Which One of the Following Statements About the Economy Is

question 4

Multiple Choice

Which one of the following statements about the economy is correct?

• A) It is difficult to accurately predict movements in the stock market when the economy is at a peak.
• B) A strong economy is associated with a declining business cycle.
• C) Stocks tend to perform well in a weak economy.
• D) The economic cycle has little effect on stocks.

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Definitions:

Stockholders' Equity

The residual interest in the assets of a corporation after deducting liabilities, representing ownership interest in the company.

Convertible Bonds

Bonds that can be converted into a predetermined number of a company's shares at certain times during its life, usually at the discretion of the bondholder.

Earnings Per Share

A financial ratio calculated by dividing a company's net income by its number of outstanding shares, indicating the profitability on a per-share basis.

Stock Dividend

A dividend payment made in the form of additional shares of stock, rather than cash.