In Considering Whether a Company Should Invest in Debt or Equity

question 118

Multiple Choice

In considering whether a company should invest in debt or equity securities of another company,which of the following statements is incorrect?

• A) The company wants to make the best use of its excess cash to generate investment income.
• B) Investment income consists of interest earned from equity securities and dividends earned from debt investments.
• C) Investment income includes increases in the market value of debt or equity securities.
• D) The excess cash that can be invested could be the result of temporary or seasonal business fluctuations.

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Definitions:

Motivational Processes

Internal processes that energize, direct, and sustain behavior towards achieving specific goals.

Retention Processes

The methods by which information is kept over time in the brain, crucial for learning and memory functions.

Self-Reinforcement

The process of rewarding oneself for behaving in a desirable way, thus strengthening the likelihood of repeat behavior.

Self-Efficacy

Belief in one's capabilities to organize and execute the courses of action required to manage prospective situations.