Improvements in a Person's Financial Position Are the Result Of

question 23

Multiple Choice

Improvements in a person's financial position are the result of:

• A)increased liabilities.
• B)reductions in earnings.
• C)increased savings and investments.
• D)increased purchases on credit.
• E)lower amounts deposited in savings.

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Definitions:

Dividend Preference Theory

A theory suggesting that investors prefer dividends from current earnings over potential capital gains because of the perceived certainty of dividend payments.

Bird in Hand

A theory in finance that suggests investors prefer the certainty of dividend payments to the potential for future capital gains.

PE Ratio

The Price to Earnings Ratio, a metric used to evaluate the valuation of a stock by dividing its current share price by its earnings per share.

EPS

Earnings Per Share, a company's profit divided by its number of outstanding shares of stock, indicating the company's profitability.