If Investors Showed Less of a Preference for Investing in War-Related

question 56

Multiple Choice

If investors showed less of a preference for investing in war-related companies, then it would be expected that the stock prices for those companies would

• A) increase, and the rates of return would decrease relative to other companies.
• B) decrease, and the rates of return would increase relative to other companies.
• C) decrease, but the rates of return would stay the same relative to other companies.
• D) decrease, and the rates of return would decrease relative to other companies.

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Definitions:

Average Collection Period

The average number of days it takes for a company to receive payment from its customers for invoices issued.

Inventory Turnover

A measure of how often a company sells and replaces its stock of goods within a certain period.

Average Sale Period

The average amount of time it takes for a company to convert its inventory into sales.

Operating Cycle

The duration of time it takes for a company to purchase inventory, sell the goods, and receive cash from sales.