Blaze Corporation Had OCF of $400, Change in Net Working

question 186

Multiple Choice

Blaze Corporation had OCF of $400, change in net working capital of 300 and cash flow from assets of $320. Given this information, calculate its net capital spending.

• A) $(170)
• B) $(220)
• C) $170
• D) $220
• E) $150

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Definitions:

Characteristic Line

In finance, a line that describes the relationship between the returns on a stock and the returns on the market, used in the Capital Asset Pricing Model (CAPM).

Stable Equilibrium

A state in which a system, once disturbed, returns to its original condition because the equilibrium is stable.

Expected and Required Returns

The returns that investors anticipate or demand from an investment considering its risk, often guiding investment decisions.

SML

Stands for Security Market Line; it represents the relationship between the expected return of an investment and its risk in the capital asset pricing model (CAPM).