Which of the Following Is an Example a Statement Made

question 18

Multiple Choice

Which of the following is an example a statement made by a salesperson that would be considered "puffing"?

• A) This car will get 35 miles per gallon.
• B) This is a genuine diamond ring.
• C) This is an original work of art.
• D) This copier is the best in the business.

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Definitions:

Target Capital Structure

The mix of debt, preferred stock, and common equity that a company aims to hold to minimize its cost of capital and maximize its market value.

Forecasted Net Income

Forecasted net income is an estimate of a company's future profits after all expenses and taxes have been subtracted from revenues.

Total Dividends

The sum of all dividend payments made by a company to its shareholders over a specified period, usually a fiscal year.

Residual Dividend Policy

A policy wherein dividends are based on the earnings left over after all operating expenses and expansion projects are funded.