Wealthy investars cfen unds, Hiedige fund managers use investors\' money to buy
ID: 1160715 • Letter: W
Question
Wealthy investars cfen unds, Hiedige fund managers use investors' money to buy stocks bonds, and otherimvestments with the interion h But a colm in the Hhet om noted that ma nvestors to determine which they were Source: James Mackintosh, "Every Stock Picking Opportunity ls a Way to Lose Money Too, Wall Street Journal, January 16, 2017 is it ever easy to determine whether a tirim making economic profits is doing so because of the skills of the firm's managers or because of luck? Brnefly explain Determining why a frm is making economic profits (ie, whether profitability is due to managerial skill or luck) is O A. easy because profitability is determined by factors under a firm's control, such as the ability to produce its product at iower cost ? ? never easy because pro tabiity determined by factors under a n s con o such as he ability to diff entate nts oduct and factors beyond its eo ro such as chance e ents ? ? ever easy because profitabili y ws determined by factors nder a firm scontro such as factors affecting all the firms n the market, and actos beyond s contro such as chance events O D. never easy because profitability is determined by factors under a firm's contral, such as the ability to produce itsproduct at lower cost and factors beyond its control, such as the ability to differentiate its product O E. easy because profitability is determined by factors not under a firms control, such as factors affecting all the firms in the market.Explanation / Answer
Ans:
Option C
never easy because profitability is determined by factors under a firms control such as factors affecting all the firms in the market and factors beyond its control such as chance events.
The profitability of a firm is affected by both internal and external factors.Internal factors means the factors under its control and external factors are the factors beyond its control.