or less.
(c) HPR does not take into account the time value of money.
(d) HPR offers a relative comparison of investments of different sizes.
(e) HPR indicates the return per invested dollar.
(f) HPR can have a positive, a zero, or a negative value.
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Gerard and Tony organize an LLC (limited liability company) by investing $55,000 and $45,000 respectively
The operating agreement states that profits are to be shared in the ratio of 55:45 between Gerard and Tony and makes no mention of sharing losses. The LLC incurs a loss of $100,000 in its first year. How is this loss shared? A) Both Gerard and Tony have to pay $50,000 each. B) Gerard pays $55,000, while Tony pays $45,000. C) Gerard pays $45,000, while Tony pays $55,000. D) Gerard and Tony are not liable for the losses of the LLC.
Which of the following statements is true of real property inherited under a will?
A) The person is not allowed to renounce the will after the death of the testator. B) The person can only renounce the will before probate is conducted. C) The person is not allowed to renounce the will if all outstanding claims against it are not settled by him or her. D) All outstanding claims against the property like liens and mortgages are inherited by the beneficiary.
A comparison of the contingency reserves of schedule, resources, and budget at a particular time during the progress of a project with the original schedule, resources, and budget to determine if there are enough reserves in schedule, resources, or
budget best defines A) total operating cost. B) feasibility study. C) reserve analysis. D) risk analysis.
When using the internal rate of return method, the future cash flows are discounted at a rate that makes the net present value equal to
a. assets minus liabilities. b. assets minus owners' equity. c. assets minus (liabilities plus owners' equity). d. zero.