Which of the Following Is a TRUE Statement

question 34

Multiple Choice

Which of the following is a TRUE statement?

• A)A share split will increase total assets, but a share dividend will not.
• B)Neither a share split nor a share dividend will affect total assets or total liabilities.
• C)Both a share split and a share dividend will decrease total assets.
• D)Both a share split and a share dividend will increase total liabilities.

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Definitions:

SML

The Security Market Line, a graphical representation of the Capital Asset Pricing Model (CAPM) showing the relationship between the expected return of a security and its risk.

CML

The Capital Market Line, representing the risk-return trade-off of efficient portfolios in the capital market theory; it shows the highest return possible for any given level of risk.

Well-Diversified Portfolios

Investment portfolios that contain a wide variety of assets to minimize exposure to any single asset or risk.

Relative Systematic Risk

The risk inherent to the entire market or market segment, which can be compared relative to other stocks or securities within the same market.