Which One of the Following Statements Concerning Liquidity Is Correct

question 16

Multiple Choice

Which one of the following statements concerning liquidity is correct?

• A) If you sold an asset today, it was a liquid asset.
• B) If you can sell an asset next year at a price equal to its actual value, the asset is highly liquid.
• C) Trademarks and patents are highly liquid.
• D) The less liquidity a firm has, the lower the probability the firm will encounter financial difficulties.
• E) Balance sheet accounts are listed in order of decreasing liquidity.

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Definitions:

Cyclical Component

A pattern in a time series data set that occurs at regular or predictable intervals, often related to economic cycles.

Periodic Fluctuations

Systematic variations within a time series data that occur at regular intervals over time.

Time Series

A sequence of data points, typically consisting of successive measurements made over a time interval.

Moving Averages

A technique used in time series analysis to smooth out short-term fluctuations and highlight longer-term trends by averaging data points over a specified period.