Q&A Hero

Q: When economic profits are positive, accounting profitsA) must be positive. B) will be negative.C) will equal zero. D) could be positive, negative or zero.

Q: A summary balance sheet for the Ash, Brown, and Curly partnership on December 31, 2011 is shown below. Partners Ash, Brown, and Curly allocate profit and loss in their respective ratios of 2:1:1. The partnership agreed to pay partner Brown $135,000 for his partnership interest upon his retirement from the partnership on January 1, 2012. The partnership financials on January 1, 2012 are: Assets Cash $ 75,000 Marketable securities 60,000 Inventory 85,000 Land 90,000 Building-net 110,000 Total assets $420,000 Equities Ash, capital $210,000 Brown, capital 105,000 Curly, capital 105,000 Total equities $420,000 Required: Prepare the journal entry to reflect Brown's retirement from the partnership: 1. Assuming a bonus to Brown. 2. Assuming a revaluation of total partnership capital based on excess payment. 3. Assuming goodwill equal to the excess payment is recorded.

Q: The quantity of good A is measured along the vertical axis, and the quantity of good B is measures along the horizontal axis. If the price of Good A fallsA) the vertical intercept of the budget line moves along the vertical axis away from the origin. B) the vertical intercept of the budget line moves along the vertical axis toward the origin.C) the horizontal intercept (along Good B) of the budget line will increase.D) none of the above

Q: A summary balance sheet for the Sissy, Jody, and Buffy partnership on December 31, 2011 is shown below. Partners Sissy, Jody, and Buffy allocate profit and loss in their respective ratios of 3:4:6. The partnership agreed to pay Buffy $360,000 for her partnership interest upon her retirement from the partnership on January 1, 2012. Any payments exceeding Buffy's capital balance are treated as a bonus from partners Sissy and Jody. Assets Cash $110,000 Marketable securities 100,000 Inventory 240,000 Land 90,000 Building-net 140,000 Total assets $680,000 Equities Sissy, capital $220,000 Jody, capital 170,000 Buffy, capital 290,000 Total equities $680,000 Required: Prepare the journal entry to reflect Buffy's retirement.

Q: Slices of PizzaTotal UtilityMarginal Utility00-120 250 3 204 105 0In the above table, marginal utility begins to diminish after consumption of theA) second slice of pizza. B) third slice of pizza.C) fourth slice of pizza. D) fifth slice of pizza.

Q: A summary balance sheet for the Uma, Van, and Walter partnership on December 31, 2011 is shown below. Partners Uma, Van, and Walter allocate profit and loss in their respective ratios of 4:5:7. The partnership agreed to pay Walter $227,500 for his partnership interest upon his retirement from the partnership on January 1, 2012. Any payments exceeding Walter's capital balance are treated as a bonus from partners Uma and Van.AssetsCash $ 75,000Marketable securities 60,000Inventory 87,500Land 90,000Building-net 150,000Total assets $462,500EquitiesUma, capital $212,500Van, capital 112,500Walter, capital 137,500Total equities $462,500Required:Prepare the journal entry to reflect Walter's retirement.

Q: The cross-price elasticity of demand of products ʺMʺ and ʺNʺ is zero. This implies that ʺMʺ and ʺNʺ areA) substitute products.B) complementary products.C) independent products.D) unique goods, as the price elasticity of demand for one of them is zero.

Q: A summary balance sheet for the partnership of Quail, Rainne and Selma on December 31, 2011 is shown below. Partners Quail, Rainne and Selma allocate profit and loss in their respective ratios of 6:3:1. Assets Cash $ 320,000 Marketable securities 640,000 Inventory 270,000 Land 130,000 Building-net 210,000 Total assets $1,570,000 Equities Quail, capital $ 670,000 Rainne, capital 580,000 Selma, capital 320,000 Total equities $1,570,000 The partners agree to admit Trask for a one-tenth interest. The fair market value for partnership land is $260,000, and the fair market value of the inventory is $370,000. Required: 1. Record the entry to revalue the partnership assets prior to the admission of Trask. 2. Calculate how much Trask will have to invest to acquire a 10% interest. 3. Assume the partnership assets are not revalued. If Trask paid $300,000 to the partnership in exchange for a 10% interest, what would be the bonus that is allocated to each partner's capital account?

Q: PricePer Unit Quantity DemandedPer Week$10.00259.50309.00358.50408.00457.50507.00556.50606.00655.50705.0075Refer to the above table. Demand is unit elastic between the prices ofA) $5.00 & $10.00. B) $6.00 & $7.00. C) $6.00 & $6.50. D) $7.00 & $7.50

Q: Consider two perfectly negatively correlated risky securities, A and B. Security A has an expected rate of return of 16% and a standard deviation of return of 20%. B has an expected rate of return of 10% and a standard deviation of return of 30%. The weight of security B in the minimum-variance portfolio is _________. A. 10% B. 20% C. 40% D. 60%

Q: A summary balance sheet for the partnership of Maddy, Nelson and Olsen on December 31, 2011 is shown below. Partners Maddy, Nelson and Olsen allocate profit and loss in their respective ratios of 9:6:10. Assets Cash $ 50,000 Marketable securities 120,000 Inventory 75,000 Land 80,000 Building-net 400,000 Total assets $725,000 Equities Maddy, capital $425,000 Nelson, capital 225,000 Olsen, capital 75,000 Total equities $725,000 The partners agree to admit Poosh for a one-tenth interest. The fair market value for partnership land is $180,000, and the fair market value of the inventory is $150,000. Required: 1. Record the entry to revalue the partnership assets prior to the admission of Poosh. 2. Calculate how much Poosh will have to invest to acquire a 10% interest. 3. Assume the partnership assets are not revalued. If Poosh paid $200,000 to the partnership in exchange for a 10% interest, what is the bonus that is allocated to each partner's capital account?

Q: When no property rights exist,A) no one has an economic incentive to care for common property, and an externality may well occur.B) there will be no production.C) externalities will be internalized by voluntary arrangements among a small group of parties.D) society will produce beyond the production possibilities frontier, but the allocation of resources is not apt to be optimal.

Q: The standard deviation of return on investment A is .10, while the standard deviation of return on investment B is .04. If the correlation coefficient between the returns on A and B is -.50, the covariance of returns on A and B is _________. A. -.0447 B. -.0020 C. .0020 D. .0447

Q: The profit and loss sharing agreement for the Jill, Kelly, and Lila partnership provides that each partner receives a bonus of 5% on the original amount of partnership net income if net income is above $25,000. Jill and Kelly receive a salary allowance of $7,500 and $10,500, respectively. Lila has an average capital balance of $260,000, and receives a 10% interest allocation on the amount by which her average capital account balance exceeds $200,000. Residual profits and losses are allocated to Jill, Kelly, and Lila in their respective ratios of 7:5:8. Required: Prepare a schedule to allocate $88,000 of partnership net income to the partners.

Q: A portfolio is composed of two stocks, A and B. Stock A has a standard deviation of return of 35%, while stock B has a standard deviation of return of 15%. The correlation coefficient between the returns on A and B is .45. Stock A comprises 40% of the portfolio, while stock B comprises 60% of the portfolio. The standard deviation of the return on this portfolio is _________. A. 23% B. 19.76% C. 18.45% D. 17.67%

Q: The top 5 percent of health care users in the United States account forA) 30 percent of all health costs. B) over 50 percent of all health costs.C) over 75 percent of all health costs. D) almost 90 percent of all health costs.

Q: Greta, Harriet, and Ivy have a retail partnership business selling personal computers. The partners are allowed an interest allocation of 6% on their average capital. Capital account balances on the first day of each month are used in determining weighted average capital, regardless of additional partner investment or withdrawal transactions during any given month. Withdrawals of capital that are debited to the capital account are used in the average calculation. Partner capital activity for the year was: Capital accounts Greta Harriet Ivy Jan 1 balance $680,000 $500,000 $580,000 Feb 12 investment 40,000 Mar 26 investment 20,000 Apr 20 withdrawal (10,000) May 8 withdrawal (15,000) (8,000) Jul 3 investment 14,000 Sep 29 investment 8,000 3,000 6,000 Nov 5 investment 3,000 Required: Calculate weighted average capital for each partner, and determine the amount of interest that each partner will be allocated. Round all calculations to the nearest whole dollar.

Q: What is a monopsony and how does a monopsonistic firm determine the wage rate to pay its employees?

Q: Daniel, Ethan, and Frank have a retail partnership business selling personal computers. The partners are allowed an interest allocation of 8% on their average capital. Capital account balances on the first day of each month are used in determining weighted average capital, regardless of additional partner investment or withdrawal transactions during any given month. Withdrawals of capital that are debited to the capital account are used in the average calculation. Partner capital activity for the year was: Capital accounts Daniel Ethan Frank Jan 1 balance $ 200,000 $ 300,000 $ 250,000 Feb 2 investment 50,000 Mar 6 investment 10,000 20,000 Apr 20 withdrawal (10,000) Jul 3 withdrawal and investment (7,000) 10,000 Sep 29 investment 5,000 4,000 5,000 Nov 5 investment 5,000 Required: Calculate weighted average capital for each partner, and determine the amount of interest that each partner will be allocated. Round all calculations to the nearest whole dollar.

Q: A union shop is aA) strike by a union in sympathy with another unionʹs strike or cause.B) dispute involving two or more unions over which should have control of a particular jurisdiction.C) business enterprise in which employees must belong to the union before they can be hired and must remain in the union after they are hired.D) business which may hire nonunion members conditional on their joining the union by some specified date after employment begins.

Q: Use the following information to answer the question(s) below.Adam, Bella, and Chris operate a partnership with a complex profit and loss sharing agreement. The average capital balance for Adam, Bella and Chris on December 31, 2011 is $120,000, $270,000, and $340,000, respectively. A 6% interest allocation is provided to each partner based on the average capital balance on December 31, 2011. Adam and Bella receive salary allocations of $40,000 and $50,000, respectively. If partnership net income is above $160,000, after the salary allocations are considered (but before the interest allocations are considered), Chris will receive a bonus of 10% of the income (pre-salary and interest, but net of the bonus). All residual income is allocated in the ratios of 2:2:6 to Adam, Bella, and Chris, respectively.Required:1. Prepare a schedule to allocate income or loss to the partners assuming that the partnership incurs a net loss of $26,200 for 2011.2. Prepare a journal entry to distribute the partnership's loss to the partners (assume that an Income Summary account is used by the partnership).

Q: The _________ reward-to-variability ratio is found on the ________ capital market line. A. lowest; steepest B. highest; flattest C. highest; steepest D. lowest; flattest

Q: We would expect that a rise in labor supply will have a proportionately larger effect on the market wage rate whenA) the demand for labor is unitary elastic.B) the demand for labor is inelastic. C) the supply for labor is elastic D) the demand for labor is elastic.

Q: The optimal risky portfolio can be identified by finding: I. The minimum-variance point on the efficient frontier II. The maximum-return point on the efficient frontier and the minimum-variance point on the efficient frontier III. The tangency point of the capital market line and the efficient frontier IV. The line with the steepest slope that connects the risk-free rate to the efficient frontier A. I and II only B. II and III only C. III and IV only D. I and IV only

Q: Which of the following is exempt from antitrust laws?A) Professional basketball B) Suppliers of military equipmentC) Telephone companies D) Automobile companies

Q: Xavier, Young, and Zane operate a partnership with a complex profit and loss sharing agreement. The average capital balance for each partner on December 31, 2011 is $300,000 for Xavier, $250,000 for Young, and $325,000 for Zane. An 8% interest allocation is provided to each partner based on the average capital balance on December 31, 2011. Xavier and Young receive salary allocations of $10,000 and $15,000, respectively. If partnership net income is above $25,000, after the salary allocations are considered (but before the interest allocations are considered), Zane will receive a bonus of 10% of the original amount of net income. All residual income is allocated in the ratios of 2:3:5 to Xavier, Young, and Zane, respectively.Required:1. Prepare a schedule to allocate income or loss to the partners assuming that the partnership incurs a net loss of $36,000 for 2011.2. Prepare a journal entry to distribute the partnership's loss to the partners (assume that an Income Summary account is used by the partnership).

Q: Rational risk-averse investors will always prefer portfolios _____________. A. located on the efficient frontier to those located on the capital market line B. located on the capital market line to those located on the efficient frontier C. at or near the minimum-variance point on the efficient frontier D. that are risk-free to all other asset choices

Q: The market structure of oligopoly is whenA) there are a small number of interdependent firms that constitute the entire market. B) there is a single producer of a product.C) there are many producers of a differentiated product. D) there are many producers of a homogeneous product.

Q: Use the following information to answer the question(s) below.Xavier, Young, and Zane operate a partnership with a complex profit and loss sharing agreement. The average capital balance for each partner on December 31, 2011 is $300,000 for Xavier, $250,000 for Young, and $325,000 for Zane. An 8% interest allocation is provided to each partner based on the average capital balance on December 31, 2011. Xavier and Young receive salary allocations of $10,000 and $15,000, respectively. If partnership net income is above $25,000, after the salary allocations are considered (but before the interest allocations are considered), Zane will receive a bonus of 10% of the original amount of net income. All residual income is allocated in the ratios of 2:3:5 to Xavier, Young, and Zane, respectively.Required:1. Prepare a schedule to allocate income to the partners assuming that partnership net income for 2011 is $250,000.2. Prepare a journal entry to distribute the partnership's income to the partners (assume that an Income Summary account is used by the partnership).

Q: The term complete portfolio refers to a portfolio consisting of _________________. A. the risk-free asset combined with at least one risky asset B. the market portfolio combined with the minimum-variance portfolio C. securities from domestic markets combined with securities from foreign markets D. common stocks combined with bonds

Q: FirmAnnual SalesFirmAnnual SalesA$1000G$800B900H1200C120I1050D75J90E50K75F40L600According to the above table, if the fourth and fifth largest firms in the industry merge, the four-firm concentration ratio in the industry will beA) 82.5 percent. B) 35.8 percent. C) 69.0 percent. D) 84.1 percent.

Q: The profit and loss sharing agreement for the Tuttle, Upman, and Veer partnership provides for residual profits and losses to be allocated 2:3:6 to Tuttle, Upman, and Veer, respectively. In 2011, the partnership recorded $11,000 of net income that was properly allocated to the partners' capital accounts. On January 18, 2012, after the books were closed for 2011, Tuttle discovered that the $16,500 payment for the partnership's liability and workers compensation insurance for 2012 was recorded as insurance expense when it was paid on December 28, 2011. Required: Prepare the necessary correcting entry(s) for the partnership.

Q: On a standard expected return versus standard deviation graph, investors will prefer portfolios that lie to the _____________ the current investment opportunity set. A. left and above B. left and below C. right and above D. right and below

Q: Since the firm in the above figure is operating in a monopolistically competitive industry, in the long run we can expect to seeA) the typical firmʹs economic profits expand as production becomes more efficient. B) more firms entering the industry until economic profits are zero.C) the typical firm producing at the minimum point on its ATC curve. D) each firm expand its share of the total market.

Q: The profit and loss sharing agreement for the Mason, Nell, and Odell partnership provides for a $15,000 salary allowance to Nell. Residual profits and losses are allocated 5:3:2 to Mason, Nell, and Odell, respectively. In 2010, the partnership recorded $120,000 of net income that was properly allocated to the partners' capital accounts. On January 25, 2011, after the books were closed for 2010, Mason discovered that office equipment, purchased for $12,000 on December 29, 2010, was recorded as office expense by the company bookkeeper. Required: Prepare the necessary correcting entry(s) for the partnership.

Q: You put half of your money in a stock portfolio that has an expected return of 14% and a standard deviation of 24%. You put the rest of your money in a risky bond portfolio that has an expected return of 6% and a standard deviation of 12%. The stock and bond portfolios have a correlation of .55. The standard deviation of the resulting portfolio will be ________________.A. more than 18% but less than 24%B. equal to 18%C. more than 12% but less than 18%D. equal to 12%

Q: Which of the following conditions hold true for both the perfectly competitive firm and the monopoly at the profit-maximizing output level?A) MR = P B) MC = ATC C) MC = P D) MR = MC

Q: Suppose that a stock portfolio and a bond portfolio have a zero correlation. This means that ______. A. the returns on the stock and bond portfolios tend to move inversely B. the returns on the stock and bond portfolios tend to vary independently of each other C. the returns on the stock and bond portfolios tend to move together D. the covariance of the stock and bond portfolios will be positive

Q: On July 1, 2011, Joe, Kline, and Lama began a partnership in which Joe and Kline each contributed cash of $200,000; and Lama contributed property with a fair value of $100,000 and a tax basis $150,000. Joe receives a 10% bonus of partnership income. Kline and Lama receive salaries of $40,000 each. The partnership agreement of Joe, Kline, and Lama provides that all partners receive 5% interest on capital and that profits and losses of the remaining income be distributed to Joe, Kline, and Lama by a 1:1:3 ratio. Required: Prepare a schedule to distribute $225,000 of partnership net income to the partners.

Q: If a perfectly competitive industry is in long-run equilibrium, thenA) price equals average cost.B) price is greater than average cost and equal to marginal cost. C) all firms earn the same accounting profits.D) marginal cost is less than average cost.

Q: Harry Markowitz is best known for his Nobel Prize-winning work on _____________. A. strategies for active securities trading B. techniques used to identify efficient portfolios of risky assets C. techniques used to measure the systematic risk of securities D. techniques used in valuing securities options

Q: On February 1, 2011, George, Hamm, and Ishmael began a partnership in which George and Ishmael each contributed cash of $25,000; and Hamm contributed property with a fair value of $50,000 and a tax basis $40,000. Hamm receives a 5% bonus of partnership income. George and Ishmael receive salaries of $10,000 each. The partnership agreement of George, Hamm, and Ishmael provides that all partners receive 5% interest on capital, and that profits and losses of the remaining income be distributed to George, Hamm, and Ishmael by a 1:3:1 ratio. Required: Prepare a schedule to distribute $25,000 of partnership net income to the partners.

Q: For a perfect competitor, the marginal revenue curve will beA) horizontal. B) vertical.C) positively sloped. D) negatively sloped.

Q: Which one of the following stock return statistics fluctuates the most over time? A. covariance of returns B. variance of returns C. average return D. correlation coefficient

Q: Dan and Ellie share partnership profits and losses at 70% and 30%, respectively. The partners agree to admit Fran into the partnership for a 50% interest in capital and earnings. Capital accounts immediately before the admission of Fran are: Dan (70%) $ 800,000 Ellie (30%) 400,000 Total $ 1,200,000 Required: 1. Prepare the journal entry(s) for the admission of Fran to the partnership assuming Fran invested $800,000 for the ownership interest, and that this is a fair price for that share of the partnership to be acquired. Fran paid the money directly to Dan and to Ellie for 50% of each of their respective capital interests. The partnership records goodwill. 2. Prepare the journal entry(s) for the admission of Fran to the partnership assuming Fran invested $1,000,000 for the ownership interest. Fran paid the money to the partnership for a 50% interest in capital and earnings. Assume the valuation is based on the capital of the current partnership, which is fairly valued. The partnership records goodwill. 3. Prepare the journal entry(s) for the admission of Fran to the partnership assuming Fran invested $1,400,000 for the ownership interest, and that this is a fair price for that share of the partnership to be acquired. Fran paid the money to the partnership for a 50% interest in capital and earnings. The partnership records goodwill.

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 total cost to produce 3 units of output?A) $33.33 B) $53.33 C) $55 D) $20

Q: Firm-specific risk is also called __________ and __________. A. systematic risk; diversifiable risk B. systematic risk; nondiversifiable risk C. unique risk; nondiversifiable risk D. unique risk; diversifiable risk

Q: Anna and Bess share partnership profits and losses at 60% and 40%, respectively. The partners agree to admit Cal into the partnership for a 50% interest in capital and earnings. Capital accounts immediately before the admission of Cal are: Anna (60%) $ 300,000 Bess (40%) 300,000 Total $ 600,000 Required: 1. Prepare the journal entry(s) for the admission of Cal to the partnership assuming Cal invested $400,000 for the ownership interest, and that this is a fair price for that share of the partnership to be acquired. Cal paid the money directly to Anna and to Bess for 50% of each of their respective capital interests. The partnership records goodwill. 2. Prepare the journal entry(s) for the admission of Cal to the partnership assuming Cal invested $500,000 for the ownership interest. Cal paid the money to the partnership for a 50% interest in capital and earnings. Assume the valuation is based on the capital of the current partnership, which is fairly valued. The partnership records goodwill. 3. Prepare the journal entry(s) for the admission of Cal to the partnership assuming Cal invested $700,000 for the ownership interest, and that this is a fair price for that share of the partnership to be acquired. Cal paid the money to the partnership for a 50% interest in capital and earnings. The partnership records goodwill.

Q: The short run is A) a year or less. B) up to three years. C) the period of time in which the firm can vary its rate of output. D) the period of time in which the firm cannot change its use of at least one input.

Q: Market risk is also called __________ and _________. A. systematic risk; diversifiable risk B. systematic risk; nondiversifiable risk C. unique risk; nondiversifiable risk D. unique risk; diversifiable risk

Q: In a limited partnership, a general partner A) is excluded from management of the business. B) is not entitled to a bonus at the end of the year. C) has limited liability for partnership debt. D) has unlimited liability for partnership debt.

Q: Economic profits are found by total revenues minusA) explicit costs. B) explicit and implicit costs.C) implicit costs. D) all opportunity costs.

Q: Consider an investment opportunity set formed with two securities that are perfectly negatively correlated. The global minimum-variance portfolio has a standard deviation that is always _________. A. equal to the sum of the securities' standard deviations B. equal to -1 C. equal to 0 D. greater than 0

Q: Which of the following is a reason to use a partnership as the legal form of a business? A) Partnerships avoid the issue of mutual agency. B) Partnerships avoid the issue of unlimited liability. C) Partnerships avoid the issue of double-taxation faced by corporations. D) Partnerships avoid the difficulty of raising capital.

Q: Let the quantity of hamburgers be measured along the vertical axis and the quantity of movies be measured along the horizontal axis. If the price of a hamburger is $1.50 and the price of a movie is $6, then the slope of the budget line isA) -6. B) -4. C) -3. D) -0.25.

Q: Approximately how many securities does it take to diversify almost all of the unique risk from a portfolio? A. 2 B. 6 C. 8 D. 20

Q: Use the following information to answer the question(s) below.Quincy has decided to retire from the partnership of Quincy, Robert, and Sam. The partnership will pay Quincy $400,000. Total partnership capital should be revalued based on the excess payment to Quincy. (Assume the book values of the assets listed below equals fair values.) A summary balance sheet for the Quincy, Robert, and Sam partnership appears below. Quincy, Robert, and Sam share profits and losses in a ratio of 1:1:3, respectively.AssetsCash $ 150,000Marketable securities 76,000Inventory 164,000Land 300,000Building-net 510,000Total assets $1,200,000EquitiesQuincy, capital 320,000Robert, capital 280,000Sam, capital 600,000Total equities $1,200,000What partnership capital will Robert have after Quincy retires?A) $200,000B) $280,000C) $360,000D) $440,000

Q: Slices of PizzaTotal UtilityMarginal Utility00-120 250 3 204 105 0In the above table, the total utility of 4 slices of pizza isA) 50. B) 70. C) 80. D) 20.

Q: The risk that can be diversified away is __________. A. beta B. firm-specific risk C. market risk D. systematic risk

Q: The cross price elasticity of demand between two goods is 50. We may conclude thatA) the two goods are very complementary and probably are sold together. B) the two goods are poor substitutes for each other.C) the demand for one of the goods is likely to be fairly elastic and the demand for the other good is likely to be fairly inelastic.D) the demand for each of the goods is likely to be very elastic.

Q: Beta is a measure of security responsiveness to _________. A. firm-specific risk B. diversifiable risk C. market risk D. unique risk

Q: If the partnership agreement provides a formula for the computation of a bonus to the partners, the bonus would be computed A) next to last, because the final allocation is the distribution of the profit residual. B) before income tax allocations are made. C) after the salary and interest allocations are made. D) in any manner agreed to by the partners in the partnership agreement.

Q: PricePer Unit Quantity DemandedPer Week$10.00259.50309.00358.50408.00457.50507.00556.50606.00655.50705.0075Refer to the above table. Demand is least price elastic at a price ofA) $10.00. B) $7.50. C) $7.00. D) $5.00.

Q: Your great aunt Zella invested $100 in 1925 in a portfolio of large U.S. stocks that earned a compound return of 10% annually.If she left that money to you, how much would be in the account 90 years later in 2015?A. $1,000B. $9,900C. $531,302D. $5,843,325

Q: Drawings A) are advances to a partnership. B) are loans to a partnership. C) are a function of interest on partnership average capital. D) are the same nature as withdrawals.

Q: Common property ownership is most apt to lead toA) an efficient allocation of resources.B) production at a rate at which price is less than social cost. C) a decrease of externalities.D) an increase in pollution.

Q: What is the VaR of a $10 million portfolio with normally distributed returns at the 5% VaR? Assume the expected return is 13% and the standard deviation is 20%. A. 13% B. -13% C. 19.90% D. -19.90

Q: Use the following information to answer the question(s) below.Alfred and Barne share profits and losses in a ratio of 2:3, respectively, after salary allowances, interest allowances and bonus allocations. Alfred and Barne receive salary allowances of $30,000 and $60,000, respectively, and both partners receive 10% interest based upon the balance in their capital accounts on January 1. Partners' drawings are not used in determining the average capital balances. Total net income for 2011 is $180,000. If net income after deducting the interest and salary allocations is more than $60,000, Barne receives a bonus of 5% of the original amount of net income.Alfred BarneJanuary 1 capital balances $ 600,000 $ 900,000Yearly drawings ($3,000 a month) 36,000 36,000The XYZ partnership provides a 10% bonus to Partner Y that is based upon partnership income, after deduction of the bonus. If the partnership's income is $140,000, how much is Partner Y's bonus allocation?A) $12,727B) $13,860C) $14,000D) $15,400

Q: An individual with no deductible on his or her health insurance policy will tend to engage in a lifestyle that is less healthy than a person with a $2,000 insurance deductible. This is said to be a problem ofA) healthy selection. B) moral hazard.C) wellness training. D) blue-zoning.

Q: Which measure of downside risk predicts the worst loss that will be suffered with a given probablility? A. standard deviation B. variance C. value at risk D. Sharpe ratio

Q: The normal distribution is completely described by its _______. A. mean and standard deviation B. mean and variance C. mode and standard deviation D. median and variance

Q: If a minimum wage is established, a monopsonist facesA) an upward sloping supply of labor at all quantities of labor.B) a downward sloping supply of labor at all quantities of labor.C) a horizontal supply of labor at the minimum wage and the upward sloping portion of the labor supply curve above minimum wage.D) a horizontal supply of labor at the minimum wage and the downward sloping portion of the labor demand curve below minimum wage.

Q: If you believe you have a 60% chance of doubling your money, a 30% chance of gaining 15%, and a 10% chance of losing your entire investment, what is your expected return? A. 5% B. 15% C. 54.5% D. 114.5%

Q: A business enterprise that allows the hiring of nonunion members conditional on their joining the union isA) a closed shop. B) a union shop.C) a jurisdictional dispute. D) an industrial union.

Q: You have the following rates of return for a risky portfolio for several recent years. Assume that the stock pays no dividends.What is the dollar-weighted return over the entire time period?A. 2.87% B..74% C. 2.6%D. 2.21%

Q: We would expect that a fall in labor supply will have a proportionately larger effect on the market wage rate whenA) capital goods exist that can replace many of the workers.B) the product produced in the industry has several close substitutes.C) the product produced in the industry makes up a large portion of most familiesʹ budgets. D) labor represents a relatively small portion of total costs.

Q: Which of the following is exempt from antitrust laws?A) Professional football B) Petroleum companiesC) Airlines D) Hospitals

Q: Use the following information to answer the question(s) below.Bertram and Ernest share profits and losses equally after salary and interest allowances. Bertram and Ernest receive salary allowances of $40,000 and $60,000, respectively, and both partners receive 10% interest on their average capital balances. Average capital balances are calculated at the beginning of each month, regardless of when additional capital contributions or permanent withdrawals are made subsequently within the month. Partners' drawings of $3,000 per month are not used in determining the average capital balances. Total net income for 2011 is $240,000.Bertram ErnestJanuary 1 capital balances $200,000 $240,000Yearly drawings ($3,000 a month) (36,000) (36,000)Permanent withdrawals of capital:June 3 (24,000)May 2 (30,000)Additional investments of capital:July 3 80,000October 2 100,000If the average capital balances for Bertram and Ernest are $200,000 and $240,000, what will the total partnership profit allocations be for Bertram and Ernest in 2011?A) $100,000 and $140,000B) $108,000 and $132,000C) $120,000 and $120,000D) $140,000 and $100,000

Q: Which of the following arguments supporting passive investment strategies is (are) correct? I. Active trading strategies may not guarantee higher returns but guarantee higher costs. II. Passive investors can free-ride on the activity of knowledge investors whose trades force prices to reflect currently available information. III. Passive investors are guaranteed to earn higher rates of return than active investors over sufficiently long time horizons. A. I only B. I and II only C. II and III only D. I, II, and III

Q: If we observe firms earning zero economic profits in the short run, we know thatA) the industry must be perfectly competitive.B) the industry must be either perfectly competitive or monopolistically competitive. C) there must not be any barriers to entry.D) any market structure is possible since firms under any market structure can earn zero profits at some time.