Question 26
If the government wants to increase tax revenues, it should tax goods and services that have a(n)
Question 27
Clark Watson wants to purchase 300 shares of Babylon High Income fund, an open-end fund. How much must Clark pay to Babylon, if the fund has an NAV of $55.40 and a front-end load of 5%?
Question 28
If an analyst is trying to estimate the value of a stock, using the formula E(Y | E) = [y_1 * P(y_1 |E) + y_2
* P(y_2|E) + ... y_n * P(y_n|E), the analyst is making use of:
Question 29
Which of the following statements regarding individual and institutional investors is/are incorrect?
I). Individuals define risk as "losing money", while institutions view risk as variance (or standard deviation) of returns.
II). Individuals are categorized according to their personalities and unique circumstances, whereas institutions are categorized by the investment characteristics of those that have a beneficial interest in the portfolios of pension funds, endowment funds, banks, insurance companies and mutual funds.
III). Individuals are defined financially by their assets and goals (particularly as they related to their life cycle), while institutions are typically concentrated within precise asset and liability parameters.
IV). Institutions have great flexibility in selecting their investments, whereas individuals are managed and regulated by ERISA (Employee Retirement Income Security Act) as well as other legal constraints.
Question 30
Diane Corporation had 400 units of inventory on hand at July 1, 2002, costing $20 each. Purchases and sales of goods during the month of July were as follows:
July 12, 2002 Sales 200 units @ $40 July 15, 2002 Purchases 100 units @ $26 July 25, 2002 Purchases
3 00 units @ $28 July 30, 2002 Sales 200 units @ $40
Assume Diane Corporation does not maintain perpetual inventory records. According to a physical count,
4 00 units were on hand on July 31, 2002.
The cost of ending inventory using the FIFO cost method is: