Cotuit Company Has a Current Ratio of 3

question 57

Multiple Choice

Cotuit Company has a current ratio of 3.2 and an acid-test ratio of 2.4.The company's current assets consist of cash,marketable securities,accounts receivable,and inventory.The company's inventory is $40,000.Cotuit Company's current liabilities must be:

• A)$40,000
• B)$120,000
• C)$50,000
• D)$32,000

Comprehend the implications of changes in supply and demand on market equilibrium.

Understand the determinants of supply in the market.

Differentiate between movements along the supply curve and shifts in the supply curve.

Identify factors that cause an increase or decrease in the supply of a good.

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Definitions:

Security Market Line

A line that represents the relationship between the risk of an investment and its expected return, used in the capital asset pricing model.

Market Risk Premium

The additional return expected by investors for taking on the higher risk of investing in the stock market over a risk-free rate.

Beta

A measure of a stock's volatility in comparison to the overall market; a beta above 1 indicates greater volatility than the market.

Risk-Free Rate

The theoretical rate of return of an investment with zero risk, serving as a benchmark for measuring risk.