You Withdraw Some of Your Savings to Invest in a New

question 38

Multiple Choice

You withdraw some of your savings to invest in a new business venture.Which of the following statements is true?

• A)The return you will earn from this new investment is your opportunity cost.
• B)The interest rate you would have earned in the bank is higher than the return from this investment.
• C)The return you expect to earn from this new investment must exceed your opportunity cost.
• D)The return you expect to earn from this new investment must equal your opportunity cost.

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Definitions:

Accounts Receivable Turnover

A financial ratio measuring how many times a company collects its average accounts receivable balance within a certain period.

Average Accounts Receivable

An accounting metric that represents the average amount of money owed to a company by its customers over a specific time period.

Net Sales

The amount of sales generated by a company after deductions for returns, allowances for damaged or missing goods, and discounts.

Dividend Yield Ratio

A financial ratio that indicates how much a company pays out in dividends each year relative to its share price.