Which of the Following Statements Regarding the Statement of Cash

question 126

Multiple Choice

Which of the following statements regarding the statement of cash flows is true?

• A)The statement of cash flows analyzes the changes in consecutive balance sheets in conjunction with the income statement.
• B)The statement of cash flows is organized as cash inflows less cash outflows.
• C)The statement of cash flows analyzes only the changes in current assets and current liabilities.
• D)The statement of cash flows is an optional financial statement.

---

Definitions:

Convertible Bond

A type of bond that can be converted into a predetermined amount of the company's equity at certain times during its life, usually at the discretion of the bondholder.

Straight-Bond Value

The value of a bond ignoring any embedded options, based purely on its coupon payments and principal repayment.

Conversion Value

The value of a convertible bond if it was immediately converted into common stock.

Call Option

A financial contract giving the buyer the right, but not the obligation, to buy an asset at a specified price within a specified time.