amqata

CareerThruCFA Wrote:
-------------------------------------------------------
> For two European put options that differ only in
> their time to expiration, which of the following
> is most accurate? The longer-term option:
>
> A) can be worth less than the shorter-term option.
>
>
> B) can be worth more than the shorter-term option.
>
>
> C) can be worth at least as much as the
> shorter-term option.
>
>
> Very tricky,(I also selected C) The answer is A,
> it could be all of them and most accurate is A
> because european options can not be excercised
> until the contact expiration date.

Sorry I still don't get your explanation. Mind elaborating further?

Thanks.

dotamasta

5)
During inflation, FIFO will generate higher earnings because cost of goods will be lower than if LIFO was used. However, LIFO will generate higher cash flows since cash outflows for taxes will be lower for LIFO.

LIFO Will generate higher cash flows because you pay less taxes.

Imagine with FIFO when prices are rising with FIFO you pay less price yo buy inventory and profit more when you sell, so you pay more tax because of more gain.

With LIFO you pay high price to buy inventory and profit less when you sell and you pay less taxes and retain more as earnings and more cash flow.

when prices are descreasing opposite will apply.

Londonrocks

For two European put options that differ only in their time to expiration, which of the following is most accurate? The longer-term option:

A) can be worth less than the shorter-term option.

B) can be worth more than the shorter-term option.

C) can be worth at least as much as the shorter-term option.


Very tricky,(I also selected C) The answer is A, it could be all of them and most accurate is A because european options can not be excercised until the contact expiration date.

ishfaque

cfagoal2 Wrote:
-------------------------------------------------------
> Q: How about answer C? Does that constitutes
> inside info?
>
> She learned about it a public salon, so it's not
> insider information.

So what constitutes insider information? Material nonpublic information out from the mouth of management or employees of company?

dontknow1987

Hank Scorpio Wrote:
-------------------------------------------------------
> " This question confused me about accrual
> accounting. Shouldn't we recognise the sales? "
>
> No, because you haven't delivered the product yet,
> so it's not a sale, it is deferred revenue (a
> liability). This is the same as magazine
> subscriptions - take the money upfront, create a
> liability, and extinguish the liability as you
> send the magazines.
>
> " However, LIFO will generate higher cash flows
> since cash outflows for taxes will be lower for
> LIFO. "
>
> If there is inflation, using LIFO will increase
> your COGS. These expenses are tax deductible, so
> your revenue will be lower. Lower revenue = lower
> tax liability.
>
> I'll leave the rest for someone who can formulate
> a better response.
>
> Cheers


all explanations are spot on.