Mha 706 Final Study Guide Questions And Correct Answers

total budget variance {Ans: the difference between the actual cost of an input and its planned cost.}Efficient Market Theory {Ans: A theory based on the premise that the stock market processes information efficiently. The theory postulates that, as new information becomes known, it is reflected immediately in the price of stock and, therefore, stock prices represent fair prices.}Assumptions of constant growth dividend model {Ans: E(g1) = E(g2) = E(gN) = E(g) R(Re) E(g) The last dividend was paid recently Dividends are paid annually.}Cost Allocation Rate {Ans: dividing # of dollars in cash pool/total volume of cost driver}Indirect costs (overheads) {Ans: Costs associated with shared resources used by the entire organization Ex-costs associated with central services such as human resources and finance}Cash Flow Estimation {Ans: - incremental cash flows - cash flow changes that a new project causes throughout the firm}