The Purpose of Adding an Asset with a Negative or Low

question 16

Multiple Choice

The purpose of adding an asset with a negative or low positive beta is to

• A) reduce profit.
• B) reduce risk.
• C) increase risk.
• D) increase profit.

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Definitions:

Stock Dividends

A dividend payment made to shareholders in the form of additional shares rather than cash payout, reflecting the company's desire to reinvest the dividend back into the business.

Accrual

The accounting principle of recording revenues and expenses when they are incurred, regardless of when cash transactions occur.

Vacation Pay

Compensation owed to employees for their entitled but unused vacation time, often recognized as a liability on the balance sheet.

GAAP

An aggregation of universally recognized rules and standards in accounting for presenting financial information.