Which of the Following Statements About Investments Is True

question 77

Multiple Choice

Which of the following statements about investments is true?

• A) As income increases, the need for investment planning decreases.
• B) Keeping money idle is a form of investment.
• C) Higher returns on investment will lead to the accumulation of less wealth.
• D) Investment is measured by the amount of debt incurred.
• E) The length of time for which money is invested is important.

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Definitions:

Times-Interest-Earned Ratio

A metric used to evaluate a company's ability to meet its interest obligations, calculated as earnings before interest and taxes (EBIT) divided by interest expense.

EBIT

Earnings Before Interest and Taxes, a metric used to assess a company's financial performance, focusing purely on operational and production efficiency.

Net Profit

The amount of profit left over after all expenses and taxes have been subtracted from total revenue.

Pretax Profit

The earnings a company generates before taxes are deducted.