Multiple Choice
If you purchase a bond for \$1,000 that pays annual interest of \$50 and will be redeemed at par (\$1,000) after one year, what is the rate of return you would earn?
112
views
7. Receivables and Investments
Introduction to Investments in Securities
Multiple Choice
Which of the following is an example of a cash inflow from an investing activity?
A
Proceeds from the sale of equipment
B
Cash received from issuing common stock
C
Payment of dividends to shareholders
D
Cash collected from customers
Verified step by step guidance1
Step 1: Understand the concept of cash flows from investing activities. Investing activities involve transactions related to the acquisition or disposal of long-term assets, such as property, plant, equipment, or investments.
Step 2: Analyze the options provided in the question. Determine which option represents a cash inflow related to the sale or disposal of long-term assets.
Step 3: Evaluate 'Proceeds from the sale of equipment.' This represents cash received from selling a long-term asset, which is classified as a cash inflow from investing activities.
Step 4: Evaluate 'Cash received from issuing common stock.' This is a financing activity, as it involves raising capital from shareholders, not an investing activity.
Step 5: Evaluate 'Payment of dividends to shareholders' and 'Cash collected from customers.' The former is a financing activity, while the latter is an operating activity, neither of which are investing activities.
Related Videos
Related Practice
