Which of the Following Situations Is a Potential Source of Cash

question 40

Multiple Choice

Which of the following situations is a potential source of cash flows for shareholders? I. The investor may be able to sell the shares at a future date.
II. The firm in which the shares are held might pay out cash to shareholders in the form of dividends.
III. The firm in which the shares are held might increase the value of its shares by reducing the total number of shares outstanding.

• A)I only
• B)II only
• C)I and II
• D)II and III

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Definitions:

Phillips Curves

A graphical representation indicating the inverse relationship between the rate of unemployment and the rate of inflation in an economy.

Expected Inflation

The anticipated rate at which the general level of prices for goods and services will rise over a period.

High Inflation

A situation where there is a sustained, rapid increase in the general price level of goods and services in an economy over a period, eroding purchasing power.

High Unemployment

A condition where a large portion of the workforce is not employed, indicating a distressed economy.