Which One of These Statements Is Not Correct

question 77

Multiple Choice

Which one of these statements is not correct?

• A) When a foreign government borrows dollars, investors worry that in some future crisis the government will not have sufficient dollars to repay the debt.
• B) When the Japanese government borrows yen, investors worry that in some future crisis the government will not have sufficient yen to repay the debt.
• C) When a Eurozone government borrows euros, investors worry that in some future crisis the government will not have sufficient euros to repay the debt.
• D) When the U.S. government issues Treasury bonds, investors never need to worry that they will not be paid back.

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Definitions:

Retention Ratio

The fraction of net profits not paid out as dividends but kept within the corporation for reinvestment or other purposes.

Dividend Payout Ratio

The fraction of net income a firm pays to its shareholders in dividends, representing how much money a company returns to shareholders versus retaining for growth.

Net Income

The total profit of a company after all expenses, taxes, and costs have been deducted from total revenue.

External Financing Needed

The additional funds a company requires from external sources to finance its planned activities or growth when internal cash flows are insufficient.