The Basic Sources of Capital for a Firm Include All

question 65

Multiple Choice

The basic sources of capital for a firm include all of the following EXCEPT

• A) long-term debt.
• B) preferred stock.
• C) current liabilities.
• D) common stock.

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Definitions:

Nonsystematic Risk

The risk associated with an individual investment or a small group of investments, which can be mitigated through diversification.

Treynor-Black Model

An optimization tool used by portfolio managers to balance the trade-off between risk and return by combining actively selected securities with a passively managed market portfolio.

Nonsystematic Risk

The risk associated with a specific issuer of a security, industry, or sector, which can be mitigated through diversification.

Systematic Risk

The risk inherent to the entire market or entire market segment, which cannot be mitigated through diversification.