If the Amount of Net Income for the Current Period

question 45

Multiple Choice

If the amount of net income for the current period exceeds the amount of the owner's withdrawals, there will be a(n) :

• A)decrease in the cash account.
• B)increase in the owner's capital account.
• C)decrease in the owner's capital account.
• D)increase in the cash account.

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Definitions:

Market Portfolio

A theoretical bundle of investments that includes every type of asset available in the market, with each asset weighted by its total market capitalization.

Capital Asset Pricing Model (CAPM)

Equation of the Security Market Line showing the relationship between expected return and beta.

Reward To Risk Ratio

A measure that evaluates the anticipated gains from an investment against the level of risk assumed to achieve these gains.

Security Market Line

A graphical representation of the expected return of all risky marketable securities as a function of their beta, or systemic risk, according to the capital asset pricing model.