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:

Dividends Increase

An action by a company to raise the amount of money paid to shareholders through dividends.

Dividend Growth Rate

The annual percentage increase in a company's dividend payouts.

Required Rate of Return

The minimum percent gain on a yearly basis that captivates entities or persons to invest in a certain security or effort.

Required Rate of Return

The minimum expected return needed from an investment to make it worthwhile.