________ Questions Have to Do with Explanation and Prediction; ________

question 29

Multiple Choice

________ questions have to do with explanation and prediction; ________ questions have to do with what ought to be.

• A) Positive; negative.
• B) Negative; normative.
• C) Affirmative; positive.
• D) Positive; normative.
• E) Econometric; theoretical.

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Definitions:

Risk

The potential for experiencing losses or less-than-expected returns, inherent in investments and business activities.

Common-sized Financial Statements

Financial statements that present all items in percentage terms. The balance sheet items are presented as a percentage of assets, and income statement items are presented as a percentage of sales.

Industry Averages

Statistical benchmarks that represent the standard or average performance in a particular industry, useful for comparison and analysis.

Solvency

A measure of a company's ability to meet its long-term financial obligations, indicating its financial health.