Identify the Correct Statement About the Securities Market

question 177

Multiple Choice

Identify the correct statement about the securities market.

• A)Secondary markets make shares readily convertible into cash and increase the liquidity of securities.
• B)Secondary markets make bonds readily convertible into cash and increase the funds available with a corporation.
• C)The securities market decides the value of a corporation on the basis of its profits.
• D)The securities market decides the value of a corporation on the basis of the number of years it has registered profits.
• E)The securities market decides the value of a corporation on the basis of the number of its employees.

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Definitions:

Debt and Equity

Debt and Equity are the two primary ways companies finance their activities, with debt referring to borrowed money to be repaid and equity representing ownership interests in the company.

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations or those due within one year, calculated as current assets divided by current liabilities.

Current Liabilities

Obligations or debts a company must pay within a year or within its operating cycle if longer than a year.

Company Finance

Refers to the financial activities related to running a company, focusing on maximizing shareholder value through long-term and short-term financial planning and the implementation of various strategies.