Deborah Recently Purchased a Stock That Is Considerably More Risky

question 38

Multiple Choice

Deborah recently purchased a stock that is considerably more risky than a typical stock.It has exhibited a high degree of earnings variability.This is an example of a(n) ________ stock.

• A)speculative
• B)blue-chip
• C)income
• D)mid-cap

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Definitions:

Held-for-Collection Investments

Investments acquired with the intention of holding them to collect their contractual cash flows, rather than for selling in the near term.

Equity Method

An accounting technique used for recording investments in associate companies where the investor has significant influence over the investee.

Carrying Value

The book value of an asset on a company's balance sheet, derived from its original cost minus accumulated depreciation or amortization.

Net Income

The total profit of a company after all expenses, including taxes and operating costs, have been deducted from total revenues.