One Way of Handling Uncertain Cash Flows Is to Set

question 95

True/False

One way of handling uncertain cash flows is to set an upper and lower limit for cash balances and a return point to which the cash balance is brought to when the upper or lower limit is reached.

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Definitions:

Stated Value

A value assigned to no-par value stock by the corporation's board, not based on market price but used for accounting purposes.

Issue Price

Issue price is the price at which a new set of securities, such as bonds or stock, is offered to the public for the first time.

Preferred Stock

A class of stock that offers dividends and/or liquidation preferences over common stock but typically does not carry voting rights.

Par Value

A nominal value assigned to shares of stock by a company's charter, which has little relation to its market value.