If a Company Sells Equipment with Accumulated Depreciation Totaling $4,200

question 19

Multiple Choice

If a company sells equipment with accumulated depreciation totaling $4,200 and an original cost of $5,100, for a loss of $400, what amount will appear in the investing activities section of the statement of cash flows?

• A)$500 inflow
• B)$400 inflow
• C)$900 inflow
• D)$4,700 inflow

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Definitions:

CAPM

Capital Asset Pricing Model, a model that describes the relationship between systematic risk and expected return for assets, particularly stocks.

Risk Premium

An expected return in excess of that on risk-free securities. The premium provides compensation for the risk of an investment.

Market Portfolio

An investment portfolio that theoretically includes all assets in the market, with each asset weighted according to its market capitalization.

Expected Return-Beta Relationship

A concept in the Capital Asset Pricing Model (CAPM), indicating that the expected return on an investment is related to its beta, which measures the investment's volatility relative to the market.