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- UID
- 223200
- 帖子
- 247
- 主题
- 139
- 注册时间
- 2011-7-11
- 最后登录
- 2017-8-12
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1)
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.
Your answer: C was incorrect. The correct answer was A) can be worth less than the shorter-term option.
For European puts, it is possible that the longer term option can be less valuable than a shorter-term option.
Q: Can anyone explain why the answer is not C?
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2)
Amanda Brad, CFA, is a security analyst at UpTrend, Inc. During a routine visit to a beauty salon, she learns that a major cosmetic company, Lorean, is expected to present a revolutionary formula for facial cream. Brad buys Lorean stock for her portfolio and prepares a special report on the company. Brad also makes a call to Hillary Lang, another security analyst at UpTrend, to inform her about the news. Lang starts trading on her clients’ portfolios. Brad’s report states that given the on-going research activity at Lorean within the last months, investors can expect some successful new products and a sharp increase in the price of the stock. Lang’s actions:
A) violate the Standard of Fair Dealing.
B) violate the Standard of Objectivity and Independence.
C) violate the Standards because she trades on inside information.
Your answer: B was incorrect. The correct answer was A) violate the Standard of Fair Dealing.
Lang violates Standard III(B), Fair Dealing, which imposes the requirement to start trading on the clients’ portfolios only after the information is disseminated to all clients.
Q: How about answer C? Does that constitutes inside info?
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3)
Q: Normally when we want to calculate the CFO, we would not take dividend into play. How about the case where IFRS is assumed? Dividend paid/receive under IFRS can be classified under CFO.
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4)
Given the following inventory information about the Buckner Company:
Year-end last in, first out (LIFO) inventory of $6,500.
Year-end LIFO reserve of $2,500.
The current year's LIFO cost of goods sold (COGS) is $15,000.
After tax income is $1,600.
The previous year's LIFO reserve was $2,000.
How much higher would the firm's retained earnings be on a first in, first out (FIFO) basis if the firm's tax rate is 40%?
A) $2,100.
B) $1,500.
C) $1,800.
Your answer: C was incorrect. The correct answer was B) $1,500.
Adjustment to retained earnings = LIFO reserve (1 − t) = $2,500(1 − 0.4) = $1,500
Q: If I use COGS to work out the difference, I will get $500 pre-tax difference. Why can't I use this way?
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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.
Q: Can anyone explain the second sentence?
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6)
Washburn Motors signs a contract to sell a $100,000 luxury sedan to be delivered next month, and receives a $20,000 cash down payment from the buyer. How will the transaction most likely affect Washburn’s assets and liabilities?
Assets
Liabilities
A) Unchanged
Unchanged
B) Increase
Unchanged
C) Increase
Increase
Your answer: A was incorrect. The correct answer was C) Increase Increase
The down payment will increase cash (an asset) and unearned revenue (a liability). Revenues (and thus retained earnings and owner’s equity) will not increase because the car has not been delivered.
Q: This question confused me about accrual accounting. Shouldn't we recognise the sales?
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Thanks all for your time. And hope others will benefit from it too. |
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发表于 2011-7-13 16:10
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