Cash Flows from Issuing and Repurchasing Stock or Issuing and Repaying

question 129

Multiple Choice

Cash flows from issuing and repurchasing stock or issuing and repaying (retiring) debt are classified as

• A)operating activities.
• B)investing activities.
• C)financing activities.
• D)borrowing activities.

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Definitions:

Outstanding Call Options

Call options that have been sold but not yet exercised, representing potential claims on the underlying security.

Efficient-market Hypothesis

The theory that all known information is already reflected in stock prices, making it impossible to consistently achieve higher returns than the overall market.

Security Prices

The current cost or value at which a particular security, such as stocks, bonds, or options, can be bought or sold in the market.

Empirical Validity

The extent to which a theoretical concept is supported by real-world evidence or data.