All of the Following Statements Are Considered to Be Good

question 30

Multiple Choice

All of the following statements are considered to be good advice for a potential investor starting an investment program except:

• A)Work to balance your budget.
• B)Increase credit purchases to conserve cash.
• C)Establish specific and measurable investment goals.
• D)Start an emergency fund.
• E)Establish a line of credit.

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Definitions:

Plowback Ratio

Also known as the retention rate, it refers to the portion of earnings that a company retains and reinvests in its operations rather than distributing as dividends.

Optimistic Assumptions

Assumptions made under the most favorable conditions, often used in forecasting or planning to predict the best-case scenario outcomes.

Pro Forma

A method of calculating financial results using hypothetical income and expenses, often used for planning or projective statements.

Financial Planning

The process of framing objectives, policies, procedures, budgets, and financial forecasts for a specific time frame.