Which of the Following Statements Is TRUE

question 136

Multiple Choice

Which of the following statements is TRUE?

• A) Treasury stock causes the number of issued shares to go down.
• B) Treasury stock causes the number of issued shares to exceed authorized shares.
• C) Treasury stock causes the number of outstanding shares to go up.
• D) Treasury stock causes the number of outstanding shares to go down.

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Definitions:

Zero Coupon Interest Rate

A rate of interest reflecting the discount from par at which zero-coupon bonds are sold. This rate is not paid annually but at maturity.

Arbitrage Profit

Profit earned from buying and selling the same asset in different markets to take advantage of differing prices for the same asset.

Stock Index

A measurement of a section of the stock market calculated from the prices of selected stocks, representing a specific market or sector.

Futures Contracts

Financial contracts obligating the buyer to purchase an asset or the seller to sell an asset, such as a physical commodity or a financial instrument, at a predetermined future date and price.