Question & Answer

Why would a financial institution holding a stock consider buying a put option on that stock rather than simply selling it? (LO4)

How does increasing discharge current affect metal removal rate and surface finish in electric discharge machining?

Explain the differences between the installment-sales method and the cost-recovery method.

All else being equal, should taxpayers prefer to exclude income or defer it? Why?

A silicon boule has been processed through grinding to provide a cylinder whose diameter = 285 mm and whose length = 900 mm. Next, it will be sliced into wafers 0.7 mm thick using a cut-off saw with a kerf = 0.5 mm. The wafers thus produced will be used to fabricate as many IC chips as possible for the personal computer market. Each IC has a market value to the company of $98. Each chip is square with 15 mm on a side. The processable area of each wafer is defined by a diameter = 270 mm. Estimate the value of all of the IC chips that could be produced, assuming an overall yield of 80% good product.

Explain why there are such a large number and variety of tax credits.

Explain the advantage of a swap option to a financial institution that wants to swap fixed payments for floating payments. (LO2)

What major types of items are reported in the retained earnings statement?

Madrasah Corporation issued its financial statements for the year ended December 31, 2014, on March 10, 2015. The following events took place early in 2015. (a) On January 10, 10,000 shares of $5 par value common stock were issued at $66 per share. (b) On March 1, Madrasah determined after negotiations with the Internal Revenue Service that income taxes payable for 2014 should be $1,270,000. At December 31, 2014, income taxes payable were recorded at $1,100,000. Instructions Discuss how the preceding post-balance-sheet events should be reflected in the 2014 financial statements.

Write a short essay on the integration of bond markets. Explain why adverse conditions within one bond market (such as a particular country) commonly spread to other bond markets.

Identify the main categories of plastics shaping processes, as classified by the resulting product geometry.

Outline the accounting procedures involved in applying the capital lease method by a lessee.

The New York Knicks, Inc. sold 10,000 season tickets at $2,000 each. By December 31, 2014, 16 of the 40 home games had been played. What amount should be reported as a current liability at December 31, 2014?

Identify the three sources of contraction in a metal casting after pouring

Explain how income could fall even though the unit sales level rises.

What factors must be considered by the actuary in measuring the amount of pension benefits under a defined benefit plan?

Is the eurozone an optimal currency area? Explain your answer.

Define computer integrated manufacturing.

The Fed uses a targeted federal funds rate when implementing monetary policy. However, the Fed’s main purpose in its monetary policy is typically to have an impact on the aggregate demand for products and services. Reconcile the Fed's targeted federal funds rate with its goal of having an impact on the overall economy. (LO2; LO3)

What is the purpose of FASB Staff Positions?

Explain how the Financial Reform Act of 2010 and the rules issued to implement it attempted to reduce the risk in the financial system resulting from the use of credit default swaps. (LO7)

Sprague Company has been operating for several years, and on December 31, 2014, presented the following balance sheet.   The net income for 2014 was $25,000. Assume that total assets are the same in 2013 and 2014. Instructions Compute each of the following ratios. For each of the four, indicate the manner in which it is computed and its significance as a tool in the analysis of the financial soundness of the company. (a) Current ratio. (c) Debt to assets. (b) Acid-test ratio. (d) Return on assets.

What two assumptions are central to the IASB conceptual framework?

There exists a view that the UK is too small an economy to benefit from competition in many industries, with firms failing to reach minimum efficient scale. What does this imply for competition policy?

Explain why interest rates tend to decrease during recessionary periods. Review historical interest rates to determine how they react to recessionary periods. Explain this reaction. (LO1, LO2)