Which of the Following Is Generally True Regarding Liquidity as It

question 314

Multiple Choice

Which of the following is generally true regarding liquidity as it relates to the firm?

• A) Liquidity is detrimental to a firm because it allows the firm to pay its bills more easily, thereby avoiding financial distress.
• B) Liquidity is valuable to a firm because liquid assets can be sold quickly without much loss in value.
• C) Liquidity is valuable to a firm because a firm can borrow money using its liquid assets, such as a warehouse, as collateral.
• D) Assets are generally listed on a firm's statement of financial position in the order of increasing liquidity.
• E) Liquid assets generally earn a large return, especially in comparison to illiquid assets.

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Definitions:

Median

The middle value in a data set, which separates the higher half from the lower half.

Unimodal

Refers to a distribution that has a single peak or mode.

Median

The middle value in a sorted list of numbers, effectively dividing the distribution into two equal halves.

Mean

In statistics, it refers to the average value in a data set, calculated by summing all the numbers and dividing by the count of these numbers.