You Are Trying to Decide in Which of the Three

question 5

Multiple Choice

You are trying to decide in which of the three companies you should invest. Refer to the following Payoff Table. If the market declines in the next year, which of the following statements are correct?
i. The Opportunity Loss for Company A is $250.
ii. The Opportunity Loss for Company B is $30.
iii. The Opportunity Loss for Company C is $500.

• A) (i), (ii) and (iii) are all correct statements
• B) (i) is a correct statement but not (ii) or (iii).
• C) (ii) is a correct statement but not (i) or (iii).
• D) (ii) and (iii) are correct statements but not (i).
• E) All statements are false

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Definitions:

Working Capital

The difference between a company's current assets and current liabilities, indicating its short-term liquidity.

Paid-In Capital

The amount of money a company has received from shareholders in exchange for shares of stock.

Capital Surplus

Capital surplus refers to the amount that a company raises from the sale of its shares above their par value, often reflecting additional investment or gains retained in the business.

Legal Capital

The portion of a company's equity that cannot be distributed to shareholders and must be maintained as a financial protection for creditors.