Which of the Following Statements Is True About Net Worth

question 76

Multiple Choice

Which of the following statements is true about net worth?

• A)A firm's net worth should be higher than the stockholders' equity.
• B)A firm's net worth should be equal to 50 percent of the value of the total assets of the firm.
• C)A firm's net worth is equal to total assets minus total liabilities.
• D)A firm's net worth is the amount that the firm's assets can generate on their liquidation.
• E)A firm's net worth is the amount to be paid by the shareholders to the firm on liquidation of the firm.

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Definitions:

Systematic Risk

The risk inherent to the entire market or market segment, representing factors that affect all companies such as economic, political, or social changes.

Diversifiable Risk

The portion of an investment's risk that can be reduced or eliminated through portfolio diversification, also known as unsystematic risk.

Unsystematic Risk

The type of risk that is unique to a specific company or industry, unpredictable and can be mitigated through diversification.

Minable Gold Reserves

The quantity of gold that is economically viable to extract from the earth's crust.