Which of the following statements are incorrect: i) Net income represents cash available to pay dividends ii) Net income represents sales minus operating expenses iii) Positive net income increases a company's cash balance iv) Net income represents income that may be distributed to its owners O i, ii, iii & iv O i, iii & iv O ii, iii & iv O i, ii & iii

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Loanable Funds Theory

The loanable funds theory is a neoclassical theory that determines the interest rate where the demand for loanable investments and supply of loanable funds intersect. To determine the interest rate, this theory employs linear regression and a demand curve. At the equilibrium point, demand for borrowings and demand for the issuance of borrowing funds are inextricably linked. This point of equilibrium should equalize demand and the supply of money available for borrowing.