Investing All Your Money in One Company Is an Example

question 34

Multiple Choice

Investing all your money in one company is an example of:

• A) risk diversification.
• B) risk pooling.
• C) risk aversion.
• D) None of these statements is true.

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Definitions:

Increase Borrowing

The act of obtaining more funds through loans, typically to support business operations or expansion.

Cash Cycle

The time between cash disbursement and cash collection.

Receivables Balance

The total amount of money owed to a company by its customers for goods or services delivered or used but not yet paid for.

Accounts Receivable Turnover

This ratio measures how efficiently a company collects revenue from its customers by dividing total sales by the average accounts receivable during a specific period.