With respect to the cash flow volatility and earnings volatility of a certain firm,which of the following is most accurate concerning their effects on ratios of market value to capital?
A) Cash flow volatility is more likely to diminish the ratios than earnings volatility is.
B) Earnings volatility is more likely to diminish the ratios than cash flow volatility is.
C) Neither of these types of volatility has been proven to have a negative effect on ratios of market value to capital.
D) Both types of volatility have a negative effect on ratios of market value to capital,but it is not clear which has the stronger effect.
Correct Answer:
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