You Are Considering an Investment in IBM Stock and Wish

question 26

Multiple Choice

You are considering an investment in IBM stock and wish to assess the firm's long-term debt-paying ability and its use of debt financing.All of the following ratios can be used to assess solvency except:

• A)Number of times interest is earned.
• B)Debt to assets ratio.
• C)Debt to equity ratio.
• D)Net margin.

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Definitions:

Gambler's Fallacy

The mistaken belief that if something happens more frequently than normal during some period, it will happen less frequently in the future, or vice versa.

Availability Heuristic

A cognitive shortcut that depends on the first examples that appear in someone's mind when considering a particular subject, idea, technique, or choice.

Conjunction Fallacy

The cognitive bias where people incorrectly believe specific conditions are more probable than a single general one.

Public Relations

The strategic communication process that builds mutually beneficial relationships between organizations and their publics.