Which of the Following Statements Is Generally Incorrect from an Investor's

question 43

Multiple Choice

Which of the following statements is generally incorrect from an investor's perspective?

• A) A 1:1 current ratio is generally preferred over a 2:1 current ratio.
• B) A 20-day average collection period for accounts receivable is generally preferred over a 30-day average collection period.
• C) A 5% dividend yield is generally preferred over a 3% dividend yield.
• D) A 10% net margin is generally preferred over an 8% net margin.

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Definitions:

Hurricane

A powerful tropical cyclone with heavy rain and winds exceeding 74 miles per hour, typically in the Atlantic Ocean region.

Expected Utility

The anticipated satisfaction or benefit derived from a risky decision or choice, calculated by considering all possible outcomes.

Marginal Utility

Marginal utility is the additional satisfaction or utility gained from consuming one more unit of a good or service.

Risk Preferences

The degree of variability in outcomes that an individual or entity is willing to accept in pursuit of a goal, often associated with investments.