An Increase in Total Assets

question 39

Multiple Choice

An increase in total assets:

• A)means that net working capital is also increasing.
• B)requires an investment in fixed assets.
• C)means that shareholders' equity must also increase.
• D)must be offset by an equal increase in liabilities and shareholders' equity.
• E)can only occur when a firm has positive net income.

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Definitions:

Positive Expected Return

A projection that an investment will yield a return above the initial outlay.

Risk-Free Arbitrage

The practice of profiting from price differences in different markets or forms without risk.

Benchmark Portfolio

Portfolio against which a manager is to be evaluated.

Well-Diversified

Refers to an investment portfolio that contains a wide variety of assets to minimize risk.