Q&A Hero

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: 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: 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: 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: 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: 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: 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: 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: 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: 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: 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: 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: 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: 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: 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 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: 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: 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: 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: 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: Official poverty rates in the last 40 years haveA) fallen dramatically. B) risen dramatically.C) stayed roughly the same. D) been eliminated.

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: 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: 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

Q: Preferred stock is like long-term debt in that ___________. A. it gives the holder voting power regarding the firm's management B. it promises to pay to its holder a fixed stream of income each year C. the preferred dividend is a tax-deductible expense for the firm D. in the event of bankruptcy preferred stock has equal status with debt

Q: Use the following information to answer the question(s) below.Bower Corporation purchased a 70% interest in Stage Corporation on June 1, 2010 at a purchase price of $350,000. On June 1, 2010, the book values of Stage's assets and liabilities were equal to fair values. On June 1, 2010, Stage's stockholders' equity consisted of $290,000 of Common Stock and $210,000 of Retained Earnings. All cost-book differentials were attributed to goodwill.During 2010, Stage earned $120,000 of net income, earned uniformly throughout the year and paid $6,000 of dividends on March 1 and another $6,000 on September 1.Preacquisition income for 2010 isA) $50,000.B) $35,000.C) $44,000.D) $36,000.

Q: Negotiations between the management of a company and the management of a union for the purpose of setting a mutually agreeable contract on wages, fringe benefits and working conditions for all employees in a union is know asA) a closed shop. B) a union shop.C) collective bargaining. D) an industrial union.

Q: Investors will earn higher rates of returns on TIPS than on equivalent default-risk standard bonds if _______________. A. inflation is lower than anticipated over the investment period B. inflation is higher than anticipated over the investment period C. the U.S. dollar increases in value against the euro D. the spread between commercial paper and Treasury securities remains low

Q: What is the marginal revenue product of labor (MRP)? What shape does the MRP curve have? Why?

Q: A subsidiary split its stock 2 for 1. Which of the following statements is false?A) A stock split does not affect the amount of net assets of the subsidiary.B) A stock split does not affect parent and noncontrolling interest ownership percentages.C) A stock split does not affect consolidation procedures.D) A 2 for 1 stock split decreases the number of shares outstanding.

Q: The Dow Jones Industrial Average is _________. A. a price-weighted average B. a value weight and average C. an equally weighted average D. an unweighted average

Q: Which of the following is NOT an antitrust law?A) The Robinson-Patman Act B) The Smoot-Hawley ActC) The FTC Act D) The Sherman Act

Q: The price quotations of Treasury bonds in the Wall Street Journal show a bid price of 104.5313 and an ask price of 104.5489. If you sell a Treasury bond, you expect to receive _________. A. $ 1,000.00 B. $ 1,045.00 C. $ 1,045.31 D. $ 1,045.48

Q: If a parent company and outside investors purchase shares of a subsidiary in relation to existing stock ownership (ratably), thenA) there will be an adjustment to additional paid-in capital if the stock is sold above book value.B) there will be no adjustment to additional paid-in capital regardless whether the stock is sold above or below book value.C) there will be an adjustment to additional paid-in capital if the stock is sold below book value.D) there will be the elimination of a gain.

Q: A market situation in which there are a few large firms is calledA) monopolistic competition. B) imperfect competition.C) oligopoly. D) monopoly.

Q: TIPS are ______. A. Treasury bonds that pay no interest and are sold at a discount B. U.K. bonds that protect investors from default risk C. securities that trade on the Toronto stock index D. Treasury bonds that protect investors from inflation

Q: Consider a sale of stock by a subsidiary to parties outside the consolidated entity. This transaction requires an adjustment of the parent's investment and additional paid-in capital accounts except whenA) the shares are sold below book value per share.B) the shares are sold above book value per share.C) the shares are sold at book value per share.D) All of the above are correct.

Q: In general, horizontal mergers willA) increase the number of firms in an industry.B) decrease the number of firms in an industry. C) increase competition in an industry.D) reduce economic profits in an industry.

Q: If a Treasury note has a bid price of $996.25, the quoted bid price in the Wall Street Journal would be _________. A. 99:5/8 B. 99:6/10 C. 99.6250 D. none of the options

Q: In the short run, a monopolistically competitive firm can earnA) positive profits only. B) zero profits only.C) zero or positive profits only. D) zero, positive or negative profits.

Q: Use the following information to answer the question(s) below.Great Corporation acquired a 90% interest in SOS Corporation at its $810,000 book value on December 31, 2010. A summary of the stockholders' equity for SOS at the end of 2010 and 2011 is as follows:12/31/10 12/31/11Capital stock, $10 par $600,000 $600,000Additional paid-in capital 30,000 30,000Retained Earnings 270,000 420,000Total stockholders' equity $900,000 $1,050,000On January 1, 2012, SOS sold 10,000 new shares of its $10 par value common stock for $45 per share.If SOS sold the additional shares directly to Great, Great's Investment in SOS account after the sale would beA) $1,350,000.B) $1,395,000.C) $1,425,000.D) $1,500,000.

Q: An investor purchases one municipal bond and one corporate bond that pay rates of return of 5% and 6.4%, respectively. If the investor is in the 15% tax bracket, his after-tax rates of return on the municipal and corporate bonds would be, respectively, _____. A. 5% and 6.4% B. 5% and 5.44% C. 4.25% and 6.4% D. 5.75% and 5.44%

Q: A monopolist who is maximizing profits produces to the point at whichA) marginal cost and average total cost are equal.B) price, marginal cost and average variable cost are equal.C) price is greater than marginal cost.D) price is greater than average total cost.

Q: Currently, the Dow Jones Industrial Average is computed by _________. A. adding the prices of 30 large "blue-chip" stocks and dividing by 30 B. calculating the total market value of the 30 firms in the index and dividing by 30 C. measuring the current total market value of the 30 stocks in the index relative to the total value on the previous day D. adding the prices of 30 large "blue-chip" stocks and dividing by a divisor adjusted for stock splits and large stock dividends

Q: Use the following information to answer the question(s) below.Goldberg Corporation owned a 70% interest in Savannah Corporation on December 31, 2010, and Goldberg's Investment in Savannah account had a balance of $3,900,000. Savannah's stockholders' equity on this date was as follows:Capital stock, $10 par value $3,000,000Retained Earnings 2,400,000Total Stockholders' Equity $5,400,000On January 1, 2011, Savannah issues 80,000 new shares of common stock to Goldberg for $16 each.On January 1, 2011, assume the fair values of Savannah's identifiable assets and liabilities equal book values. What is the change in the amount of goodwill associated with the issuance of 80,000 additional shares to Goldberg? (Use four decimal places.)A) Increase goodwill $38,176.B) Decrease goodwill $38,176.C) Increase goodwill $384,000.D) Decrease goodwill $384,000.

Q: Explain what happens to the long-run supply curve of an industry when firm entry raises the price of inputs used in the industry.

Q: A firm that has large securities holdings and wishes to raise money for a short length of time may be able to find the cheapest financing from which of the following? A. reverse repurchase agreement B. bankers' acceptance C. commercial paper D. repurchase agreement

Q: If a firm is producing an output rate at which marginal cost is greater than price, the firm A) is sustaining economic loss. B) should increase its output level. C) should reduce its output level. D) will not be covering its fixed cost.

Q: The interest rate charged by large banks in London to lend money among themselves is called _________. A. the prime rate B. the discount rate C. the federal funds rate D. LIBOR

Q: Utah Company holds 80% of the stock of a subsidiary company. The subsidiary issues 100 additional shares of stock to Utah Company at a price above book value per share. The subsidiary does not issue any additional shares at the same time. How will Utah Company record the purchase?A) Utah Company records a gain on sale of stock.B) Utah Company increases additional paid-in capital.C) Utah Company decreases additional paid-in capital.D) Utah Company assigns any excess cost over book value acquired to increase undervalued identifiable assets or goodwill as appropriate.

Q: Using the above table, the TC, the AFC, and the TVC when output is 2 units areA) $20, $2.50, and $15, respectively. B) $35, $2.50, and $30, respectively. C) $30, $2.50, and $40, respectively. D) $35, $2.50, and $20, respectively.

Q: Which of the following indexes are market value-weighted? I. The NYSE Composite II. The S&P 500 III.The Wilshire 5000 A. I and II only B. II and III only C. I and III only D. I, II, and III

Q: Jersey Company acquired 90% of York Company on April 1, 2011. Both Jersey Company and York Company have December 31 fiscal year ends. Under current GAAP, which of the following statements is false?A) The consolidated income statement in 2011 should not include York's revenues and expenses prior to April 1, 2011.B) When preparing consolidating work papers in 2011, York's revenues prior to April 1, 2011 are eliminated.C) York's earnings prior to April 1, 2011 should appear as a deduction on the consolidated income statement in 2011.D) The consolidated income statement in 2011 should include York's revenues and expenses after April 1, 2011.

Q: How can one ʺbeat the market?ʺ

Q: Which one of the following provides the best example of securitization? A. convertible bond B. call option C. mortgage pass-through security D. preferred stock