CFA Practice Question

There are 539 practice questions for this study session.

CFA Practice Question

Which relationship has a positive effect on a firm's market value of equity?

A. accounting profit > normal profit
B. accounting profit = normal profit
C. accounting profit < normal profit
Correct Answer: A

In this case, the economic profit > 0.

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.
You need to log in first to add your comment.