In a Statement of Cash Flows, Which of the Following

question 8

Multiple Choice

In a statement of cash flows, which of the following events would not be classified as an operating activity?

• A)purchase of a trading security
• B)receipt of a cash dividend
• C)payment of interest on a bond issue
• D)proceeds from the sale, at a gain, of an available-for-sale security

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Definitions:

Exercise Price

The predetermined price at which the holder of an option can buy (in the case of a call option) or sell (in the case of a put option) the underlying asset.

Call Option

A financial contract giving the buyer the right, but not the obligation, to purchase a stock or other asset at a specified price within a specified time.

Risk-free Rate

Often considered as the return on government securities, it represents the interest an investor would expect from an absolutely risk-free investment over a specified period.

Put Option

A financial contract that gives the holder the right, but not the obligation, to sell a specified amount of an underlying asset at a set price within a specified period.