Which One of the Following Transactions Will Ultimately Cause a Decrease

question 78

Multiple Choice

Which one of the following transactions will ultimately cause a decrease in Retained Earnings?

• A)Payment of the current month's telephone bill
• B)Collection of cash from a customer for services provided in the current month
• C)Payment of the prior month's Account Payable balance
• D)Receipt of interest on a note receivable

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Definitions:

Market Risk Premium

The additional return an investor expects to receive from holding a risky market portfolio instead of risk-free assets.

SML

Stands for Security Market Line, a graphical representation of the expected return of investments at different levels of systematic, or market, risk.

Beta

An indicator of how much a stock's price is expected to fluctuate, compared to fluctuations in the overall stock market.

Required Rate of Return

The minimum annual percentage return an investor expects to earn from an investment to consider it worthwhile.