Which of the Following Statements Is INCORRECT

question 20

Multiple Choice

Which of the following statements is INCORRECT?

• A) A stock market index is a hypothetical portfolio formed according to some criteria or rules.
• B) Most indexes,unlike total return indexes,make no adjustment for regular cash dividends.
• C) Total return indexes assume that all disbursements from the company including regular dividends get reinvested in the hypothetical index portfolio.
• D) The cost-of-carry model that has a total return index as the underlying requires dividend adjustments.
• E) The cost-of-carry model that uses indexes like the Dow Jones Industrial Average and the Standard and Poor's 500 index requires dividend adjustments.

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Definitions:

Additional Staff

The employment of extra personnel beyond the current number to meet increased demands or to fulfill specific roles within an organization.

Total Collection Time

The total period it takes for a business to convert its accounts receivable into cash.

Cash Management

The process of collecting, managing, and investing a company's cash flows in a way that meets its operational and financial objectives.

Zero-Balance Account

A chequing account in which a zero balance is maintained by transfers of funds from a master account in an amount only large enough to cover cheques presented.