Higher Cash Flow and Greater Risk

question 30

Multiple Choice

Higher cash flow and greater risk

• A) have no effect on share price.
• B) have an inverse effect on share price.
• C) adversely affect share price.
• D) have the same effect on share price.

---

Definitions:

Output

The quantity of goods or services produced within a given time period by a firm, sector, or economy.

U-Shaped Marginal Cost

A graphical representation of the cost incurred to produce one more unit of a good, which decreases at first due to increasing returns but eventually increases due to decreasing returns.

Profit-Maximizing Output

The quantity of output at which a firm achieves the maximum possible profit, determined where marginal revenue equals marginal cost.

Economic Profit

The difference between total revenue and total costs, including both explicit and implicit costs.