Which One of the Following Statements Is Correct

question 100

Multiple Choice

Which one of the following statements is correct?

• A) The S&P 500 Index is based on 500 large companies that trade on U.S. exchanges.
• B) Because of mergers and bankruptcies, the S&P 500 Index no longer contains 500 stocks.
• C) The S&P 500 Index is carefully constructed to reflect the values of large, medium and small capitalization companies.
• D) The S&P 500 is based on the 500 largest U.S. companies as measured by market value.

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Definitions:

Earnings per Share

A measure of a company's profitability, calculated as the net income divided by the number of outstanding shares of its common stock.

Net Income

The total earnings of a company after deducting all expenses, taxes, and costs from its total revenue.

Common Shares

Equities owned in a corporation, representing a share of the company's profits and a right to vote on certain matters.

Acid-Test Ratio

A financial metric used to determine a company's short-term liquidity position by comparing its most liquid assets (excluding inventory) to its current liabilities.