Which of the Following Statements Is TRUE

question 21

Multiple Choice

Which of the following statements is TRUE?
I. Stock prices provide signals on how well a company is performing.
II. The stock market is a mechanism that firms use to raise money to buy capital.
III. The stock market provides a mechanism for poorly managed companies to be taken over by more competent managers.

• A) III only
• B) I and II only
• C) I, II, and III
• D) I and III only

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Definitions:

Promissory Note

A financial instrument involving a written promise by one party to pay a definite sum of money to another party under specific terms.

Dishonored

A term used when a financial obligation or instrument, such as a check or bill, is not honored or paid when presented for payment.

Interest Revenue

Money received for interest.

Allowance for Doubtful Accounts

An accounting provision made to accommodate possible unpaid debts or credit losses in a company's accounts receivable.