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Questions
Q:
In calculating the variance of a portfolio's returns, squaring the deviations from the mean results in:
I. Preventing the sum of the deviations from always equaling zero
II. Exaggerating the effects of large positive and negative deviations
III. A number for which the unit is percentage of returns
A. I only
B. I and II only
C. I and III only
D. I, II, and III
Q:
Each of the following accounts has been converted to U.S. dollars from a foreign subsidiary's financial statements. Based on the information given, determine if the U.S. dollar or a foreign currency is the functional currency of the subsidiary.F = Foreign CurrencyD = U.S. DollarN/A = Cannot be determinedCost of goods sold was converted at a historical rate ___________Marketable debt securities carried at cost were converted at the year-end spot rate ___________Depreciation Expense was converted at the historical rate at the date of acquisition of the subsidiary ___________Inventories carried at their historical cost were converted at the spot rate from year-end ___________Intangible assets were converted at the historical exchange rate at the date of acquisition of the subsidiary ___________Deferred income tax liability was converted at the year-end spot rate ___________Property, Plant and Equipment was converted at the year-end spot rate ___________Accounts Payable was converted at the year-end spot rate ___________Patents were converted at the exchange rate in place at the date of acquisition of the subsidiary ___________Accumulated depreciation on buildings was converted at the year-end spot rate ___________
Q:
Historically, small-firm stocks have earned higher returns than large-firm stocks. When viewed in the context of an efficient market, this suggests that ___________.
A. small firms are better run than large firms
B. government subsidies available to small firms produce effects that are discernible in stock market statistics
C. small firms are riskier than large firms
D. small firms are not being accurately represented in the data
Q:
Pritt Company purchased all the outstanding stock of Standy Company (a manufacturing company in Argentina) when the book value of Standy's net assets equaled their fair value. Standy's summarized balance sheet is shown below on January 1, 2011, the date of acquisition, and on December 31, 2011, when the exchange rates were $.25 and $.20, respectively. The average exchange rate for 2011 was $.23, and Standy paid dividends in 2011 amounting to 300,000 pesos when the exchange rate was $.21. January 1, 2011 (Peso)December 31, 2011 (Peso)BALANCE SHEET Cash1,400,0001,100,000Accounts Receivable400,0001,400,000Inventory1,200,0001,200,000Building & Equipment1,000,0001,000,000Accumulated Depreciation(200,000)(300,000)Total Assets3,800,0004,400,000 Accounts Payable300,000360,000Debt Payable1,000,0001,000,000Common Stock2,000,0002,000,000Retained Earnings500,0001,040,000Total Liab. & Equity3,800,0004,400,000 Required: If Standy's functional currency and reporting currency are the Argentine peso, compute the change to other comprehensive income that would result from the translation of these financial statements at December 31, 2011.
Q:
PricePer Unit Quantity DemandedPer Week$10.00259.50309.00358.50408.00457.50507.00556.50606.00655.50705.0075Refer to the above table. What is the absolute price elasticity of demand when a price rises from $9 to $9.50?A) 0.35 B) 0.55 C) 2.57D) 2.85
Q:
Historical returns have generally been __________ for stocks of small firms as (than) for stocks of large firms.
A. the same
B. lower
C. higher
D. none of these options (There is no evidence of a systematic relationship between returns on small-firm stocks and returns on large-firm stocks.)
Q:
On January 1, 2011, Paste Unlimited, a U.S. company, acquired 100% of Sticky Corporation of Italy, paying an excess of 112,500 euros over the book value of Sticky's net assets. The excess was allocated to undervalued equipment with a five year remaining useful life. Sticky's functional currency is the euro, and the books are kept in euros. Exchange rates for the euro for 2011 are:January 1, 2011 $1.44Average rate for 2011 1.48December 31, 2011 1.52Required:1. Determine the depreciation expense on the excess allocated to equipment for 2011 in U.S. dollars.2. Determine the unamortized excess allocated to equipment on December 31, 2011 in U.S. dollars.3. If Sticky's functional currency was the U.S. dollar, what would be the depreciation expense on the excess allocated to the equipment for 2011?
Q:
All the costs associated with making, reaching, and enforcing agreements are calledA) private costs. B) internal costs. C) transaction costs. D) social costs.
Q:
Both investors and gamblers take on risk. The difference between an investor and a gambler is that an investor _______.
A. is normally risk neutral
B. requires a risk premium to take on the risk
C. knows he or she will not lose money
D. knows the outcomes at the beginning of the holding period
Q:
On January 1, 2011, Placid Corporation acquired a 40% interest in Superior Industries, a Canadian Corporation, for $811,900 when Superior's stockholders' equity consisted of 1,000,000 Canadian dollars (C$) capital stock and C$500,000 retained earnings. Superior's functional currency is the Canadian dollar and the books are kept in the same currency. The exchange rate at the time of the purchase was $1.15 per Canadian dollar. Any excess allocated to patents is to be amortized over 10 years. A summary of changes in the stockholders' equity of Superior during 2011 and related exchange rates follows: Canadian $Exchange RateU.S. $Stockholders' equity - 1/1/111,500,000$1.15 C$1,725,000Net income300,000$1.14 A342,000Dividends(200,000)$1.14 C(228,000)Equity adjustment (31,000)Stockholders' equity - 12/31/111,600,000$1.13 C$1,808,000Required: Determine the following:1. Fair value of the patent from Placid's investment in Superior on January 1, 2011 in U.S. dollars2. Patent amortization for 2011 in U.S. dollars3. Unamortized patent at December 31, 2011 in U.S. dollars4. Equity adjustment from the patent in U.S. dollars5. Income from Superior for 2011 in U.S. dollars6. Investment in Superior balance at December 31, 2011 in U.S. dollars
Q:
The impact of technological change in the health care area has been to
A) reduce the quality of health care while raising the costs.
B) reduce the cost of health care.
C) increase the quality of health care while decreasing the costs.
D) increase both the quality of health care and the costs of health care.
Q:
During the 1926-2013 period which one of the following asset classes provided the lowest real return?
A. Small U.S. stocks
B. Large U.S. stocks
C. Long-term U.S. Treasury bonds
D. Equity world portfolio in U.S. dollars
Q:
Par Industries, a U.S. Corporation, purchased Slice Company of New Zealand for $1,411,800 on January 1, 2011. Slice's functional currency is the New Zealand dollar (NZ$). Slice's books are kept in NZ$. The book values of Slice's assets and liabilities were equal to fair values, with the exception of land which was valued at NZ$1,300,000. Slice's balance sheet appears below:Current AssetsNZ$ 1,510,000Land645,000Buildings - net825,000Equipment - net220,000Total AssetsNZ$ 3,200,000 Current LiabilitiesNZ$ 1,200,000Long-Term Debt845,000Common Stock800,000Retained Earnings355,000 NZ$ 3,200,000Relevant exchange rates are shown below:January 1, 2011 1 NZ$ = $0.78Average rate 2011 1 NZ$ = $0.79December 31, 2011 1 NZ$ = $0.80Required:Determine the unrealized translation gain or loss at December 31, 2011 relating to the excess allocated to the undervalued land.
Q:
Use the above table. If the marginal revenue product is $20, how many workers will the profit maximizing monopsonist hire?A) 1 B) 2 C) 3 D) 4
Q:
During the 1986-2013 period, the Sharpe ratio was lowest for which of the following asset classes?
A. small U.S. stocks
B. large U.S. stocks
C. long-term U.S. Treasury bonds
D. equity world portfolio in U.S. dollars
Q:
On January 1, 2011, Psalm Corporation purchased all the stock of Solomon Corporation for $481,400 when Solomon had capital stock of 180,000 pounds () and retained earnings of 90,000. The book value of Solomon's assets and liabilities represented the fair value, except for equipment with a 5-year life that was undervalued by 15,000. Any remaining excess is due to a patent with a useful life of 6 years. Solomon's functional currency is the pound. Solomon's books are kept in pounds. Relevant exchange rates for a pound follow:January 1, 2011 $1.66Average for 2011 1.65December 31, 2011 1.64Required:1. Determine the equity adjustment on translation of the excess differential assigned to equipment at December 31, 2011.2. Determine the equity adjustment on translation of the excess differential assigned to patent at December 31, 2011.
Q:
A business enterprise in which employees must belong to the union before they can be hired isA) a closed shop. B) a union shop.C) a jurisdictional dispute. D) an industrial union.
Q:
During the 1926-2013 period the Sharpe ratio was greatest for which of the following asset classes?
A. small U.S. stocks
B. large U.S. stocks
C. long-term U.S. Treasury bonds
D. bond world portfolio return in U.S. dollars
Q:
Plato Corporation, a U.S. company, purchases all of the outstanding stock of Socrates Company, which operates outside the U.S. on January 1, 2011. Socrates' net assets have fair values that equal their book values with the exception of land that has a fair value of 200,000 foreign currency units and equipment with a fair value of 100,000 foreign currency units. Plato paid $180,000 for this acquisition. The balance sheets for Plato and Socrates are shown below just before the business combination. Socrates' functional currency is the foreign currency unit (fcu) and the exchange rate at the date of acquisition was $.40 per fcu. Socrates uses the fcu for record-keeping purposes. Plato ($)Socrates (fcu)Current Assets2,800,000200,000Land600,000150,000Buildings - net1,300,000200,000Equipment - net2,300,00050,000 Total Assets7,000,000600,000 Current Liabilities1,300,000150,000Notes Payable1,500,000100,000Capital Stock2,000,000200,000Retained Earnings2,200,000150,000 Total Liabilities7,000,000600,000 Required:Prepare a consolidated balance sheet for Plato and subsidiary at January 1, 2011 immediately following the business combination.
Q:
The price elasticity of demand for a variable input will be greaterA) the fewer substitutes there are for the final product.B) the easier it is for a particular input to be substituted for by other inputs. C) the lower the price elasticity of supply of all other inputs.D) the smaller the proportion of total costs accounted for by a particular variable input.
Q:
During the 1926-2013 period the geometric mean return on Treasury bonds was _________.
A. 5.07%
B. 5.56%
C. 9.34%
D. 11.43%
Q:
Pew Corporation (a U.S. corporation) acquired all of the stock of Skunk Company (a Brazilian company) on January 1, 2011 for $9,300,000 when Skunk had 10,000,000 Brazilian real (BR) capital stock and 5,000,000 BR retained earnings. The book value of Skunk's net assets equaled the fair value on this date, and any cost/book value differential is due to a patent with a 5-year remaining useful life. Skunk's functional currency is the BR. Skunk's books are maintained in the functional currency. The exchange rates for BR's for 2011 are shown below:January 1, 2011 $0.60Average for 2011 $0.64December 31, 2011 $0.68Required:1. Calculate the patent value from the business combination on January 1, 2011 in U.S. dollars.2. Calculate the patent amortization in U.S. dollars for 2011.3. Prepare the journal entry (in U.S. dollars) required on Pew's books to record the patent amortization for 2011, assuming that Pew accounts for Skunk using the equity method.
Q:
Which antitrust law is sometimes called the ʺChain Store Actʺ?A) Sherman Act B) Clayton ActC) Robinson-Patman Act D) Federal Trade Act
Q:
During the 1926-2013 period the geometric mean return on small-firm stocks was ______.
A. 5.31%
B. 5.56%
C. 9.34%
D. 11.82%
Q:
Puddle Incorporated purchased an 80% interest in Soake Company, located in England. Puddle paid $1,560,000 on January 1, 2011, at a time when the book values of Soake equaled the fair values. Any excess cost/book value differential was attributed to a patent with a five-year remaining useful life. Soake's books are kept in the functional currency, pounds. A summary of Soake's equity is shown below for the first year that Puddle had ownership interest. In PoundsExchange RatesIn DollarsStockholders' Equity - 12/31/101,200,000$1.60H$1,920,000Net Income400,000$1.62A648,000Dividends - 11/1/11(200,000)$1.64H(328,000)Translation Adjustment 70,000Stockholders' Equity - 12/31/111,400,000$1.65C$2,310,000Required:Determine Puddle's income from Soake for 2011, and the balance of Puddle's Investment in Soake account at December 31, 2011.
Q:
In which market structure does a firm have the LEAST influence over the market price?A) Monopoly B) Monopolistic competitionC) Oligopoly D) Perfect competition
Q:
Your investment has a 40% chance of earning a 15% rate of return, a 50% chance of earning a 10% rate of return, and a 10% chance of losing 3%. What is the standard deviation of this investment?
A. 5.14%
B. 7.59%
C. 9.29%
D. 8.43%
Q:
Phim Inc., a U.S. company, owns 100% of Sera Corporation, a New Zealand company. Sera's equipment was acquired on the following dates (amounts are stated in New Zealand dollars as NZ$):Jan. 01, 2011 Purchased equipment for NZ$40,000Jul. 01, 2011 Purchased equipment for NZ$80,000Jan. 01, 2012 Purchased equipment for NZ$50,000Jul. 01, 2012 Sold equipment purchased on Jan. 01, 2011 for NZ$35,000Exchange rates for the New Zealand dollar on various dates are:Jan. 01, 2011 1NZ$ = $.800 Jan. 01, 2012 1NZ$ = $.830Jul. 01, 2011 1NZ$ = $.820 Jul. 01, 2012 1NZ$ = $.805Dec. 31, 2011 1NZ$ = $.830 Dec. 31, 2012 1NZ$ = $.7902011 avg. rate 1NZ$ = $.815 2012 avg. rate 1NZ$ = $.810Sera's equipment has an estimated 5-year life with no salvage value and is depreciated using the straight-line method. Sera's functional currency and reporting currency are the New Zealand dollar.Required:1. Determine the value of Sera's equipment account on December 31, 2012 in U.S. dollars.2. Determine Sera's depreciation expense for 2012 in U.S. dollars.3. Determine the gain or loss from the sale of equipment on July 1, 2012 in U.S. dollars.
Q:
If industry sales are $2,000, and the top four firms have sales of $170, $140, $100, and $80, respectively, what will be the four-firm concentration ratio?A) 49 percent B) 24.5 percent C) 490 percent D) 200/49
Q:
Plane Corporation, a U.S. company, owns 100% of Shipp Corporation, a Libyan company. Shipp's equipment was acquired on the following dates (amounts are stated in Libyan dinars):Jan. 01, 2011 Purchased equipment for 40,000 dinarsJul. 01, 2011 Purchased equipment for 80,000 dinarsJan. 01, 2012 Purchased equipment for 50,000 dinarsJul. 01, 2012 Sold equipment purchased on Jan. 01, 2011 for 35,000 dinarsExchange rates for the Libyan dinars on various dates are:Jan. 01, 2011 1 dinar = $.500 Jan. 01, 2012 1 dinar = $.530Jul. 01, 2011 1 dinar = $.520 Jul. 01, 2012 1 dinar = $.505Dec. 31, 2011 1 dinar = $.530 Dec. 31, 2012 1 dinar = $.4902011 avg. rate 1 dinar = $.515 2012 avg. rate 1 dinar = $.510Shipp's equipment has an estimated 5-year life with no salvage value and is depreciated using the straight-line method, calculating depreciation expense on a monthly basis. Shipp's functional currency is the U.S. dollar, but the company uses the Libyan dinar as its reporting currency.Required:1. Determine the value of Shipp's equipment account on December 31, 2012 in U.S. dollars.2. Determine Shipp's depreciation expense for 2012 in U.S. dollars.3. Determine the gain or loss from the sale of equipment on July 1, 2012 in U.S. dollars.
Q:
In the above figure, the monopolistically competitive firmʹs profit -maximizing output isA) 1,000 units. B) 300 units. C) 900 units. D) 700 units.
Q:
The reward-to-volatility ratio is given by _________.
A. the slope of the capital allocation line
B. the second derivative of the capital allocation line
C. the point at which the second derivative of the investor's indifference curve reaches zero
D. the portfolio's excess return
Q:
A monopolistA) is a price searcher. B) is a price taker.C) faces an upward sloping demand curve. D) faces a vertical demand curve.
Q:
Plate Corporation, a US company, acquired ownership of Saucer Corporation of Switzerland on January 1, 2011 for $1,500,000 when Saucer's stockholders' equity in Swiss francs (SF) consisted of 700,000 SF Capital Stock and 300,000 SF Retained Earnings. The exchange rate for Swiss francs was $1.20 on January 1. All excess purchase cost was attributed to a Trademark that did not have a recorded book value. The trademark is to be amortized over 20 years.Saucer's functional currency is Swiss francs and the records are kept in the same currency. A summary of changes in Saucer's stockholders' equity during 2011 and relevant exchange rates are as follows:In Exchange InFrancs Rates DollarsStockholders' equity1/1/11 1,000,000 $1.20H $1,200,000Net income 250,000 1.15A 287,500Dividends 11/1/11 (100,000) 1.10H (110,000)Equity adjustment (170,000)Stockholders' equity _________ _________12/31/11 1,150,000 1.05C $1,207,500Required: Determine the following:1. Fair value of the Trademark from Plate's investment in Saucer on January 1, 2011 in U.S. dollars.2. Trademark amortization for 2011 in U.S. dollars.3. Unamortized Trademark at December 31, 2011 in U.S. dollars.4. Equity adjustment from the Trademark in U.S. dollars.5. Income from Saucer for 2011 in U.S. dollars.6. Investment in Saucer balance at December 31, 2011 in U.S. dollars.
Q:
The rate of return on _____ is known at the beginning of the holding period, while the rate of return on ____ is not known until the end of the holding period.
A. risky assets; Treasury bills
B. Treasury bills; risky assets
C. excess returns; risky assets
D. index assets; bonds
Q:
On January 1, 2011, Pilgrim Corporation, a U.S. firm, acquired ownership of Settlement Corporation, a foreign company, for $168,000, when Settlement's stockholders' equity consisted of 300,000 local currency units (LCU) and retained earnings of 100,000 LCU. At the time of the acquisition, Settlement's assets and liabilities were fairly valued except for a patent that did not have any recorded book value. All excess purchase cost was attributed to the patent, which had an estimated economic life of 10 years at the date of acquisition. The exchange rate for LCUs on January 1, 2011 was $.40. The functional currency for Settlement is LCU. Settlement's books are maintained in LCU.A summary of changes in Settlement's stockholders' equity during 2011 and the exchange rates for LCUs is as follows:LCU Rates DollarsStockholders' equity1/1/11 400,000 $.40H $160,000Net income 100,000 .42A 42,000Dividends 12/1/11 (50,000) .43H (21,500)Equity adjustment 17,500Stockholders' equity _______ ________12/31/11 450,000 .44C $198,000Required: Determine the following:1. Fair value of the patent from Pilgrim's investment in Settlement on January 1, 2011 in U.S. dollars.2. Patent amortization for 2011 in U.S. dollars.3. Unamortized patent at December 31, 2011 in U.S. dollars.4. Equity adjustment from the patent in U.S. dollars.5. Income from Settlement for 2011 in U.S. dollars.6. Investment in Settlement balance at December 31, 2011 in U.S. dollars.
Q:
In long-run equilibrium, the perfectly competitive firm will
A) go out of business.
B) produce to the point at which marginal cost is at its minimum.
C) produce to the point at which marginal cost equals average total cost.
D) produce on the upward sloping portion of its ATC curve.
Q:
The excess return is the _________.
A. rate of return that can be earned with certainty
B. rate of return in excess of the Treasury-bill rate
C. rate of return to risk aversion
D. index return
Q:
Marginal revenue equalsA) total revenue divided by output.B) price times quantity, divided by average revenue.C) total revenue divided by average revenue.D) the change in total revenue from selling one more unit.
Q:
Note to Instructor: This exam item is a continuation of Exercise 5 and proceeds forward with Stripe's second year of operations.Stripe Corporation, a British subsidiary of Polka Corporation (a U.S. company) was formed by Polka on January 1, 2011 in exchange for all of the subsidiary's common stock. Stripe has now ended its second year of operations on December 31, 2012. Relevant exchange rates are:January 01, 2011 = 1 = $1.60April 01, 2011 = 1 = $1.62December 31, 2012 = 1 = $1.572012 average rate = 1 = $1.56Stripe's adjusted trial balance is presented below for the calendar year 2012.In PoundsDebits:Cash 172,000Accounts receivable 308,000Notes receivable 98,000Building 400,000Land 100,000Depreciation expense 10,000Other expenses 117,000Salary expense 376,000Total debits 1,581,000CreditsAccumulated depreciation 17,500Accounts payable 200,000Common stock 550,000Retained earnings 213,500Sales revenue 600,000Total credits 1,581,000Required: Prepare Stripe's:1. Remeasurement working papers;2. Remeasured income statement; and3. Remeasured balance sheet.
Q:
The market risk premium is defined as __________.A. the difference between the return on an index fund and the return on Treasury billsB. the difference between the return on a small-firm mutual fund and the return on the Standard & Poor's 500 IndexC. the difference between the return on the risky asset with the lowest returns and the return on Treasury billsD. the difference between the return on the highest-yielding asset and the return on the lowest-yielding asset
Q:
Note to Instructor: This exam item is similar to Exercise 3 except that the exchange rates have been changed and the temporal method is used instead of the current rate method.The Polka Corporation, a U.S. corporation, formed a British subsidiary on January 1, 2011 by investing 550,000 British pounds () in exchange for all of the subsidiary's no-par common stock. The British subsidiary, Stripe Corporation, purchased real property on April 1, 2011 at a cost of 500,000, with 100,000 allocated to land and 400,000 allocated to the building. The building is depreciated over a 40-year estimated useful life on a straight-line basis with no salvage value. The U.S. dollar is Stripe's functional currency, but it keeps its records in pounds. The British economy does not experience high rates of inflation. Exchange rates for the pound on various dates are:January 01, 2011 = 1 = $1.60April 01, 2011 = 1 = $1.62December 31, 2011 = 1 = $1.652011 average rate = 1 = $1.64Stripe's adjusted trial balance is presented below for the year ended December 31, 2011.In PoundsDebits:Cash 200,000Accounts receivable 72,000Notes receivable 99,000Building 400,000Land 100,000Depreciation expense 7,500Other expenses 115,000Salary expense 208,000Total debits 1,201,500CreditsAccumulated depreciation 7,500Accounts payable 100,000Common stock 550,000Retained earnings 0Equity adjustment 0Sales revenue 544,000Total credits 1,201,500Required: Prepare Stripe's:1. Remeasurement working papers;2. Remeasured income statement; and3. Remeasured balance sheet.
Q:
OutputFixed CostsVariable CostsTotal CostsAverage Total CostsAverage Marginal Variable Costs Costs0 $0$100 1 30 2 50 3 60 4 120 5 200 In the above table, what is the average variable cost to produce 3 units of output?A) $30 B) $60 C) $10 D) $20
Q:
You have an EAR of 9%. The equivalent APR with continuous compounding is _____.
A. 8.47%
B. 8.62%
C. 8.88%
D. 9.42%
Q:
Which of the following would be a fixed input to an automobile firm?A) Steel B) A factory in DetroitC) Car batteries D) Engineers
Q:
You have an APR of 7.5% with continuous compounding. The EAR is _____.
A. 7.5%
B. 7.65%
C. 7.79 %
D. 8.25%
Q:
Pan Corporation, a U.S. company, formed a British subsidiary on January 1, 2012 by investing 450,000 British pounds () in exchange for all of the subsidiary's no-par common stock. The British subsidiary, Skillet Corporation, purchased real property on April 1, 2012 at a cost of 500,000, with 100,000 allocated to land and 400,000 allocated to a building. The building is depreciated over a 40-year estimated useful life on a straight-line basis with no salvage value. The British pound is Skillet's functional currency and its reporting currency. The British economy does not have high rates of inflation. Exchange rates for the pound on various dates were:January 01, 2012 = 1 = $1.60April 01, 2012 = 1 = $1.61December 31, 2012 = 1 = $1.682012 average rate = 1 = $1.66Skillet's adjusted trial balance is presented below for the year ended December 31, 2012.In PoundsDebits:Cash 220,000Accounts receivable 52,000Inventory 59,000Building 400,000Land 100,000Depreciation expense 7,500Other expenses 110,000Cost of goods sold 220,000Total debits 1,168,500CreditsAccumulated depreciation 7,500Accounts payable 111,000Common stock 450,000Retained earnings 0Equity adjustment 0Sales revenue 600,000Total credits 1,168,500Required: Prepare Skillet's:1. Translation working papers;2. Translated income statement; and3. Translated balance sheet.
Q:
Accounting profits are found by total revenues minusA) explicit costs. B) explicit and implicit costs. C) implicit costs. D) all opportunity costs.
Q:
Suppose you pay $9,400 for a $10,000 par Treasury bill maturing in 6 months. What is the effective annual rate of return for this investment?
A. 6.38%
B. 12.77%
C. 3.17%
D. 14.25%
Q:
Suppose that the quantity of good y is measured along the vertical axis and that the quantity of good x is measured along the horizontal axis. If the price of good x is $5 and the price of good y is $10 when income is $200 per time period, the slope of the consumerʹs budget constraint will beA) -0.5. B) -2. C) -5. D) -10.
Q:
On January 1, 2012, Planet Corporation, a U.S. company, acquired 100% of Star Corporation of Bulgaria, paying an excess of 90,000 Bulgarian lev over the book value of Star's net assets. The excess was allocated to undervalued equipment with a three-year remaining useful life. Star's functional currency is the Bulgarian lev. Star's books are maintained in the functional currency. Exchange rates for Bulgarian lev for 2012 are:January 1, 2012 $.77Average rate for 2012 .75December 31, 2012 .73Required:1. Determine the depreciation expense stated in U.S. dollars on the excess allocated to equipment for 2012.2. Determine the unamortized excess allocated to equipment on December 31, 2012 in U.S. dollars.3. If Star's functional currency was the U.S. dollar, what would be the depreciation expense on the excess allocated to the equipment for 2012?
Q:
If your dinner guest said, ʺEvery bite, including the last bite, tasted as good as the first,ʺ then the marginal utility for himA) is decreasing. B) is increasing. C) is constant. D) is positive.
Q:
For each of the 12 accounts listed in the table below, select the correct exchange rate to use when either remeasuring or translating a foreign subsidiary for its U.S. parent company.CodesC = Current exchange rateH = Historical exchange rateA = Average exchange rateU.S. dollar is The foreignthe functional currency is thecurrency functional currencyAccounts receivable ________ ________Marketable debt securities carried at cost ________ ________Inventories carried at cost ________ ________Deferred income ________ ________Goodwill ________ ________Other paid-in capital ________ ________Depreciation expense ________ ________Refundable deposits ________ ________Common stock ________ ________Accumulated depreciation on buildings ________ ________Deferred income tax liabilities ________ ________Accounts payable ________ ________
Q:
Annual percentage rates can be converted to effective annual rates by means of the following formula:
A. [1 + (APR/n)]n - 1
B. (APR)(n)
C. (APR/n)
D. (periodic rate)(n)
Q:
If a U.S. company wants to hedge a prospective loss on its investment in a foreign entity that may result from a foreign currency fluctuation, the U.S. company shouldA) purchase a forward to swap currency of the foreign entity's local country for U.S. currency.B) purchase a call option to buy currency of the foreign entity's local country.C) issue a loan in the foreign entity's local country.D) borrow money in the foreign entity's local country.
Q:
A measure of the responsiveness of the demand for one good to the percentage change in the price of another good isA) price elasticity of demand. B) price elasticity of supply. C) cross price elasticity of demand. D) income elasticity.
Q:
An investment earns 10% the first year, earns 15% the second year, and loses 12% the third year. The total compound return over the 3 years was ______.
A. 41.68%
B. 11.32%
C. 3.64%
D. 13%
Q:
A foreign subsidiary's accounts receivable balance should be translated for the consolidated financial statements atA) the appropriate historical rate.B) the prior year's forecast rate.C) the future rate for the next year.D) the spot rate at year-end.
Q:
PricePer Unit Quantity DemandedPer Week$10.00259.50309.00358.50408.00457.50507.00556.50606.00655.50705.0075Refer to the above table. What is the absolute price elasticity of demand if a price falls from $7.50 to $7?A) 10 B) 1.38 C) 0.724 D) 0.1
Q:
The dollar-weighted return is the _________.
A. difference between cash inflows and cash outflows
B. arithmetic average return
C. geometric average return
D. internal rate of return
Q:
A U.S. parent corporation loans funds to a foreign subsidiary to be used to purchase equipment. The loan is denominated in U.S. dollars and the functional currency of the subsidiary is the euro. This intercompany transaction is a foreign currency transaction ofA) neither the subsidiary nor the parent, as it is eliminated as part of the consolidation procedure.B) the subsidiary but not the parent.C) both the subsidiary and the parent.D) the parent but not the subsidiary.
Q:
Which of the following would be viewed as a common property problem?A) Your property is burglarized.B) Vandals damage your property.C) People pick all of the flowers in a public park. D) To be safe you must lock your door at night.
Q:
The geometric average of -12%, 20%, and 25% is _________.
A. 8.42%
B. 11%
C. 9.7%
D. 18.88%
Q:
The percentage of national income spent on health care
A) has steadily decreased since 1965.
B) has steadily increased since 1965.
C) increased until the end of the 1970s and then decreased in the 1980s and 1990s.
D) decreased until the end of the 1970s and then increased in the 1980s and 1990s.
Q:
Exchange gains or losses from remeasurement appearA) in the continuing operations section of the consolidated income statement.B) as an extraordinary item on the consolidated income statement.C) as other comprehensive income typically reported in a statement of stockholders' equity.D) as an adjustment to the beginning balance of retained earnings on the consolidated Statement of retained earnings.
Q:
The arithmetic average of -11%, 15%, and 20% is ________.
A. 15.67%
B. 8%
C. 11.22%
D. 6.45%
Q:
Which of the following foreign subsidiary accounts will have the same value on consolidated financial statements, regardless of whether the statements are remeasured or translated?A) TrademarkB) Deferred IncomeC) Accounts ReceivableD) Goodwill
Q:
Use the above table. If the marginal revenue product is $10, how many workers will the profit maximizing monopsonist hire?A) 1 B) 2 C) 3 D) 4
Q:
Published data on past returns earned by mutual funds are required to be ______.
A. dollar-weighted returns
B. geometric returns
C. excess returns
D. index returns
Q:
The following assets of Poole Corporation's Romanian subsidiary have been converted into U.S. dollars at the following exchange rates:Current HistoricalRates RatesAccounts receivable $850,000 $875,000Trademark 600,000 575,000Property plant and equipment 1,200,000 900,000Totals $2,650,000 $2,350,000Assume the functional currency of the subsidiary is the U.S. dollar and the books are kept in a different currency. The assets should be reported in the consolidated financial statements of Poole Corporation and Subsidiary in the total amount ofA) $2,325,000.B) $2,350,000.C) $2,375,000.D) $2,650,000.
Q:
The CIO was founded byA) Samuel Gompers. B) Jimmy Hoffa. C) John L. Lewis. D) George Meany.
Q:
Your timing was good last year. You invested more in your portfolio right before prices went up, and you sold right before prices went down. In calculating historical performance measures, which one of the following will be the largest?
A. dollar-weighted return
B. geometric average return
C. arithmetic average return
D. mean holding-period return
Q:
When translating foreign subsidiary income statements using the current rate method, why are some accounts translated at an average rate?A) This approach improves matching.B) This approach accentuates the conservatism principle.C) This approach smoothes out highly volatile exchange rate fluctuations.D) This approach approximates the effect of transactions which occur continuously during the period.
Q:
When an input represents a larger proportion of a firmʹs total costs, thenA) demand for the input will tends to be less elastic.B) the input demand will not vary significantly with a change in input price. C) the usage of the input cannot be varied in the production function.D) demand for the input will tends to be more elastic.
Q:
The holding period return on a stock is equal to _________.
A. the capital gain yield over the period plus the inflation rate
B. the capital gain yield over the period plus the dividend yield
C. the current yield plus the dividend yield
D. the dividend yield plus the risk premium
Q:
At the time of a business acquisition,A) identifiable assets and liabilities are allocated the portion of the translation or remeasurement adjustment that existed on the date of acquisition.B) a foreign entity's assets and liabilities are translated into U.S. dollars using the current exchange rate in effect on that date.C) the difference between investment fair value and translated net assets acquired is treated as a remeasurement gain or loss on the income statement.D) the difference between investment fair value and translated net assets acquired is recorded as a cumulative translation adjustment on the balance sheet.
Q:
Which antitrust act was passed to protect independent retailers from ʺunfair discriminationʺ by chain stores?A) Federal Trade Commission Act B) Robinson-Patman ActC) Sherman Act D) Wheeler-Lea Act
Q:
You have calculated the historical dollar-weighted return, annual geometric average return, and annual arithmetic average return. You always reinvest your dividends and interest earned on the portfolio. Which method provides the best measure of the actual average historical performance of the investments you have chosen?
A. dollar-weighted return
B. geometric average return
C. arithmetic average return
D. index return
Q:
Palk Corporation has a foreign subsidiary located in a country experiencing high rates of inflation. Information concerning this country's inflation rate experience is given below.Change Annual rateDate Index in index of InflationJanuary 1, 2009 90January 1, 2010 120 30 30/100 = 30.00%January 1, 2011 150 30 30/130 = 23.08%January 1, 2012 210 60 60/160 = 37.50%The inflation rate that is used in determining if the subsidiary is operating in a highly inflationary economy isA) 37.50%.B) 90.58%.C) 133.33%.D) 350.00%.
Q:
Other things being equal, which market structure is most likely to yield the greatest industry long-run economic profit?A) Monopolistic competition B) OligopolyC) Monopoly D) Perfect competition