Which of the Following Is Not One of the Reasons

question 67

Multiple Choice

Which of the following is not one of the reasons why net income differs from cash flows from operations under the indirect method of calculating cash flows?

• A) non-cash items, such as depreciation and amortization
• B) changes in working capital accounts
• C) gains and losses related to the sale of plant, property and equipment
• D) sale or repurchase of capital stock

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Definitions:

Security Market Line

A line on a chart that displays the relationship between risk and the expected return of the market portfolio. It serves as a graphical representation of the Capital Asset Pricing Model (CAPM).

Beta Coefficient

A framework for quantifying the variability, or orderly risk, of a security or investment compilation when juxtaposed with the general market.

Risk Premium

The additional return an investor demands for choosing a risky investment over a risk-free option, serving as compensation for the additional risk.

Capital Asset Pricing Model

A framework that explains the link between the inherent risk and anticipated return on assets, especially equities.