Which Two of the Following Four Conditions Are Most Apt

question 17

Multiple Choice

Which two of the following four conditions are most apt to cause a quarterly cash shortfall for a firm which is financially sound?
I. a relatively constant level of sales
II. periodic expenditures for major equipment purchases
III. a steady dependence on a constant level of external financing
IV. highly seasonal sales

• A) I and III only
• B) II and IV only
• C) III and IV only
• D) I, II and III only
• E) II, III and IV only

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Definitions:

Beta

A symbol often representing the type II error rate in hypothesis testing, or a measure of risk exposure in finance.

Type II Error

A statistical error that occurs when one fails to reject a false null hypothesis.

Alpha

In statistics, alpha represents the level of significance, the probability of rejecting the null hypothesis when it is actually true, commonly set at 0.05 or 5%.

Beta

In statistics, it often refers to the probability of making a Type II error, or in finance, a measure of how much a stock's price could move in relation to the market.