An Item Is Considered Material If

question 63

Multiple Choice

An item is considered material if

• A) it doesn't costs a lot of money.
• B) it is of a tangible good.
• C) its size is likely to influence the decision of an investor or creditor.
• D) the cost of reporting the item is greater than its benefits.

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Definitions:

Fixed Dividend

A dividend that is set at a particular amount and does not vary, often found in preferred stocks.

Dividend Yield

A financial ratio that shows how much a company pays out in dividends each year relative to its share price.

Cost of Equity

The rate of return that a company is required to pay out to its equity investors, reflecting the compensation for the risk they undertake.

SML Approach

Security Market Line (SML) approach is a graphical representation in the Capital Asset Pricing Model (CAPM) that shows the expected return of an asset or portfolio at various levels of systemic risk.