Which of the Following Statements Is False with Regard to Investments

question 43

Multiple Choice

Which of the following statements is false with regard to investments and the cash flow statement?

• A)Dividends received from stock investments increase cash flows from investing activities.
• B)Income from investments accounted for using the equity method does not create cash flows.
• C)Sale of stock investments is a cash inflow from investing activities.
• D)Dividends received from stock investments accounted for using the equity method are not reported as income but are reported as cash flows.

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Definitions:

Not Correlated Stocks

Stocks whose price movements are independent of each other, indicating no direct relationship in their performance.

Volatility

The degree of variation of a trading price series over time, usually measured by the standard deviation of logarithmic returns.

Negatively Correlated Stocks

Stocks that move in opposite directions; when the price of one increases, the price of the other tends to decrease.

Volatility

A statistical measure of the dispersion of returns for a given security or market index, often used to gauge risk.