What Is the Difference Between Invested Capital and Spontaneous Liabilities

question 52

Multiple Choice

What is the difference between invested capital and spontaneous liabilities?

• A)The firm knows who invests capital in the firm, but not the identity of who the firm owes its spontaneous liabilities.
• B)Invested capital is randomly determined, so the corresponding liabilities must be spontaneous and therefore also random.
• C)Invested capital is the amount of equity invested in the firm, while spontaneous liabilities are the sum of long-term and short-term debt.
• D)Invested capital is the result of investor decisions while spontaneous liabilities arise from the firm's business operations.

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Definitions:

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