Which One of the Following Is a True Statement

question 103

Multiple Choice

Which one of the following is a true statement?

• A) When choosing an investment, it is not necessary to consider the risk factor.
• B) During inflationary times, there is a risk that the financial return on an investment will not keep pace with the rate of inflation.
• C) The interest rate risk associated with investments in bonds is the result of changes in business conditions faced by companies.
• D) The risk of business failure deals with changes in the value of stocks and bonds due to changes in interest rates in the market.
• E) The prices of stocks, bonds, and other investments never fluctuate in the market.

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Definitions:

Dividends

Payments made to shareholders out of a company's profits.

Equity Method

This is a method in accounting where investments in external companies are initially logged at their acquisition cost, then later altered to account for the owner's share in the profits or losses of the company invested in.

Intra-entity Inventory

Inventory transactions that occur within the same company, involving transfers between departments or subsidiaries, not affecting the overall financial position.

Gross Profit

The financial metric representing the difference between sales and the cost of goods sold.