Q&A Hero

Q: Which type of fund is often priced at a significant discount to net asset value? A. open-end fund B. closed-end fund C. hedge fund D. ETF

Q: PxQxPyQyPzQz$10100$2050$25200109018602522510701590252751250151002529015251512025320Refer to the above table. The price of Y decreases from $18 to $15. What is the cross price elasticity of demand between Y and X?A) -0.73 B) -1.0 C) +1.38 D) +1.83

Q: On March 1, 2011, Amber Company sold goods to a foreign customer at a price of 50,000 foreign currency units. The customer will pay in three months. At the time of the sale, Amber paid $2,000 to acquire an option to sell 50,000 foreign currency units in three months at the strike price of $0.39. On May 30, 2011, the customer sent in 50,000 foreign currency units. Quarterly financial reports are prepared on March 31. Ignore the time value of money. Relevant exchange rates are as follows: Spot Rate Mar 1, 2011 $0.39 Mar 31, 2011 $0.45 May 30, 2011 $0.36 Required: Prepare the journal entries required for these transactions, if the foreign currency option is designated as a fair value hedge.

Q: The five-star Morningstar rating implies A. superior returns compared to risk. B. superior risk compared to return. C. lowest turnover compared to peers. D. lowest fees compared to peers.

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 to $6.50?A) 0.85 B) 1.08 C) 1.17 D) 0.92

Q: On December 18, 2011, Wabbit Corporation (a U.S. Corporation) has a Forward Contract recorded on their ledger as a debit balance of $17,500. The forward contract was related to a purchase of electronic components purchased overseas, which were going to be re-sold in the United States. On December 20, the forward contract was settled with a payment of $20,000, and the related parts which cost $118,000 were sold for $160,000 cash. The forward contract is set up to lock in the price for the electronic components when they are sold. The forward contract was settled net. Assume this is a cash flow hedge. Required: Prepare the journal entries required by Wabbit on December 20.

Q: You are considering investing in a no-load mutual fund with an annual expense ratio of .6% and an annual 12b-1 fee of .75%. You could also invest in a bank CD paying 6.5% per year. What minimum annual rate of return must the fund earn to make you better off in the fund than in the CD? A. 7.1% B. 7.45% C. 7.25% D. 7.85%

Q: When negative externalities exist, a voluntary agreement can be negotiated. Which of the following statements is true?A) Voluntary agreements usually do not work since the owner has no incentive to negotiate. B) Transactions costs must be low relative to the expected benefits of reaching an agreement. C) Voluntary agreements are difficult to negotiate because they usually involve government intervention.D) Voluntary agreements always leave the owner worse off.

Q: Ferb Company is a U.S.-based importer of fine fabrics. They periodically place orders with an Italian manufacturer for bolts of fabric at a price typically set in euros. Because they have business on an ongoing basis in euros, Ferb also enters into forward contracts to speculate on the Euro. On September 15, Ferb entered into a 45-day forward contract to purchase 2,000,000 euros. Ferb has a year-end of September 30. The forward contract cannot be settled net. Relevant exchange rates are shown below: Spot Rate Forward Rate to October 30, 2011 Sep 15, 2011 $1.415 $1.397 Sep 30, 2011 $1.395 $1.399 Oct 30, 2011 $1.410 $1.410 Required: Prepare the journal entries to account for the forward contract for September and October.

Q: The top Morningstar mutual fund performance rating is ________. A. five stars B. four stars C. three stars D. two stars

Q: An important contributor to rising U.S. health care costs in recent years isA) less interest on the part of Americans to stay physically fit. B) the increasing proportion of the population that smokes.C) an easing of standards at medical schools that has permitted unqualified people to become physicians.D) the aging of the population.

Q: Opie Industries is a manufacturer of plastic bottles. On September 1, 2011, Opie purchased an option contract at a cost of $2,000. The purpose of the option is to hedge against increases in the price of this type of plastic, "PET." The option is to buy 1,000,000 pounds of PET on March 1, 2012 for $.75 per pound. If the market price of PET is below $.75 on March 1, Opie will let the option expire. If the market price is above $.75, then Opie will exercise the option. The option is to be settled net. Opie assumes a 6% annual borrowing rate. Assume this is a cash flow hedge. Required: Prepare the entry that Opie should record on September 1, 2011. Then, assuming that the price of PET is $.72 on December 31, 2011 (Opie's year end), prepare the entry that Opie should record. Finally, prepare the entries for March 1, 2012, assuming that the price of PET is $.78.

Q: Which one of the following statements about returns reported by mutual funds is not correct? A. Reported returns are net of management expenses. B. Reported returns are net of 12b-1 fees. C. Reported returns are net of brokerage fees paid on the fund's trading activity. D. None of these options. (All of the items are included in reported returns.)

Q: Use the above table. The MFC of the 4th worker isA) $5. B) $6.25. C) $25. D) $40.

Q: Ivan has 14,000 barrels of oil that were purchased a month ago at $50.00 per barrel. On November 1, 2011 Ivan hedges the value of the inventory by entering into a forward contract to sell 14,000 barrels of oil on January 31, 2012 for $60.00 per barrel. The forward contract is to be settled net. Assume this is a fair value hedge. Required: Assume a 6% discount rate is reasonable, and using a mixed-attribute model, prepare the journal entries to account for this hedge at the following dates: When the market price is... November 1, 2011 $60.00 per barrel December 31, 2011 $65.00 per barrel January 31, 2012 $62.00 per barrel

Q: The Wagner Act A) permitted unions to engage in collective bargaining. B) permitted states to pass right-to-work laws. C) restricted activities of heads of unions that were not beneficial to union members. D) mandates compulsory arbitration in some key industries.

Q: You pay $21,600 to the Laramie Fund, which has a NAV of $18 per share at the beginning of the year. The fund deducted a front-end load of 4%. The securities in the fund increased in value by 10% during the year. The fund's expense ratio is 1.3% and is deducted from year-end asset values. What is your rate of return on the fund if you sell your shares at the end of the year? A. 4.35% B. 4.23% C. 6.45% D. 5.63%

Q: On January 1, 2011, Bosna borrowed $100,000 from Lenda. The three-year term note carries a variable rate interest, based on LIBOR, and interest is payable at December 31 of each year, compounded annually. The first year's rate of interest is 7% and Bosna would like to assure that their rate does not increase. Bosna enters into a pay-fixed, receive-variable interest rate swap agreement with Swamp City Bank, under which Bosna will pay 7%, fixed. At December 31, 2011, it is determined that Bosna's interest rate to Lenda for 2012 will be 6%. At December 31, 2012, the interest rate for 2013 was determined to be 8%. Treat as a cash flow hedge. Required: Determine the estimated fair value of the hedge at December 31, 2011, and prepare the related journal entries required to document this hedge and the related interest payments at December 31, 2011, 2012, and 2013, including final repayment on 12/31/13. Assume a flat interest rate curve.

Q: You invest in a mutual fund that charges a 3% front-end load, 1% total annual fees, and a 0% back-end load on Class A shares. The same fund charges a 0% front-end load, 1% total annual fees, and a 2% back-end load on Class B shares. What are the total fees in year 1 on a Class B investment of $20,000 if you redeem shares with no growth in value? A. $596 B. $794 C. $885 D. $902

Q: When an input represents a small proportion of a firmʹs total costs, thenA) demand for the input will tend to be less elastic.B) the input demand will vary significantly with a change in input price. C) the usage of the input cannot be varied in the production function.D) output demand will be highly elastic.

Q: On January 1, 2011, Bambi borrowed $500,000 from Lonni. The five-year term note carries a variable rate interest, based on LIBOR, and interest is payable at December 31 of each year, compounded annually. The first year's rate of interest is 6% and Bambi would like to assure that their rate does not increase. Bambi enters into a pay-fixed, receive-variable interest rate swap agreement with Third National Bank, under which Bambi will pay 6%, fixed. At December 31, 2011, it is determined that Bambi's interest rate to Lonni for the next year will be 5%. Treat as a cash flow hedge. Required: Determine the estimated fair value of the hedge at December 31, 2011, and prepare the related journal entry required to document this hedge and the related interest payment at December 31, 2011. Assume the interest rate curve is flat.

Q: The regulatory agency most concerned with false advertising is the A) Antitrust Division of the Justice Department. B) National Labor Relations Board. C) Federal Deposit Insurance Corp. D) Federal Trade Commission.

Q: Astrotuff Company is planning to purchase 200,000 pounds of nylon from Tangsun Company. On November 1, 2011, Astrotuff entered into a 90-day forward contract to hedge the planned purchase. The forward contract is to purchase 200,000 pounds of nylon at $1.80 per pound (forward rate at November 1, 2011). On November 1, 2011, the spot price of nylon is $1.75 per pound, but Astrotuff anticipates significant increases in the price of nylon. The forward contract is to be settled net. On December 31, 2011, Astrotuff's year end, the forward rate to January 30, 2012 is $1.78 per pound. The spot and forward rates on January 30, 2012 are $1.85 per pound. Astrotuff uses a 6% discount rate relating to their hedging activity. Astrotuff purchases 200,000 pounds of nylon on January 30 when the forward contract expires. Required: Prepare the necessary journal entries to account for this cash flow hedge and related purchase of nylon.

Q: Other things being equal, which market structure would produce the least output and the highest average product price?A) Monopoly B) OligopolyC) Monopolistic competition D) Perfect competition

Q: On December 15, 2011, Electronix Company purchased inventory from a foreign supplier for 2,000,000 foreign currency units (fcu's). Payment will be made on February 13, 2012. On December 15, 2011, to hedge the transaction, Electronix signed a forward contract to buy 2,000,000 fcu's in 60 days. Electronix uses a discount rate of 5% resulting in a 45-day present value factor of .9938. The forward contract will be settled net. The related exchange rates are shown below: Spot Rate Forward Rate to 2/13/12 December 15, 2011 $0.010 = 1 fcu $0.010 = 1 fcu December 31, 2011 $0.012 = 1 fcu $0.011 = 1 fcu February 13, 2012 $0.013 = 1 fcu $0.013 = 1 fcu On December 15, 2011, Electronix recorded a debit to Inventory and a credit to Accounts Payable (fcu) for $20,000, using the current spot rate. Required: 1. Show the required entries on December 31, 2011 if the hedge is a cash flow hedge. Round to the nearest whole dollar. 2. Show the required entries on December 31, 2011 if the hedge is a fair value hedge. Round to the nearest whole dollar.

Q: Which of the following funds are usually most tax-efficient?A. equity fundsB. bond FundsC. ETFsD. specialized-sector funds

Q: Suppose that an industry consists of 100 firms, and the top 4 firms have annual sales of $1 million, $1.5 million, $2 million, and $2.5 million, respectively. If the entire industry has annual sales of $8.5 million, the four-firm concentration ratio is approximatelyA) 82 percent. B) 50 percent. C) 94 percent. D) 70 percent.

Q: Wild West, Incorporated (a U.S. corporation) sold inventory to a company in the Philippines for 1,600,000 pesos on account on February 1, 2011, with payment expected in 90 days. Wild West entered into a forward contract to hedge this transaction, and properly accounts for the transaction as a cash flow hedge. Wild West has a March 31 fiscal year end, and uses an 8% discount rate, resulting in a 30-day present value factor of .9934. The forward contract is settled net. The relevant exchange rates are shown below: Spot Rate Forward Rate to May 2, 2011 February 1, 2011 $0.0229 = 1 peso $0.0270 = 1 peso March 31, 2011 $0.0254 = 1 peso $0.0268 = 1 peso May 2, 2011 $0.0280 = 1 peso $0.0280 = 1 peso Required: Record the journal entries needed by Wild West on February 1, March 31, and May 2. Round all entries to the nearest whole dollar.

Q: The assets of a mutual fund are $25 million. The liabilities are $4 million. If the fund has 700,000 shares outstanding and pays a $3 dividend, what is the dividend yield? A. 5% B. 10% C. 15% D. 20%

Q: Which of the following statements about a monopolistically competitive firm is FALSE?A) It tries to differentiate its product from that of competitors.B) It may earn short-run economic profits.C) It produces the quantity at which MC =MR. D) It sets price like a perfectly competitive firm.

Q: Slickton Corporation, a U.S. holding company, enters into a forward contract on November 1, 2011 to speculate in Singapore dollars (S$). The forward contract requires Slickton to sell 1,000,000 Singapore dollars to the exchange broker on January 30, 2012. Net settlement is not permitted. Relevant exchange rates for the Singapore dollar are listed below: 11/1/11 12/31/11 1/30/12 Spot rate $0.806 $0.797 $0.802 30-day forward rate $0.805 $0.792 $0.796 90-day forward rate $0.804 $0.795 $0.789 Required: Prepare the journal entries required by Slickton on November 1, 2011, December 31, 2011 (year end), and January 30, 2012.

Q: A mutual fund has $50 million in assets at the beginning of the year and 1 million shares outstanding throughout the year. Throughout the year assets grow at 12%. The fund imposes a 12b-1 fee on all shares equal to 1%. The fee is imposed on year-end asset values. If there are no distributions, what is the end-of-year NAV for the fund? A. $50 B. $55.44 C. $56.12 D. $54.55

Q: Refer to the above figure. The firm is currently producing at Q2. The firm shouldA) reduce production. B) leave production as it is. C) increase production. D) shut down.

Q: Onoly Corporation (a U.S. manufacturer) sold parts to its customer in Hong Kong on December 8, 2011 with payment of 500,000 Hong Kong Dollars (HKD) to be received in sixty days on February 6, 2012. Onoly has a December 31 year end. The following exchange rates apply: Spot Rate Forward Rate to February 6 December 8, 2011 $.1150 $.1150 December 31, 2011 $.1300 $.1250 February 6, 2012 $.1400 $.1400 Required: 1. Assuming no forward contract is taken, what is the amount of foreign currency exchange gain or loss that would be recorded in 2011, and in 2012? 2. Assuming a 60-day forward contract is taken on December 8 with the intent of hedging this foreign currency transaction, and that this hedge is properly accounted for as a cash flow hedge, what is the net effect on income to be recorded in 2011, and in 2012?

Q: The offer price of an open-end fund is $18 and the fund is sold with a front-end load of 5%. What is the fund's NAV? A. $18.74 B. $17.10 C. $15.40 D. $16.57

Q: For a firm in a perfectly competitive industry, A) short-run economic profits must be zero.B) short-run and long-run economic profits must be zero.C) short-run economic profits may be positive, but long-run economic profits must be zero.D) both short-run and long-run economic profits may be negative.

Q: On November 1, 2010, Ironside Company (a U.S. manufacturer) sold an airplane for 1 million New Zealand dollars (NZ$) to a New Zealand company, Wellington Corporation. Ironside will receive payment on January 30, 2011 in New Zealand dollars. In order to hedge the accounts receivable position, Ironside entered into a 90-day forward contract on November 1, 2010 to sell 1 million New Zealand dollars. On November 1, 2010, the forward rate is US$0.79 per New Zealand dollar. The forward contract will be settled net. This is a fair value hedge. Ignore the time value of money. The relevant exchange rates per New Zealand dollar: Spot Rate Forward Rate to 1/30/11 Nov. 1, 2010 US$0.79 US$0.79 Dec. 31, 2010 US$0.75 US$0.76 Jan. 30, 2011 US$0.73 US$0.73 Required: Record the journal entries that Stateside would need to prepare at November 1, 2010, December 31, 2010 and January 30, 2011. December 31 is the fiscal year end.

Q: An open-end fund has a NAV of $16.50 per share. The fund charges a 6% load. What is the offering price? A. $14.57 B. $15.95 C. $17.55 D. $16.49

Q: In the above figure, what happens to the firmʹs optimal level of output if the price it receives for its product increases from P2 to P3?A) Output stays the same. B) Output decreases.C) Output increases.D) There is not enough information provided to know what happens to output.

Q: On November 1, 2010, Stateside Company (a U.S. manufacturer) sold an airplane for 1 million New Zealand dollars (NZ$) to New Zealand company Aukland Corporation. Stateside will receive payment on January 30, 2011 in New Zealand dollars. In order to hedge the accounts receivable position, Stateside entered into a 90-day forward contract to sell 1 million New Zealand dollars on January 30, 2011. On November 1, 2010, the 90-day forward rate is US$0.73 per New Zealand dollar. The forward contract will be settled net. Account for the hedge as a fair value hedge. Ignore the time value of money. The relevant exchange rates per New Zealand dollar: Spot Rate Forward Rate to 1/30/11 Nov. 1, 2010 US$0.73 US$0.73 Dec. 31, 2010 US$0.75 US$0.76 Jan. 30, 2011 US$0.79 US$0.79 Required: Record the journal entries that Stateside would need to prepare at November 1, 2010, December 31, 2010 and January 30, 2011. December 31, 2010 is the fiscal year end.

Q: From 1971 to 2013 the average return on the Wilshire 5000 Index was _________ the return of the average mutual fund.A. identical toB. .9% higher thanC. .9% lower thanD. 1.3% higher than

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 marginal cost to produce the 2nd unit of output?A) $30 B) $60 C) $55 D) $20

Q: On November 1, 2010, Athom Corporation purchased 5,000 television sets for its merchandise inventory from Sockk, a South Korean firm, at a total quoted cost of 600,000,000 won (W). On this date, the spot rate for the won was $1 = 1,080W. On the same day, Athom invested $500,000 cash in a non-interest bearing account with a Japanese bank, to hedge its exposed liability position. The account payable to Sockk is due on January 30, 2011. The exchange rates on December 31, 2010 and January 30, 2011 were $1 = 1,060W, and $1 = 1,030W, respectively. Athom agreed to pay Sockk in won. The bank deposit made by Athom will be held in won, but will be withdrawn in dollars by Athom on January 30th. Assume that Athom has a December 31 year-end. Assume this is a fair value hedge. Required: Prepare all the journal entries for Athom Corporation's General Journal on November 1, 2010, December 31, 2010, and January 30, 2011. Round entries to the nearest whole dollar. If no entry is required on a particular date, indicate "No entry" in the General Journal.

Q: _______ have become the main way for investors to speculate in precious metals. A. Strategic income funds B. Balanced funds C. Specialized-sector funds D. Exchange-traded funds

Q: The long run is defined as the time period in whichA) the firm can vary only one input.B) the firm can make positive economic profits.C) all factors of production can be altered. D) the firm can alter its rate of production.

Q: Which of the following funds is most likely to have a debt ratio of 70% or higher?A. bond fundB. commingled fundC. mortgage-backed securitiesD. REIT

Q: On November 1, 2010, Mayberry Corporation, a U.S. corporation, purchased from Cantata Corporation, a Mexican company, some machinery that cost 1,000,000 pesos. The invoice was payable in pesos on January 30, 2011. To hedge against rapid changes in the peso, Mayberry entered into a forward contract on November 1, 2010 with AB Trader & Company, a US brokerage and investment firm. The contract specified that Mayberry would buy 1,000,000 pesos from AB Trader at $0.084 per peso for settlement on January 30, 2011. Assume that all three companies are subject to the same accounting standards and have December 31st year-ends. The spot rates for pesos on November 1, December 31, and January 30, are $0.082, $0.080, and $0.089, respectively. The 30-day forward rate for pesos on December 31, 2010 is $0.083. The forward contract is not settled net. Required: Record General Journal entries for Mayberry Corporation on November 1, December 31, and January 30. If no entry is required on a particular date, indicate "No entry" in the General Journal. This is a fair value hedge.

Q: It is likely that the owners have little to do with the day -to-day management of a firm in the case ofA) partnerships only. B) proprietorships only.C) corporations only. D) partnerships and corporations.

Q: On November 1, 2011, Moddel Company (a U.S. corporation) entered into a 90-day forward contract to purchase 200,000 British pounds. The purpose of the forward contract is to hedge a commitment to purchase special equipment on January 30, 2012 from a British firm Jeckyl Inc. The invoice price on the purchase commitment is denominated in British pounds. The forward contract is not settled net. Assume Moddel uses a 12% interest rate. Use a fair value hedge. The relevant exchange rates are stated in dollars per pound: Forward Rate Spot Rate to Jan. 30, 2012 November 1, 2011 $1.32 $1.35 December 31, 2011 $1.47 $1.50 January 30, 2012 $1.55 - Required: 1.What journal entry did Moddel record on November 1, 2011? 2.What journal entries did Moddel record on December 31, 2011? 3.What journal entries did Moddel record on January 30, 2012 if the purchase was made?

Q: Harold has just taken his company public and owns a large quantity of restricted stock. For purposes of diversification, what fund might he help create in order to diversify his holdings? A. commingled funds B. hedge funds C. ETF D. REITs

Q: If the quantity of hamburgers is measured along the horizontal axis and the quantity of movies is measured along the vertical axis, and the price of a hamburger is $2.00 while the price of a movie is $12, then the slope of the budget line isA) -1/3. B) -3.5 C) -1/6. D) -6.

Q: Advantages of ETFs over mutual funds include all but which one of the following? A. ETFs trade continuously, so investors can trade throughout the day. B. ETFs can be sold short or purchased on margin, unlike fund shares. C. ETF providers do not have to sell holdings to fund redemptions. D. ETF values can diverge from NAV.

Q: On June 1, 2011, Dapple Industries purchases an option contract for $5,000 on 10,000 gallons of aviation gas to minimize its purchasing cost price exposure. At the time, the market price is $2.50 per gallon and the option price of $2 per gallon will expire 6 months later. Dapple can exercise the option at its discretion. When Dapple prepares quarterly reports on June 30, Dapple is still holding the option. On June 30, the market price of aviation gas is $4.50 per gallon. The option is to be settled net. On August 1, Dapple exercises the option when the gas market price is $5.00 per gallon and purchases 40,000 gallons of gas. On August 15, Dapple uses all of the gas on a charter flight. Required: What are Dapple's journal entries with regard to the aviation gas option? Assume this is a cash flow hedge. Ignore the time value of money.

Q: Bill ate four hot dogs at the baseball game. The first one tasted best, but he found that as he ate more hot dogs the amount of extra satisfaction he was receiving was beginning to fall. This would demonstrateA) the law of total utility maximization. B) the law of zero utility.C) the law of diminishing marginal utility. D) the law of diminishing costs.

Q: Which type of investment fund is commonly known to invest in options and futures in large scale? A. commingled funds B. hedge funds C. ETFs D. REITs

Q: On November 1, 2011, Ross Corporation, a calendar-year U.S. corporation, invested in a purely speculative contract to purchase 1 million euros on January 30, 2012, from Trattoria Company, an Italian brokerage firm. Ross agreed to purchase 1,000,000 euros from Trattoria at a fixed price of $1.420 per euro. Trattoria agreed to transmit 1,000,000 euros to Ross on January 30, 2012. Net settlement is not permitted. The spot rates for euros are: Nov 01, 2011 1 euro = $1.415 Dec 31, 2011 1 euro = $1.395 Jan 30, 2012 1 euro = $1.410 The 30-day futures rate for euros on December 31, 2011 was $1.405. Required: Prepare the General Journal entries that Ross would record on November 1, December 31, and January 30.

Q: PxQxPyQyPzQz$10100$2050$25200109018602522510701590252751250151002529015251512025320Refer to the above table. Suppose the price of X increases from $10 to $12. What is the cross price elasticity of demand between X and Y?A) -1.833 B) +0.545 C) +0.579 D) +1.833

Q: A mutual fund has total assets outstanding of $69 million. During the year the fund bought and sold assets equal to $17.25 million. This fund's turnover rate was _____. A. 25% B. 28.5% C. 18.63% D. 33.4%

Q: The price elasticity of demand can be computed asA) change in total utility/change in quantity.B) change in price/change in quantity demanded.C) percentage change in quantity demanded/percentage change in price.D) change in quantity demanded/change in price.

Q: On November 1, 2011, Portsmith Corporation, a calendar-year U.S. corporation, invested in a purely speculative contract to purchase 1 million yen on January 30, 2012, from the Karoke Trading Company, a Japanese brokerage firm. Portsmith agreed to purchase 1,000,000 yen from Karoke at a fixed price of $0.0100 per yen. Karoke agreed to transmit 1,000,000 yen to Portsmith on January 30. Net settlement is not permitted. The spot rates for yen are: Nov 01, 2011 1 yen = $0.0097 Dec 31, 2011 1 yen = $0.0104 Jan 30, 2012 1 yen = $0.0106 The 30-day forward rate for yen on December 31, 2011 was $0.0104. Required: Prepare the General Journal entries that Portsmith would record on November 1, December 31, and January 30.

Q: The Wildwood Fund sells Class A shares with a front-end load of 5% and Class B shares with a 12b-1 fee of 1% annually. If you plan to sell the fund after 4 years, are Class A or Class B shares the better choice? Assume a 10% annual return net of expenses before the 12b-1 fee is applied. A. Class A. B. Class B. C. There is no difference. D. The answer cannot be determined from the information given.

Q: Why do economists believe that it is socially optimal to have some amount of pollution?

Q: Use the following information to answer the question(s) below.On December 1, 2011, Thomas Company, a U.S. corporation, purchases inventory from a vendor in Italy for 400,000 euros. Payment is due in 90 days. To hedge the transaction, Thomas signs a forward contract to buy 400,000 euros in 90 days at $1.3670. Thomas uses a discount rate of 6% (present value factor for 30 days = .9950; 60 days = .9901; 90 days = .9851). Assume the forward contract will be settled net and this is a cash flow hedge. Currency exchange rates are shown below:DateSpot RateForward Rate to February 29December 1, 2011$1.3694$1.3670December 31, 2011$1.3642$1.3660January 30, 2012$1.3670$1.3690February 29, 2012$1.3712$1.3712What is the fair value of the forward contract at February 29?A) $-0-B) $1,654.97 assetC) $1,654.97 liabilityD) $1,680 asset

Q: The difference between balanced funds and asset allocation funds is that _____. A. balanced funds invest in bonds while asset allocation funds do not B. asset allocation funds invest in bonds while balanced funds do not C. balanced funds have relatively stable proportions of stocks and bonds while the proportions may vary dramatically for asset allocation funds D. balanced funds make no capital gain distributions and asset allocation funds make both dividend and capital gain distributions

Q: According to the text, government spending accounts for about percent of all U.S. health care expenditures.A) 70 B) 10 C) 30 D) 40

Q: The Stone Harbor Fund is a closed-end investment company with a portfolio currently worth $300 million. It has liabilities of $5 million and 9 million shares outstanding. If the fund sells for $30 a share, what is its premium or discount as a percent of NAV? A. 9.26% premium B. 8.47% premium C. 9.26% discount D. 8.47% discount

Q: Use the above table. The MFC of the 3rd worker isA) $5. B) $30. C) $20. D) $6.7.

Q: Which of the following ETFs tracks the S&P 500 Index? A. Qubes B. Diamonds C. Vipers D. Spiders

Q: Use the following information to answer the question(s) below.On November 2, 2011, Bellamy Corporation sells product to their Danish customer. At the same time, Bellamy signed a forward contract to sell 200,000 Danish krone in ninety days to hedge the account receivable at $0.1905, the 90-day forward rate. The receivable is expected to be collected in ninety days. Assume the forward contract will be settled net and this is a fair value hedge. The related exchange rates are shown below:DateSpot RateForward Rate to January 31November 2, 2011$0.1910$0.1905December 31, 2011$0.1920$0.1912January 31, 2012$0.1915$0.1915Assuming a present value factor of 1 for simplicity, what is the fair value of this forward contract on January 31?A) $-0-B) $ 60 assetC) $160 liabilityD) $200 liability

Q: The American Federation of State, County, Government and Municipal Employees is an example of a(n)A) guild. B) craft union.C) industrial union. D) public-sector union.

Q: The ratio of trading activity of a portfolio to the assets of the portfolio is called the ____________. A. reinvestment ratio B. trading rate C. portfolio turnover D. tax yield

Q: If the price elasticity of demand is less than 1, then then consumer demand isA) unrelated to the elasticity of demand. B) inelastic.C) elastic. D) unitary elastic.

Q: In a recent study, Malkiel found that evidence of persistence in the performance of mutual funds ________________ in the 1980s. A. grew stronger B. remained about the same C. became slightly weaker D. virtually disappeared

Q: The Federal Trade Commission was established in 1914 toA) regulate trade of public goods.B) promote competition in interstate commerce.C) investigate unfair competitive practices.D) prevent non-price competition.

Q: In his 1970 study, Malkiel found that mutual funds that do well in one period have an approximately ________ chance of doing well in the subsequent-year period. A. 33% B. 52% C. 65% D. 85%

Q: On May 1, 2011, Listing Corporation receives inventory items from their Bulgarian supplier. At the same time, Listing signed a forward contract to purchase 75,000 Bulgarian lev in sixty days to hedge the inventory purchase at $0.738, the 60-day forward rate. Payment for the inventory will be due in sixty days in Bulgarian lev. Assume the forward contract will be settled net and this qualifies as a fair value hedge. The related exchange rates are shown below: Date Spot Rate Forward Rate to June 30 May 1, 2011 $0.7270 $0.7380 May 31, 2011 $0.7350 $0.7400 June 30, 2011 $0.7420 $0.7420 Assuming a present value factor of 1 for simplicity, what is the fair value of this forward contract on May 31? A) $150 asset B) $150 liability C) $375 asset D) $375 liability

Q: Product differentiation exists in A) oligopolies only. B) monopolies only. C) monopolistic competition only. D) all market structures except perfect competition.

Q: According to the 2014 Mutual Fund Fact Book, _______ of total assets were in taxable money market funds and _______ were tax-exempt money market funds. A. 35%; 14% B. 12.3%; 75% C. 16.3%; 1.8% D. 5%; 47%

Q: International accounting standards differ from U.S. Generally Accepted Accounting Principles in that International standards A) require that firm sale or purchase commitments are accounted for as fair value hedges. B) require that firm sale or purchase commitments are accounted for as cash flow hedges. C) state that firm sale or purchase commitments may not be treated as a hedged transaction. D) permit firm sale or purchase commitments to be accounted for as either fair value hedges or cash flow hedges.

Q: Suppose a ten firm industry has total sales of $35 million per year. The largest firm have sales of $10 million, the third largest firm has sales of $4 million, and the fourth largest firm has sales of $2 million. If the rest of the industry has annual sales of $12 million, the second largest firm has sales ofA) $8 million. B) $7 million.C) $4 million. D) none fo the above.