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Basic Question 6 of 8
Which relationship has a positive effect on a firm's market value of equity?
B. accounting profit = normal profit
C. accounting profit < normal profit
A. accounting profit > normal profit
B. accounting profit = normal profit
C. accounting profit < normal profit
User Contributed Comments 3
| User | Comment |
|---|---|
| cumc | I DONT UNDERSTAND |
| weebe | accounting profit = economic profit + normal profit Only in Option A, will be economic profit be more than zero Option B economic profit is zero and in Option C it's negative. |
| jzty | If the economic profit is >0, it means the company has a potential to make more money. |
I am using your study notes and I know of at least 5 other friends of mine who used it and passed the exam last Dec. Keep up your great work!
Barnes
Learning Outcome Statements
determine and interpret break even and shutdown points of production, as well as how economies and diseconomies of scale affect costs under perfect and imperfect competition
CFA® 2024 Level I Curriculum, Volume 1, Module 1.