In the Most General Sense, Which of the Following Would

question 25

Multiple Choice

In the most general sense, which of the following would you expect to be true?

• A) If a current asset account and a current liability account both increase by the same amount, there is a net use of funds.
• B) If fixed assets decrease by the amount of depreciation for the year, there is a net use of funds.
• C) Changes in income and expense accounts do not affect sources and uses of funds.
• D) If a liability account increases and an asset account decreases by the same amount, there is a net source of funds.
• E) If the common stock outstanding increases there is a use of funds.

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Definitions:

Risk-Free Rate

The theoretical rate of return of an investment with no risk of financial loss.

Risk Premium

The additional return above the risk-free rate demanded by investors for taking on a certain level of risk.

Business-Specific

Business-specific refers to elements, strategies, or characteristics that are unique or pertinent to a particular company or industry.

Market Components

The different elements that make up a financial market, including stocks, bonds, currencies, commodities, and derivatives.