Which of the Following Is NOT a Concept That You

question 21

Multiple Choice

Which of the following is NOT a concept that you need to understand to make rational financial decisions?

• A) More value is preferred to less value.
• B) Less risky assets are preferred to riskier assets.
• C) Current cash is more valuable than cash in the future.
• D) Discount rate is a decreasing function of risk.
• E) All of the above are needed.

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Definitions:

Cumulative Preferred Stock

A type of preferred stock that has a feature where missed dividend payments accumulate and must be paid out before dividends can be issued to other stock types.

Outstanding Shares

Represents the total shares of a corporation’s stock that are currently owned by all its shareholders, including share blocks held by institutional investors and restricted shares owned by the company’s officers and insiders.

Stock Dividend

A dividend payment made to shareholders in the form of additional shares rather than cash.

Market Value

The contemporary rate at which a marketplace allows the purchase or sale of an asset or service.