Which of the Following Statements Is False

question 16

Multiple Choice

Which of the following statements is false?

• A)Investing cash flows include the cash flows associated with lending money to others.
• B)Financing cash flows include the cash flows associated with issuing stock and paying dividends.
• C)Financing cash flows include the cash flows associated with borrowing and repaying debt excluding short-term bank loans.
• D)Investing cash flows include the cash flows associated with buying and selling noncurrent assets.

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Definitions:

Efficient Frontier

A concept in modern portfolio theory representing a set of optimal investment portfolios that offer the highest expected return for a defined level of risk or the lowest risk for a given level of expected return.

Capital Asset Pricing Model

A model that describes the relationship between systemic risk and expected return for assets, particularly stocks, used to calculate a theoretically appropriate required rate of return for an asset, given its non-diversifiable risk.

Expected Rate

The anticipated return on an investment based on historical averages, interest rates, or economic indicators.

Illiquidity Premiums

Additional return expected by investors for holding assets that are difficult to trade quickly without significant price concessions.