A Rise in Stock Prices ________ the Net Worth of Firms

question 31

Multiple Choice

A rise in stock prices ________ the net worth of firms and so leads to ________ investment spending because of the reduction in moral hazard.

• A)raises;higher
• B)raises;lower
• C)reduces;higher
• D)reduces;lower

---

Definitions:

Variable Costs

Costs that vary directly with the level of production or sales volume, such as raw materials and direct labor.

Profit and Loss Statement

A financial statement that summarizes the revenues, costs, and expenses incurred during a specific period, typically a fiscal quarter or year.

CVP Analysis

Cost-Volume-Profit Analysis, a tool used to determine how changes in costs and volume affect a company's profits.

Variable Cost

Expenses that vary directly with the level of production or sales, such as materials or labor.