Which of the Following Statements Is Correct

question 11

Multiple Choice

Which of the following statements is correct?

• A) A low average payment period and a high accounts payable turnover are a sign of good management.
• B) A high average payment period and a low accounts payable turnover are a sign of good management.
• C) A high average payment period and a high accounts payable turnover are a sign of good management.
• D) A low average payment period and a low accounts payable turnover are a sign of good management.

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Definitions:

Cost of Debt

The effective rate that a company pays on its current debt, calculated as the interest expense on the debt divided by the total debt.

Security Market Line

A line in the Capital Asset Pricing Model (CAPM) that represents the relationship between the expected return of a security and its systemic risk.

Systematic Risk

The risk inherent to the entire market or an entire market segment, influenced by factors such as economic, geopolitical, and financial events, which cannot be eliminated through diversification.

Expected Return

The anticipated return on an investment, factoring in the probability of various outcomes.