Which One of the Following Is Not a Financial Instrument

question 83

Multiple Choice

Which one of the following is not a financial instrument?

• A)Commitments to pay dividends
• B)Commitments to guarantee indebtedness of third parties
• C)Commitments to provide financing to customers
• D)Financial arrangements designed to reduce risks

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Definitions:

Debt-to-Equity Ratio

A ratio reflecting the comparative amounts of debt and equity used to finance a company’s assets.

Investment Needs

The amount of capital required to fund a project, purchase assets, or support operations within a business.

Regular Cash Dividend

A payment made by a firm to its shareholders from its profits in the form of cash.

Cyclical Dividend Policy

A dividend payment strategy by companies that varies depending on the economic cycle, with higher payouts during economic prosperity and lower or no dividends during downturns.