Which Financial Statement Is Primarily Concerned with Reporting the Financial

question 2

Multiple Choice

Which financial statement is primarily concerned with reporting the financial position of a business at a particular time?

• A)The balance sheet.
• B)The income statement.
• C)The statement of cash flows.
• D)All three statements are concerned with the financial position of a business at a particular time.

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Definitions:

Investment Opportunity Set

The set of available investment choices available to an investor, considering their risk tolerance and time horizon for investing.

Securities

Financial instruments that represent an ownership position in a publicly-traded corporation, a creditor relationship with a governmental body or a corporation, or rights to ownership as represented by an option.

Nonsystematic Risk

Nonmarket or firm-specific risk factors that can be eliminated by diversification. Also called unique risk, firm-specific risk, or diversifiable risk. Systematic risk refers to risk factors common to the entire economy.

Diversifiable Risk

Nonmarket or firm-specific risk factors that can be eliminated by diversification. Also called unique risk, firm-specific risk, or nonsystematic risk. Nondiversifiable risk refers to systematic or market risk.