Companies Invest in Trading Investments with the Intent of ________

question 51

Multiple Choice

Companies invest in trading investments with the intent of ________.

• A) increasing the amount of long-term assets
• B) gaining the controlling rights of the investee
• C) holding the investment until maturity
• D) generating a profit on a quick sale

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Definitions:

Present Value

The current value of a future sum of money or stream of cash flows, given a specified rate of return.

Nominal Interest Rates

The interest rate before adjustments for inflation, representing the face value of borrowing costs.

Inflation Rate

How quickly the average cost of products and services goes up, causing the ability to purchase to decline.

Price/Earnings Ratio

A valuation ratio of a company's current share price compared to its per-share earnings, indicating the dollar amount an investor can expect to invest in a company in order to receive one dollar of that company’s earnings.