Which of the Following Will Be of Interest to Investors

question 22

Multiple Choice

Which of the following will be of interest to investors in decision-making?

• A) Assessing the company's ability to generate net cash inflows.
• B) Assessing management's ability to protect and enhance the capital providers' investments.
• C) Both assessing the company's ability to generate net cash inflows and assessing management's ability to protect and enhance the capital provider's investments.
• D) Assessing the company's ability to collect debts.

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Definitions:

Securities

Financial instruments that represent an ownership position in a publicly-traded corporation or a creditor relationship with a government or corporation.

Perpetuity

An annuity that pays a constant stream of cash flows indefinitely.

Duration

An indicator of how a bond or debt security's price is affected by interest rate fluctuations, usually stated in terms of years.

Yield

The income return on an investment, such as the interest or dividends received, expressed as a percentage of the investment's cost or current market value.