Which One of the Following Correctly Reflects the Effects on the Financial

question 85

Multiple Choice

Which one of the following correctly reflects the effects on the financial statements caused by the increase in the market price of long-term passive equity investments?

• A)Current ratio is unchanged and earnings per share increases.
• B)Current ratio and earnings per share increase.
• C)Current ratio and earnings per share are unchanged.
• D)Current ratio is unchanged and earnings per share decreases.

Understand the principle of hypothesis testing, including null and alternative hypotheses.

Interpret P-values in the context of hypothesis testing.

Distinguish between one-sided and two-sided significance tests.

Analyze the significance level (alpha) and its role in hypothesis testing.

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Definitions:

Normative Statements

Statements that express value judgments or opinions about what ought to be rather than statements of fact.

Positive Theories

Positive theories attempt to describe how the world is, focusing on factual statements and cause-effect relationships without prescribing what actions should be taken.

Congressional Budget Office

The Congressional Budget Office is a federal agency within the legislative branch of the United States government that provides budget and economic information to Congress.

John Maynard Keynes

A British economist whose theories on government intervention in economies (Keynesian economics) have greatly influenced modern economic policies.