Which of the following is not a factor that makes total return to shareholders and market capitalization unreliable measures of company performance?
A) the volatility of stock prices
B) the effects of the unemployment rate
C) variations in interest and exchange rates
D) the unpredictability of return on revenue

Question

Quizplus · Accepted Answer

Because overall macroeconomic factors, such as the unemployment rate, economic growth or contraction, and interest and exchange rates, all have a direct bearing on stock prices, using total return to shareholders and firm market capitalization to measure firm performance is not recommended. Other factors also make this method a drawback, including the volatility of stock prices and, at times, the irrational mood of investors. Return on revenue is not an external factor.

Which of the Following Is Not a Factor That Makes