An Increase in Total Assets

question 40

Multiple Choice

An increase in total assets:

• A)means that net working capital is also increasing.
• B)requires an investment in non-current assets.
• C)means that shareholders' equity must also increase.
• D)must be offset by an equal increase in liabilities and shareholders' equity.
• E)can only occur when a firm has positive net income.

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Definitions:

Correlation Coefficient

A statistical measure that describes the extent to which two variables fluctuate together, ranging from -1 (perfect negative correlation) to +1 (perfect positive correlation).

Covariance

A measure of the degree to which two variables move in relation to each other, indicating the direction of their relationship.

Expected Return

The anticipated return on an investment, averaging in the probability of different outcomes.

Optimal Risky Portfolio

A portfolio construction that maximizes expected return for a given level of risk, based on modern portfolio theory.