Investors in an established firm judge the adequacy of the returns on their investment in relation to:

Question

Quizplus · Accepted Answer

Investors in an established firm are likely to judge the adequacy of their returns on investment by comparing it with the returns on other investments of similar risk. This is because they want to ensure that their investment is generating sufficient returns as compared to the returns they might have received from investing in other assets with similar risk profiles. The stock market's overall performance, industry's profit pool, and prime interest rate may have some impact on the investors' perception of the firm's performance, but they are not direct measures of return on investment.

Investors in an Established Firm Judge the Adequacy of the Returns