Use the Following Statements to Answer This Question

question 48

Multiple Choice

Use the following statements to answer this question:
I.Debt rating should fluctuate with the economic cycle.
II.Balance sheet strength refers to the ability of the firm to cover its liabilities.

• A)I and II are correct.
• B)I and II are incorrect.
• C)I is incorrect and II is correct.
• D)I is correct and II is incorrect.

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Definitions:

Institutional Investors

Entities such as pension funds, insurance companies, and mutual funds that invest large sums of money on behalf of individuals.

Precious Metals

Metals of high economic value such as gold, silver, platinum, and palladium, often used in jewelry, industrial applications, and as investment.

Dividend-payout Policy

A company's approach to distributing earnings to its shareholders, either in the form of cash dividends or stock repurchases.

Marginal Tax Bracket

The tax rate that applies to the last dollar of the taxpayer's income, indicating the rate at which additional income will be taxed.