Which One of the Following Will Reduce the Cash Flow

question 16

Multiple Choice

Which one of the following will reduce the cash flow during an accounting period?

• A) High depreciation expense
• B) Reduction of inventory levels
• C) Acquisition of equipment
• D) Increase in accounts payable

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Definitions:

Strike Price

The predetermined price at which the holder of an option can buy (in a call option) or sell (in a put option) the underlying asset.

Call Option

An economic agreement granting the purchaser the option to acquire an asset at a predetermined price during a designated timeframe, without being compelled to do so.

Market Price

The existing cost at which an asset or service is being offered for buying or selling in the market.

American Put Option

An option contract giving the holder the right to sell an asset at a specified price at any time before the expiration date.