Which one of the following is an example of mental accounting?Multiple ChoiceO associating a security's gains or losses based on its purchase pricecalculating the gain or loss on a security on a daily basisO computing the amount of tax due on the gain from a stock saleconsidering the gain realized when a stock pays a dividendcomparing the gains and losses on a portfolio to those of the overall market

The term "mental accounting" describes the various valuations that individuals assign to the same…

Answered: Which one of the following is an…

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter12: Fainancial Statement Analysis

Section: Chapter Questions

Problem 20MCQ

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Why is there a cost for retained earnings? Group of answer choices Earnings can be reinvested or paid out as dividends Investors could buy other securities, earn a return Neither Either
For investments in equity securities, which will result in recording income based on the income of the investee? Select one: a. Held-to-maturity classification b. Trading classification O C. Available-for-sale classification O d. Equity method of accounting
What does the capital asset pricing model (CAPM) calculate? a. The expected rate of return on an individual stock with respect to the risk-free rate of return b. The expected rate of return of an individual stock based on its overall risk c. The expected rate of return of an individual stock with respect to its market risk only d. The expected rate of return of an individual stock reflecting its financial risk Clear my choice
When using discounted dividend method to estimate stock price, which of the following should be used as the discount rate? - required return of debt - risk free rate - required return of the equity - WACC - Bank deposit rate
For the following stock investment, find (a) the total purchase price, (b) the total dividend amount, (c) the capital gain or loss, (d) the total return, and (e) the percentage return. Ignore broker and SEC fees. (a) What is the total purchase price? $ (b) What is the total dividend amount? (c) What is the capital gain or loss? (d) What is the total return on investment? (e) What is the percentage return? (Round to the nearest percent.) Number of shares Purchase price per share Dividend per share Sale price per share 70 $40 $2 $82
The price of the share / stock that a company observe from a financial market such as Muscat Stock Exchange is known as ..................... Select one: A. Fundamental Price B. Extrinsic Price C. Intrinsic Price D. Market Price
Which of the following is an appropriate presentation of treasury stock? * O As a marketable security As a deduction at cost from total stockholders' equity As a deduction at cost from total contingent liabilities As a deduction at par from total stockholders' equity
Define the terms covariance and correlationcoefficient. How are they related to one another,and how do they affect the required rate of returnon a stock? Would correlation affect its requiredrate of return if a stock were held (say, by the company’s founder) in a one-asset portfolio?
The Expected Rate of Profit Formula looks at: A. Expected Profit & Money Invested B. Common Stock & Preferred Stock C. Expected Profit & Bonds D. All of the above
Which of the following characteristics accurately describes the stock market? An active market that determines the price of a firm’s shares A fixed-income market where participants buy and sell debt securities The bid-ask spread in a dealer market represents the profit that a dealer would make on a transaction involving a security. Which of the following statements best describes the bid-ask spread? The difference between the closing price of the security and the opening price of the security on the day of the transaction. The sum of the price at which a dealer is willing to buy a security and the price at which a dealer is willing to sell it. The difference between the price at which a dealer is willing to buy a security and the price at which a dealer is willing to sell it. Fernando, a trader, wants to buy 1,000 shares of XYZ stock, while a second trader, Ally, is willing to sell 1,500 shares of the same stock. Unfortunately, Fernando…

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