Which of the Following Is NOT True of Risk Capital

question 56

Multiple Choice

Which of the following is NOT true of risk capital?

• A) From the shareholders' perspective, the measure of competitive advantage is primarily based on return on their risk capital.
• B) Risk capital invested in a firm can be legally recovered if the firm goes bankrupt.
• C) A person who provides capital to a firm gets equity shares in return.
• D) Return on risk capital includes stock price appreciation plus dividends received over a specific period.

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Definitions:

Purchase Price

The amount of money paid to buy a good, service, or asset.

Perpetuity

A financial instrument that provides indefinite payments at fixed intervals, theoretically lasting forever.

Compounded Monthly

The process where interest is calculated on a monthly basis and added to the principal, allowing it to earn interest in subsequent months.

Perpetuity

A type of annuity that pays an infinite series of payments, continuing indefinitely.