CFA Practice Question

There are 539 practice questions for this study session.

CFA Practice Question

Which of the following does NOT represent a firm's explicit costs?

I. Costs related to workers salaries
II. The amount paid by the firm for employee health benefits
III. The firm's total accounting costs
IV. The value of the CEO's time
V. The electricity bill
Correct Answer: IV only

The CEO is paid for the value of his/her work, not the value of his/her time. This time is an implicit cost.

User Contributed Comments 2

User Comment
sergashev shouldn't he/she be owner with CEO role, if CEO is hired, firm does not have to consider CEO's personal opportunity cost ?
mordja Fair observation sergashev. I think from the options though we can logically assume the CEO has an ownership interest as the others are quite obviously explicit.
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