Which of the Following Statements Is True

question 32

Multiple Choice

Which of the following statements is true?

• A) Stockholders prefer corporations to make investments when the net present value is positive.
• B) Stockholders prefer corporations to make investments only when the probability of loss is very low.
• C) Most corporate charters require a stockholder vote on decisions concerning large investment projects.
• D) Stockholders prefer corporations to make all investments with positive net incomes.

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Definitions:

Financing Activities

Transactions related to raising funds or repaying borrowed funds, as reported in the statement of cash flows.

Financing Activities

Transactions a company undertakes to fund its operations and expansions, such as issuing equity or taking on loans.

Indirect Method

A way of calculating cash flows from operating activities by starting with net income and adjusting for changes in non-cash accounts.

Cash Flows

The total amount of money being transferred into and out of a business, particularly affecting liquidity, investment, and operating activities.