The passage of time usually

• A.causes the price elasticity of demand for a good to increase.
• B.causes the price elasticity of demand for a good to decrease.
• C.has a completely unpredictable effect on the price elasticity of demand for a good.

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If a researcher were to choose random days and calculate the difference in sales volume for the two fish markets in New Bedford, Massachusetts and analyze those differences, what type of experiment is being conducted?

• A.F test
• B.t test
• C.paired difference

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ABC issues 1 million shares from options exercises at $5 and receives $5 million. However, to avoid dilution of EPS, ABC repurchases all of these 1 million shares at the market price of $10. Under GAAP, what amount will ABC report for this transaction?

• A.$5 million operating cash inflow.
• B.$5 million financing cash inflow.
• C.$5 million financing cash outflow.

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You evaluate the monthly performance of your portfolio managers against a broad market index. At the end of each year, you add up the number of months in which their performance exceeded that of the market index. If the probability of beating the market index each month, after expenses and sales loads, is
6 5%, what is the mean and variance of the number of months in a year a manager would beat the index?

• A.mean = 8.7, variance = 3.73.
• B.mean = 8.7, variance = 2.73.
• C.mean = 7.8, variance = 2.73.

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James Morrison is a profit-seeking banker. His bank has $25 million in excess reserves. Mr. Morrison

• A.can probably increase his profits by increasing his excess reserves.
• B.cannot change excess reserves held by his bank because this level is set and strictly enforced by the
  Fed.
• C.can probably increase his profits by reducing his excess reserves.

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