Which of the Following Is True of Cash Flows and Risk

question 79

Multiple Choice

Which of the following is true of cash flows and risk?

• A) Low cash flow and low risk result in an increase in share price.
• B) High cash flow and low risk result in an increase in share price.
• C) High cash flow and high risk result in an increase in share price.
• D) Lo cash flow and high risk result in an increase in share price.

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Definitions:

Short Run

A time period in which at least one input (e.g., plant size, machinery) in the production process is fixed and cannot be changed.

Equilibrium Price

Equilibrium price is the price at which the quantity of goods supplied is equal to the quantity of goods demanded, achieving a state of market balance.

Purely Competitive

Refers to a market configuration in which numerous companies offer the same products, with no single company having the power to affect the market's pricing.

Short-Run Equilibrium

A state in which market supply and demand balance out at a specific price level, usually considered within a timeframe where some factors are fixed.