Misc MCQS Flashcards
Profitiability Ratios
- Return on Asses
- Gross Margin
- Operating Profit Margin
P/E ratio is a market ratio
Basis Risk
Basis risk is the risk of loss from ineffective hedging activities.
DuPont Equation
ROI = Net Operating Profit/Sales multipled by sales divided by total assets
Economic Order Quanty
The economic order quantity model minimizes the sum of ordering and carrying costs.
Oligopoly
Exits in markets or industries characterized by:
- Few sellers
- Firms sell either homogeneous product or differentiated product
- Restricted entry to the market
- Engage primarily in non price competition
Oligopolistic markets are characterized by few large competitors. Therefore, the actions of one affect others in the market.
Monopolistic Competition
The model of monopolistic competition describes a common market structurein which firms have many competitors, but each one sells a slightly different product.
- Each firm makes independent decisions about price and output, based on its product, its market, and its costs of production.
- Knowledge is widely spread between participants, but it is unlikely to be perfect
- There is freedom to enter or leave the market, as there are no major barriers to entry or exit.
- A central feature of monopolistic competition is that products are differentiated
- Monopolistically competitive firms are assumed to be profit maximisersbecause firms tend to be small with entrepreneurs actively involved in managing the business.
- There are usually a large numbers of independent firms competing in the market.
Increase Money Supply
- Federal Reserve reduce discount rate
Market Clearing Quantity
In a competitive market, the market will always clear at the equilibrium price.
If there is an equal increase in both demand and supply, the equilibrium price may increase, decrease, or remain the same. However, there will be more units sold.
