Which of the Following Statements Regarding Investors and the CMT

question 56

Multiple Choice

Which of the following statements regarding investors and the CMT is true?

• A) Investors recognize that all the assumptions of the CMT are unrealistic.
• B) Investors recognize that all of the CMT assumptions are not unrealistic.
• C) Investors are not aware of the assumptions of the CMT model.
• D) Investors recognize the CMT is useless for individual investors.

---

Definitions:

Forced into Bankruptcy

A situation where an individual or company is legally compelled into declaring bankruptcy by creditors or legal action, often due to inability to pay outstanding debts.

Unsecured Claims

Claims or debts in a bankruptcy that are not backed by any collateral and therefore rank lower in priority for repayment.

Bankruptcy Proceedings

The legal process through which individuals or businesses unable to pay their debts can seek relief from some or all of them under the jurisdiction of a bankruptcy court.

Twelve or More Creditors

A situation where an individual or entity owes debts to twelve or more separate creditors, often relevant in bankruptcy contexts.