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Questions
Q:
Pabari Corporation owns an 80% interest in Alders Corporation and Alders owns a 60% interest in Babao Corporation. Both interests were acquired at a cost equal to book value equal to fair value. During 2010, Alders sells land to Babao at a profit of $12,000. Babao still holds the land at December 31, 2010. Net income(loss) of the three companies (excluding investment income) for 2010 are:Pabari Corporation $180,000Alders Corporation 72,000Babao Corporation (30,000)Controlling interest share of consolidated net income and noncontrolling interest share, respectively, for 2010 areA) $211,200 and ($1,200).B) $211,200 and ($3,600).C) $213,600 and ($1,200).D) $213,600 and ($3,600).
Q:
A legal entity that may conduct business in its own name just as an individual does is a(n) A) corporation. B) entrepreneur.C) proprietorship. D) partnership.
Q:
All but which one of the following indices is value weighted?
A. NASDAQ Composite
B. S&P 500
C. Wilshire 5000
D. DJIA
Q:
Use the following information to answer the question(s) below.Paint Corporation owns 82% of Achille Corporation and Achille Corporation owns 80% of Badrack Corporation. For the current year, the separate net incomes (excluding investment income) of Paint, Achille, and Badrack are $120,000, $100,000, and $50,000, respectively. The cost of each investment was equal to the book value of the investment, which was also equal to the fair value.Controlling interest share of consolidated net income for Paint Corporation and Subsidiaries is:A) $234,800.B) $244,800.C) $260,000.D) $270,000.
Q:
Suppose that indifference curve I1 lies to the left of indifference curve I2. We can conclude thatA) some, but not all, points on indifference curve I1 will correspond to higher utility than points along indifference curve I2.B) some, but not all, points on indifference curve I1 will correspond to lower utility than points along indifference curve I2.C) all points along indifference curve I 1 will correspond to higher utility than points along indifference curve I2.D) all points along indifference curve I 1 will correspond to lower utility than points along indifference curve I2.
Q:
A corporation in a 34% tax bracket invests in the preferred stock of another company and earns a 6% pretax rate of return. An individual investor in a 15% tax bracket invests in the same preferred stock and earns the same pretax return. The after-tax return to the corporation is _______, and the after-tax return to the individual investor is _______.
A. 3.96%; 5.1%
B. 5.39%; 5.1%
C. 6%; 6%
D.
Q:
QuantityPer WeekTotal UtilityAmyRobertDavidMichelle0000015.01006006029.91901200130314.72701800220419.43402400310524.04003000425628.54503600575732.94904200900837.252048001275941.451054001770Refer to the above table. Michelleʹs utility schedule is characterized byA) diminishing marginal utility. B) increasing marginal utility.C) constant marginal utility. D) constant total utility.
Q:
In a ___________ index, changes in the value of the stock with the greatest market value will move the index value the most, everything else equal.
A. value-weighted index
B. equally weighted index
C. price-weighted index
D. bond price index
Q:
When two goods are substitutes,
A) the demands for both goods will be inelastic.
B) cross price elasticity of demand will be 0.
C) cross price elasticity of demand will be negative.
D) cross price elasticity of demand will be positive.
Q:
You decide to purchase an equal number of shares of stocks of firms to create a portfolio. If you wanted to construct an index to track your portfolio performance, your best match for your portfolio would be to construct ______.
A. a value-weighted index
B. an equally weighted index
C. a price-weighted index
D. a bond price index
Q:
Page Corporation acquired a 60% interest in Ace Corporation at a price $40,000 in excess of book value and fair value on January 1, 2010. On the same date, Ace acquired a 70% interest in Bader Corporation at a price $30,000 in excess of book value and fair value. The excess purchase cost paid by Page and Ace was attributed to goodwill. Separate net incomes (excluding investment income) for the three affiliates for 2010 are as follows: Page, $500,000, Ace, $300,000, and Bader, $400,000.Page's controlling interest share of consolidated net income for 2010 isA) $808,000.B) $848,000.C) $920,000.D) $960,000.
Q:
The rate of interest on short-term loans among financial institutions is _____.
A. bankers' acceptances
B. brokers' calls
C. federal funds
D. LIBOR
Q:
A value of the absolute price elasticity of demand equal to 0.5 indicates that A) a 0.5% decrease in price leads to a 1% increase in quantity demanded. B) a 2% decrease in price leads to a 25% increase in quantity demanded. C) a 1% increase in price leads to a 5% decrease in quantity demanded.D) a 1% increase in price leads to a 0.5% decrease in quantity demanded.
Q:
1) Pallet Corporation owns 80% of Adelt Corporation and Adelt owns 60% of Bajo Inc. Which of the following is correct?A) Bajo should not be consolidated because noncontrolling interests hold 52%.B) Bajo should be consolidated because the 60% of Bajo stock is held in the affiliate structure.C) Pallet has 8% indirect ownership of Bajo.D) Pallet has 80% indirect ownership of Bajo.
Q:
Which of the following is not considered a money market investment?
A. bankers' acceptance
B. eurodollar
C. repurchase agreement
D. Treasury note
Q:
The optimal quantity of pollution in the above figureA) is defined as the level where the marginal benefit is at a maximum.B) is where the optimal degree of air cleanliness is 100 percent.C) is the level of pollution at which the marginal benefit equals the marginal cost.D) cannot be determined.
Q:
Three stocks have share prices of $12, $75, and $30 with total market values of $400 million, $350 million, and $150 million, respectively. If you were to construct a price-weighted index of the three stocks, what would be the index value?
A. 300
B. 39
C. 43
D. 30
Q:
The official definition of poverty isA) exactly the 12 percent of U.S. residents with the lowest incomes.B) exactly the 20 percent of U.S. residents with the lowest incomes. C) an absolute measure.D) a relative measure.
Q:
Q:
A stock quote indicates a stock price of $60 and a dividend yield of 3%. The latest quarterly dividend received by stock investors must have been ______ per share.
A. $0.55
B. $1.80
C. $0.45
D. $1.25
Q:
On December 31, 2011, Maria Corporation has the following stockholders' equity:Common stock, $10 par $100,000Additional paid-in capital 20,000Retained earnings 80,000Total stockholders' equity $200,000On January 1, 2012, Maria Corporation declared and issued a 10% stock dividend when the market price per share was $50.On January 2, 2012, James Corporation purchased an 80% interest in Maria Corporation for $160,000 from the open market. On January 2, 2012, the fair value of Maria's individual assets and liabilities was equal to book value.Required:Prepare the journal entry(ies) for Maria Corporation on January 1, 2012.2. Prepare the journal entry(ies) for James Corporation on January 2, 2012.3. Prepare the elimination entry(ies) for consolidating work papers on January 2, 2012.4. Prepare the elimination entry(ies) for consolidating work papers on January 2, 2012 if the 10% stock dividend is not declared and issued on January 1, 2012.
Q:
Quantity of LaborHourly Wage RateTotal Marginal Wage Bill Factor Cost0-- -1$10 212 314 416 518 620 In the above table, if the marginal revenue product is $16, how many workers will the profit maximizing monopsonist hire and what wage will they pay each worker?A) 5; $18 B) 5; $16 C) 4; $16D) 6; $30
Q:
What would you expect to have happened to the spread between yields on commercial paper and Treasury bills immediately after September 11, 2001?
A. no change, as both yields will remain the same
B. increase, as the spread usually increases in response to a crisis
C. decrease, as the spread usually decreases in response to a crisis
D. no change, as both yields will move in the same direction
Q:
On December 31, 2011, Lorna Corporation has the following information available:Common stock, $10 par $200,000Additional paid-in capital 60,000Retained earnings 40,000Total stockholders' equity $300,000On December 31, 2011, Gerald Corporation buys an 80% interest in Lorna Corporation for $240,000. On December 31, 2011, the fair value of Lorna's assets and liabilities are equal to the respective book values.Required:1.On January 1, 2012, Lorna Corporation buys 500 shares of common stock from noncontrolling stockholders at $20 per share. Prepare the journal entry for Gerald Corporation on January 1, 2012. Use four decimal places for the ownership percentage.2.On January 1, 2012, Lorna Corporation buys 500 shares of common stock from noncontrolling stockholders at $30 per share. Prepare the journal entry for Gerald Corporation on January 1, 2012. Use four decimal places for the ownership percentage.3. On January 1, 2012, Lorna Corporation buys 500 shares of common stock from noncontrolling stockholders at $10 per share. Prepare the journal entry for Gerald Corporation on January 1, 2012. Use four decimal places for the ownership percentage.
Q:
Bargaining between the management of a company and the management of a union isA) a closed shop. B) a bilateral monopoly.C) a craft union. D) collective bargaining.
Q:
A typical bond price quote includes all but which one of the following?
A. coupon
B. closing bond price
C. yield to maturity
D. dividend yield
Q:
On December 31, 2011, Dixie Corporation has the following information available:Common stock, $10 par $200,000Additional paid-in capital 60,000Retained earnings 40,000Total stockholders' equity $300,000On December 31, 2011, Grimsled Corporation buys an 80% interest in Dixie Corporation for $240,000. On December 31, 2011, the fair value of Dixie's assets and liabilities are equal to the respective book values.Required:1.On January 1, 2012, Dixie Corporation sells 5,000 additional shares of common stock to noncontrolling stockholders at $20 per share. Prepare the journal entry for Grimsled Corporation on January 1, 2012.2.On January 1, 2012, Dixie Corporation sells 5,000 additional shares of common stock to noncontrolling stockholders at $35 per share. Prepare the journal entry for Grimsled Corporation on January 1, 2012.3.On January 1, 2012, Dixie Corporation sells 5,000 additional shares of common stock to noncontrolling stockholders at $10 per share. Prepare the journal entry for Grimsled Corporation on January 1, 2012.
Q:
What is marginal factor cost? How is it related to the supply curve of an input?
Q:
If you thought prices of stock would be rising over the next few months, you might want to __________________ on the stock.
A. purchase a call option
B. purchase a put option
C. sell a futures contract
D. place a short-sale order
Q:
One weakness of the Sherman Act is that
A) it fails to clearly define restraint of trade.
B) it applies only to foreign monopolies.
C) it applies only to the steel and railroad industries.
D) none of the above
Q:
On December 31, 2011, Pat Corporation has the following information available:Common stock, $10 par $100,000Additional paid-in capital 60,000Retained earnings 40,000Total stockholders' equity $200,000On December 31, 2011, Anne Corporation buys an 80% interest in Pat Corporation for $160,000. On December 31, 2011, the fair value of Pat's assets and liabilities are equal to the respective book values. Use four decimal places for the ownership percentage.Required:1.On January 1, 2012, Pat Corporation sells 2,000 additional shares of common stock to noncontrolling stockholders at $20 per share. Prepare the journal entry for Anne Corporation on January 1, 2012.2.On January 1, 2012, Pat Corporation sells 2,000 additional shares of common stock to noncontrolling stockholders at $35 per share. Prepare the journal entry for Anne Corporation on January 1, 2012.3.On January 1, 2012, Pat Corporation sells 2,000 additional shares of common stock to noncontrolling stockholders at $15 per share. Prepare the journal entry for Anne Corporation on January 1, 2012.
Q:
Which of the following is not a characteristic of common stock ownership?
A. residual claimant
B. unlimited liability
C. voting rights
D. right to any dividend paid by the corporation.
Q:
At January 1, 2010, the stockholders' equity of Raven Corporation and its 60%-owned subsidiary, Trunk Corporation, are as follows:Raven TrunkCommon stock, $10 par value $700,000 $400,000Retained earnings 800,000 50,000Totals $1,500,000 $450,000Trunk's net income for 2010 was $40,000. No dividends were declared or paid in 2010. Raven's Investment in Trunk account balance on December 31, 2010 was equal to its underlying equity on December 31, 2010. Trunk Corporation issued 10,000 additional shares of common stock directly to Raven on January 1, 2011 at $22 per share.Required:1.Compute the balance in Raven's Investment in Trunk account on January 1, 2011 after its purchase of the additional Trunk shares.2.Determine the increase or decrease in goodwill stemming from Raven's investment in the 10,000 Trunk shares. Assume the fair value and book value of Trunk's assets and liabilities are equal.
Q:
In industries in which strong network effects exist, which industry structure is likely to emerge?A) Perfect competition B) MonopolyC) Monopolistic competition D) Oligopoly
Q:
Treasury notes have initial maturities between ________ years.
A. 2 and 4
B. 5 and 10
C. 10 and 30
D. 1 and 10
Q:
On September 1, 2011, Nelson Corporation acquired a 90% interest in Corbin Corporation for $900,000. Corbin's stockholders' equity at January 1, 2011 consisted of $200,000 of Common Stock and $600,000 of Retained Earnings. The book values of its assets and liabilities were equal to their respective fair values on this date. All excess purchase cost was attributed to goodwill.During 2011, Corbin uniformly earned $98,000 and paid dividends of $19,000 on each of four dates: February 1, June 1, August 1, and December 1.Required: Compute the following:1. Implied goodwill associated with Corbin Corporation based on Nelson's purchase price on September 1, 2011.2. Nelson's income from Corbin for 2011.3. Preacquisition income for Nelson Corporation and Subsidiary for 2011.4. Noncontrolling interest share for 2011.5. What is the balance in Nelson's Investment in Corbin account at December 31, 2011?
Q:
The combining of First Union National Bank and The National Bank of Memphis is an example ofA) a vertical merger. B) a horizontal merger.C) a downstream formation. D) a conglomerate merger.
Q:
Which of the following is used to back international sales of goods and services?
A. certificate of deposit
B. bankers' acceptance
C. eurodollar deposits
D. commercial paper
Q:
On September 1, 2011, Beck Corporation acquired an 80% interest in Johnsen Corporation for $700,000. Johnsen's stockholders' equity at January 1, 2011 consisted of $200,000 of Common Stock and $600,000 of Retained Earnings. The book values of its assets and liabilities were equal to their respective fair values on this date. All excess purchase cost was attributed to goodwill.During 2011, Johnsen uniformly earned $78,000 and paid dividends of $9,000 on each of four dates: February 1, June 1, August 1, and December 1.Required: Compute the following:1. Implied goodwill associated with Johnsen Corporation based on Beck's purchase price on September 1, 2011.2. Beck's income from Johnsen for 2011.3. Preacquisition income for Beck Corporation and Subsidiary for 2011.4. Noncontrolling interest share for 2011.5. What is the balance in Beck's Investment in Johnsen account at December 31, 2011?
Q:
In the above figure, the profit-maximizing output and price for this monopolistically competitive firm areA) 10,000 units at a price of $10 per unit. B) 10,000 units at a price of $5 per unit. C) 13,000 units at a price of $7 per unit. D) 12,000 units at a price of $8 per unit.
Q:
Eurodollars are _________.
A. dollar-denominated deposits at any foreign bank or foreign branch of an American bank
B. dollar-denominated bonds issued by firms outside their home market
C. currency issued by Euro Disney and traded in France
D. dollars that wind up in banks as a result of money-laundering activities
Q:
Olson Corporation paid $62,000 to acquire 100% of Towing Corporation's outstanding voting common stock at book value on May 1, 2011. The stockholders' equity of Towing on January 1, 2011 consisted of $40,000 Capital Stock and $20,000 Retained Earnings. Towing's total dividends for 2011 were $6,000, paid equally on April 1 and October 1. Towing's net income was earned uniformly throughout 2011. In 2011, preacquisition sales were $10,000 and preacquisition expenses were cost of sales for $5,000. (There were no other preacquisition expenses in 2011.)During 2011, Olson made sales of $10,000 to Towing at a gross profit of $3,000. One-half of this merchandise was inventoried by Towing at year-end, and one-half of the 2011 intercompany sales were unpaid at year-end 2011.Olson sold equipment with a ten-year remaining useful life to Towing at a $2,000 gain on December 31, 2011. The straight-line depreciation method is used by both companies. The equipment has no salvage value.Financial statements of Olson and Towing Corporations for 2011 appear in the first two columns of the partially completed consolidation working papers.Required:Complete the consolidating working papers for Olson Corporation and Subsidiary for the year ending December 31, 2011.
Q:
The monopolist determines the price and quantity combination that maximizes short -run profits byA) finding the quantity at which marginal cost and marginal revenue are equal and then using the demand curve to find price.B) determining the price by finding the highest price at which sales can be made and then using the demand curve to find the appropriate quantity.C) finding the point at which marginal revenue and demand intersect. This gives the price and quantity that maximizes profits.D) finding the quantity at which average revenue and average total cost are furthest apart.
Q:
Which of the following is most like a short-term collateralized loan?
A. certificate of deposit
B. repurchase agreement
C. bankers' acceptance
D. commercial paper
Q:
Candy Corporation paid $240,000 on April 1, 2011 for all of the common stock of Bun Corporation in a business acquisition. On January 1, 2011, Bun's stockholders' equity was equal to $195,000. Bun's first quarter 2011 net income was $10,000 and first quarter 2011 dividends were $5,000. In 2011, preacquisition sales were $32,500 and preacquisition cost of sales was $22,500. (There were no other preacquisition expenses in 2011.) Dividends are paid quarterly on March 31, June 30, September 30 and December 31. Any excess cost over book value acquired is allocated to goodwill.Additional information:1. Candy sold equipment with a 5-year remaining useful life to Bun on July 1, 2011 for a gain of $10,000. Salvage value of the equipment is zero and both companies use the straight-line depreciation method.2. Bun's accounts payable balance at December 31 includes $5,000 due to Candy from the sale of equipment.3. Candy accounts for its investment in Bun using the equity method.Required:Complete the working papers to consolidate the financial statements of Candy and Bun Corporations for the year ending December 31, 2011.
Q:
If a perfectly competitive firm has economic profits greater than zero, then we know thatA) the firmʹs industry is not in long-run equilibrium. B) the firmʹs industry is in long-run equilibrium.C) the firm is producing at the bottom of the average total cost curve.D) the firm will reduce output.
Q:
Large well-known companies often issue their own short-term unsecured debt notes directly to the public, rather than borrowing from banks; their notes are called _________.
A. certificates of deposit
B. repurchase agreements
C. bankers' acceptances
D. commercial paper
Q:
At December 31, 2012 year-end, Arnold Corporation's investment in Oakes Inc. was $200,000 consisting of 80% of Oakes's $250,000 stockholders' equity on that date. On April 1, 2013, Arnold sold 20% interest (one-fourth of its holdings) in Oakes for $65,000. During 2013, Oakes had net income of $75,000 (earned uniformly) and on July 1, 2013, Oakes paid dividends of $40,000. Arnold uses the equity method to account for the investment. Required:1. What is the gain or loss on sale of the 20% interest?2. Record the journal entries for Arnold for the year ending December 31, 2013. Use the beginning-of-the-year-sale-date assumption.
Q:
If a firm is producing an output rate at which marginal cost is equal price, the firmA) is maximizing profits. B) should increase its output level. C) should reduce its output level. D) will not be covering its fixed cost.
Q:
The Standard & Poor's 500 is __________ weighted index.
A. an equally
B. a price-
C. a value-
D. a share-
Q:
Using the above table, the TVC, the TC, and MC when output is 3 units areA) $45, $50, and $15, respectively. B) $15, $20, and $15, respectively.C) $45, $18, and $15, respectively. D) $15, $45, and $15, respectively.
Q:
At December 31, 2012 year-end, Lapwing Corporation's investment in Ground Inc. was $200,000 consisting of 80% of Ground's $250,000 stockholders' equity on that date. On April 1, 2013, Lapwing sold 20% interest (one-fourth of its holdings) in Ground for $65,000. During 2013, Ground had net income of $75,000(earned uniformly) and on July 1, 2013, Ground paid dividends of $40,000. Lapwing uses the equity method to account for the investment.Required:1. What is the gain or loss on sale of the 20% interest?2. Record the journal entries for Lapwing for the year ending December 31, 2013. Use the actual-sale-date assumption.
Q:
The Hang Seng index reflects market performance on which of the following major stock markets?
A. Japan
B. Singapore
C. Taiwan
D. Hong Kong
Q:
On January 1, 2011, Fly Corporation held a 60% interest in Liptin Corporation. The investment account balance was $2,100,000, consisting of 60% of Liptin's $3,500,000 of net assets.During 2011, Liptin earned $300,000 uniformly and paid dividends of $110,000 on November 1. On October 1, 2011, Fly sold 10% of its investment in Liptin for $364,000, thereby reducing its interest in Liptin to 54%.Required: Compute the following using the actual sales date assumption:1. Gain or loss on sale.2. Income from Liptin for 2011.3. Noncontrolling interest share for 2011.
Q:
Economists generally define the short run as beingA) that period of time in which at least one of the firmʹs inputs, usually plant size, is fixed.B) that period of time in which all inputs are variable. C) any period of time less than one year.D) any period of time less than six months.
Q:
The ________ the ratio of municipal bond yields to corporate bond yields, the _________ the cutoff tax bracket at which more individuals will prefer to hold municipal debt.
A. higher; lower
B. lower; lower
C. higher; higher
D. The answer cannot be determined without more information.
Q:
A difference between a proprietorship and a partnership is thatA) a proprietorship is easy to form while a partnership is hard to form.B) a proprietorship has only one owner while a partnership has only two owners.C) a partnership allows for specialization while a proprietorship does not.D) the profits in a proprietorship are taxed only once while in a partnership they are taxed twice.
Q:
On January 1, 2010, Starling Corporation held an 80% interest in Twig Corporation and the investment account balance was $900,000. On January 1, 2010, Twig's total stockholders' equity was $1,125,000.During 2010, Twig uniformly earned $234,000 and paid dividends of $37,500 on April 1 and again on October 1. On August 1, 2010, Starling sold 30% of its investment in Twig for $262,500, thereby reducing its interest in Twig to 56%.Required: Compute the following using the actual sales date assumption:1. Gain or loss on sale.2. Income from Twig for 2010.3. Noncontrolling interest share for 2010.
Q:
Ownership of a call option entitles the owner to the __________ to __________ a specific stock, on or before a specific date, at a specific price.
A. right; buy
B. right; sell
C. obligation; buy
D. obligation; sell
Q:
Refer to the above figure. Which point represents the second highest level of utility?A) Point A B) Point B C) Point C D) Point D
Q:
At December 31, 2010, the stockholders' equity of Pearson Corporation and its 80%-owned subsidiary, Trompeter Corporation, are as follows:TrompeterCommon stock, $10 par value $20,000 $12,000Retained earnings 8,000 6,000Totals $28,000 $18,000Pearson's Investment in Trompeter is equal to 80 percent of Trompeter's book value. Trompeter Corporation issued 400 additional shares of common stock directly to Pearson on January 1, 2011 at $10 per share.Required:1. Compute the balance in Pearson's Investment in Trompeter account on January 1, 2011 after the new investment is recorded.2. Determine the increase or decrease in goodwill from Pearson's new investment in the 400 Trompeter shares. Use four decimal places for the ownership percentage. Assume the fair value and book value of Trompeter's assets and liabilities are equal.
Q:
June call and put options on King Books Inc. are available with exercise prices of $30, $35, and $40. Among the different exercise prices, the call option with the _____ exercise price and the put option with the _____ exercise price will have the greatest value.
A. $40; $30
B. $30; $40
C. $35; $35
D. $40; $40
Q:
At December 31, 2010, the stockholders' equity of Godwin Corporation and its 80%-owned subsidiary, Goldberg Corporation, are as follows:Godwin GoldbergCommon stock, $10 par value $20,000 $12,000Retained earnings 8,000 6,000Totals $28,000 $18,000Godwin's Investment in Goldberg is equal to 80 percent of Goldberg's book value. Goldberg Corporation issued 225 additional shares of common stock directly to Godwin on January 1, 2011 at $28 per share.Required:1. Compute the balance in Godwin's Investment in Goldberg account on January 1, 2011 after the new investment is recorded.2. Determine the increase or decrease in goodwill from Godwin's new investment in the 225 Goldberg shares. Use four decimal places for the ownership percentage. Assume the fair value and book value of Goldberg's assets and liabilities are equal.
Q:
QuantityPer WeekTotal UtilityAmyRobertDavidMichelle0000015.01006006029.91901200130314.72701800220419.43402400310524.04003000425628.54503600575732.94904200900837.252048001275941.451054001770Refer to the above table. Davidʹs utility schedule is characterized byA) diminishing marginal utility. B) increasing marginal utility.C) constant marginal utility. D) decreasing marginal utility.
Q:
An investor in a 28% tax bracket is trying to decide whether to invest in a municipal bond or a corporate bond. She looks up municipal bond yields (rm) but wishes to calculate the taxable equivalent yield r. The formula she should use is given by ______.
A. r = rm (1 - 28%)
B. r = rm / (1 - 72%)
C. r = rm (1 - 72%)
D. r = rm / (1 - 28%)
Q:
At December 31, 2010, the stockholders' equity of Gost Corporation and its 80%-owned subsidiary, Tree Corporation, are as follows:Gost TreeCommon stock, $10 par value $20,000 $12,000Retained earnings 8,000 6,000Totals $28,000 $18,000Gost's Investment in Tree is equal to 80 percent of Tree's book value. Tree Corporation issued 225 additional shares of common stock directly to Gost on January 1, 2011 at $18 per share.Required:1.Compute the balance in Gost's Investment in Tree account on January 1, 2011 after the new investment is recorded.2. Determine the increase or decrease in goodwill from Gost's new investment in the 225 Tree shares. Use four decimal places for the ownership percentage. Assume the fair values of Tree's assets and liabilities are equal to book values.
Q:
The percentage change in the demand for one good divided by the percentage change in the price of a related good is theA) price elasticity of demand. B) price elasticity of supply. C) cross price elasticity of demand. D) income elasticity.
Q:
Ownership of a put option entitles the owner to the __________ to ___________ a specific stock, on or before a specific date, at a specific price.
A. right; buy
B. right; sell
C. obligation; buy
D. obligation; sell
Q:
A 15% stock dividend by a subsidiary causesA) the parent company investment account to decrease.B) the parent company investment account to remain the same.C) the parent company investment account to increase.D) the noncontrolling interest equity to increase.
Q:
A value of the absolute price elasticity of demand equal to 2.5 indicates thatA) a 5% decrease in price leads to a 2% increase in quantity demanded.B) a 2% decrease in price leads to a 25% increase in quantity demanded. C) a 1% decrease in price leads to a 2.5% increase in quantity demanded. D) a 0.25% decrease in price leads to a 1% increase in quantity.
Q:
The purchase of a futures contract gives the buyer _________.
A. the right to buy an item at a specified price
B. the right to sell an item at a specified price
C. the obligation to buy an item at a specified price
D. the obligation to sell an item at a specified price
Q:
The acquisition of treasury stock by a subsidiary from noncontrolling shareholders at a price above book valueA) decreases the parent's share of subsidiary book value and decreases the parent's ownership percentage.B) decreases the parent's share of subsidiary book value and increases the parent's ownership percentage.C) increases the parent's share of subsidiary book value and decreases the parent's ownership percentage.D) increases the parent's share of subsidiary book value and increases the parent's ownership percentage.
Q:
In the above figure,A) the optimal degree of air cleanliness is less than 100 percent.B) the marginal cost curve slopes up because of the law of diminishing returns. C) Neither A nor B are correct.D) Both A and B are correct.
Q:
A bond issued by the state of Alabama is priced to yield 6.25%. If you are in the 28% tax bracket, this bond would provide you with an equivalent taxable yield of _________.
A. 4.5%
B. 7.25%
C. 8.68%
D. none of these options
Q:
Official poverty rates in the last 40 years haveA) fallen dramatically. B) risen dramatically.C) stayed roughly the same. D) been eliminated.
Q:
In calculating the Dow Jones Industrial Average, the adjustment for a stock split occurs _________.
A. automatically
B. by adjusting the divisor
C. by adjusting the numerator
D. by adjusting the market value weights
Q:
On April 1, 2011, Paramount Company acquires 100% of the outstanding stock of Yester Company on the open market. Paramount and Yester have December 31 fiscal year ends. Under GAAP, a consolidated income statement for the year ending December 31, 2011, will includeA) 100 percent of the revenues and expenses in 2011 of Yester Company after January 1, 2011.B) no revenues and expenses in 2011 of Yester Company.C) 80 percent of the revenues and expenses in 2011 of Yester Company.D) 100 percent of the revenues and expenses in 2011 of Yester Company after April 1, 2011.
Q:
Which of the following does not approximate the performance of a buy-and-hold portfolio strategy?
A. an equally weighted index
B. a price-weighted index
C. a value-weighted index
D. all of these options (Weights are not a factor in this situation.)
Q:
Anthony Company declared and paid $20,000 of dividends during 2011. The schedule of dividends follows:Date Dividend Declared & Paid Amount PaidMarch 31, 2011 $5,000June 30, 2011 $5,000September 30, 2011 $5,000December 31, 2011 $5,000Anthony Company was acquired on June 1, 2011 by Google Company. Google acquired 100 percent of Anthony Company. Both companies have a December 31 fiscal year end. What is the amount of preacquisition dividends in 2011?A) 0B) $5,000C) $10,000D) $15,000
Q:
Quantity of LaborHourly Wage RateTotal Marginal Wage Bill Factor Cost0-- -1$10 212 314 416 518 620 In the above table, if the marginal revenue product is $22, how many workers will the profit maximizing monopsonist hire and what wage will they pay each worker?A) 5; $18 B) 3; $14 C) 4; $22 D) 4; $16