Which of the Following Statements Is Correct

question 10

Multiple Choice

Which of the following statements is correct?

• A)A general,persistent decline in stock prices may signal that the economy is about to enter a boom period because people will be able to buy stock for less money.
• B)A general,persistent decline in stock prices may signal that the economy is about to enter a recession because low stock prices may mean that people are expecting low corporate profits.
• C)A general,persistent decline in stock prices may signal that the economy is about to enter a recession because low stock prices mean that corporations have had low profits in the past.
• D)Expectations about the business cycle have no impact on stock prices.

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Definitions:

Target Costing

A pricing method that starts with a market-based price point and then deduces the allowable cost to maintain profitability.

Return on Investment

A financial metric used to evaluate the efficiency or profitability of an investment, calculated as a percentage of the investment's return relative to its cost.

Selling Price

The sum of money required for a product or service, which directly affects the income produced through sales.

Fixed Manufacturing Overhead

Fixed costs related to manufacturing that do not change with the level of production, such as factory rent and salaries of permanent staff.