Answer: Between 1.0 and 1.3
Explanation:
The adjusted beta technique assumes that the beta of the security is moving towards the market beta overtime so it adjusts the security's beta by computing a weighted average of the security's beta and the market beta in the following manner;
Adjusted beta = (.67) * Security beta + (.33) * 1.0
= 0.67 * 1.3 + 0.33
= 1.2
Cairns owns 80 percent of the voting stock of Hamilton, Inc. The parent’s interest was acquired several years ago on the date that the subsidiary was formed. Consequently, no goodwill or other allocation was recorded in connection with the acquisition. Cairns uses the equity method in its internal records to account for its investment in Hamilton.
On January 1, 2011, Hamilton sold $1,300,000 in 10-year bonds to the public at 105. The bonds had a cash interest rate of 8 percent payable every December 31. Cairns acquired 40 percent of these bonds at 96 percent of face value on January 1, 2013. Both companies utilize the straight-line method of amortization.
Prepare the consolidation worksheet entries to recognize the effects of the intra-entity bonds at each of the following dates.
Answer:
hello your question has a missing journal entry table attached below is the entry journal table completely filled
Explanation:
Amount of bonds acquired = 40% of original bond
i) Bonds payable = 40% * 1,300,000
= $520000
purchase price of bonds = $520000 * 96% ( FACE VALUE )
= $499200
hence the annual amortization
(bonds payable - purchase price of bonds ) / 10 years - 2 years
(520000 - 499200 ) / 8 = $20800/8 = $2600
ii) premium on bonds payable
$20800 - $2600 = $18200
cash amount = $520000 * 8% = $41600
intra entity expense and income table is attached below
from the table
iii) intra-entity interest expense = $39000 and the
iv) intra-entity interest income = $44200
v) investment in bonds
purchase price of bonds + annual amortization
= $499200 + $2600 = $501800
the book value on bonds as at 1st January 2011
=$1300000 * 105% = $1365000
Premium on bonds as at January 1st 2011
= $1365000 - $1300000 = $65000
amortization of premium as at January 1st 2011
=( ($65000) / 10 years ) * 2 years
= $13000
hence the controlling interest in bonds payable = $540800
vi) gains on retirement bonds
= $540800 - $499200 = $41600
attached below is the journal entry on 31st December 2013
The incremental approach to budgeting establishes a base amount for all budget items and requires explanation or justification for any budgeted amount above that level. true or false
Answer:
The given statement is "False".
Explanation:
The provided seems to have been a methodical approach that combines the development and execution of the approach throughout the practice. The characteristics including its methodology being the way to maintain ambiguity and transition, its concentration on both small and major judgments, its reliance on both structured and unstructured mechanisms, and therefore its system interfaces.So that the above seems to be the correct solution.
Using the data below for the Ace Guitar Company:
A Region B Region
Sales $767,000 $413,000
Cost of goods sold 291,500 156,900
Selling expenses 184,100 99,100
Service department expenses
Purchasing $198,200
Payroll accounting 132,200
Allocate service department expenses proportional to the sales of each region. Determine the divisional income from operations for the A and B regions. For interim calculations, round percentages to one decimal place.
A Region $
B Region $
Answer:
A Region $76,640
B Region $41,360
Explanation:
Calculation to Determine the divisional income from operations for the A and B regions.
First step is to find the Percentage of sales allocations:
Using this formula
Percentage of sales allocation= Sales amount/Total sales ×100
Let plug in the formula
A Region = $767,000 ÷($ $767,000+$413,000)×100
A Region=$767,000/$1,180,000 ×100
A Region= 0.65×100
A Region =65%
B Region =$413,000/($767,000+$413,000)×100
B Region=$413,000/$1,180,000 ×100
B Region=0.35×100
B Region=35%
Second step
Service department expenses=
Purchasing $198,200
Add Payroll accounting $132,200
=$330,400
Third step is the allocation of support department expenses for both A and B Region
A Region = 65% × $330,400 = $214,760
B Region=35%×$330,400=$115,640
Last step is to calculate for the Operating income of both region
A Region Operating Income = $767,000-$291,500-$184,100-$214,760
A Region Operating Income = $76,640
B Region Operating Income =$413,000-$156,900-$99,100-$115,640
B Region Operating Income =$41,360
Therefore tlthe divisional income from operations for the A and B regions will be :
A Region $76,640
B Region $41,360
Local nationals are expatriates from their own countries working for a foreign company in another country.
a. True
b. False
Answer:
True
Explanation:
Blaire is an Australian working in India for a french company in view of the given data it would be appropriate to say blaire is a third country national
The following information is taken from Reagan Company's December 31 balance sheet:
Cash and cash equivalents $8,419
Accounts receivable 70,422
Merchandise inventories 60,362
Prepaid expenses 4,100
Accounts payable $14,950
Notes payable 86,638
Other current liabilities 9,500
If net credit sales for the current year were $612,000, what is the firm's days' sales uncollected for the year?
Answer:
Firm’s sales uncollected for year is 42 days.
Explanation:
Account receivable turnover ratio = $621,000 / $70,422
Account receivable turnover ratio = 8.69
Thus, accounts receivable turnover ratio is 8.69
Average collection period = 365 / Account receivable turnover ratio
Average collection period = 365 days / 8.69
Average collection period = 42.00
Thus, firm’s sales uncollected for year is 42 days.
Answer:
42 days
Explanation:
Compute Days’ Sales Uncollected
Accounts Receivable / Net Sales x 365
70,422 / 612,000 x 365 = 42
Each of the following items must be considered in preparing a statement of cash flows (indirect method) for Turbulent Indigo Inc. for the year ended December 31, 2017 State where each item is to be shown in the statement of cash flows, if at all. Items
(a) Plant assets that had cost $20,000 6 years before and were being depreciated on a straight-line basis over 10 years with no estimated scrap value were sold for $5,300.
(b) During the year, 10,000 shares of common stock with a stated value of $10 a share were issued for $43 a share
(c) Uncollectible accounts receivable in the amount of $27,000 were written off against Allowance for Doubtful Accounts.
(d) The company sustained a net loss for the year of $50,000. Depreciation amounted to $22,000, and a gain of $9,000 was realized on the sale of land for $39,000 cash.
(e) A 3-month U.S. Treasury bill was purchased for $100,000. The company uses a cash and cash equivalent basis for its cash flow statement.
(f) Patent amortization for the year was $20,000
(g) The company exchanged common stock for a 70% interest in Tabasco Co. for $900,000.
(h) During the year, treasury stock costing $47,000 was purchased
Answer:
(a) Plant assets that had cost $20,000 6 years before and were being depreciated on a straight-line basis over 10 years with no estimated scrap value were sold for $5,300.
increases cash flows from investing activities(b) During the year, 10,000 shares of common stock with a stated value of $10 a share were issued for $43 a share
increases cash flows from financing activities(c) Uncollectible accounts receivable in the amount of $27,000 were written off against Allowance for Doubtful Accounts.
this corresponds to bad debt expense which is included in the income statement(d) The company sustained a net loss for the year of $50,000. Depreciation amounted to $22,000, and a gain of $9,000 was realized on the sale of land for $39,000 cash.
the net loss and the gain on the sale of land decreases the cash flows from operating activities, while the depreciation expense increases it.the $39,000 received will increase cash flow from investing activities(e) A 3-month U.S. Treasury bill was purchased for $100,000. The company uses a cash and cash equivalent basis for its cash flow statement.
not included in teh cash flow statements(f) Patent amortization for the year was $20,000
increases cash flow from operating activities (in a similar way than depreciation)(g) The company exchanged common stock for a 70% interest in Tabasco Co. for $900,000.
this is a non-cash financing and investing activity(h) During the year, treasury stock costing $47,000 was purchased
decreases cash flow from financing activitiesIf the price level increases by 0.2 percent for every $100 billion increase in the money supply, by how much might prices rise if the Fed increases total reserves by $80 billion and the reserve requirement is 0.05?
Answer:
Prise rise = 3.2%
Explanation:
Given the increase in price level = 0.2%
The increase in total reserve by the Fed = $80
Reserve requirement = 0.05
Increase in money supply ($ billion) = Increase in reserves / Reserve ratio
Increase in money supply = 80 / 0.05 = 1,600
Increase in price level = (Increase in money supply / 100) x 0.2%
Increase in price level = (1,600 / 100) x 0.2%
Increase in price level = 3.2%
a. Assuming Phil's wages were $27,000 and Linda's wages were $18,500 for 2019 and they had no other income, what is the maximum amount of their deductible contributions to a traditional IRA for 2019
Answer:
Phil = $6,000
Linda = $6,000
Explanation:
In the year 2019, and in the year 2020, the maximum contribution allowed = $6,000, also in case the age = 50 or more than that the maximum contribution allowed = $7,000.
Thus, on a general note here it is assumed that both Linda and Phil are less than the age of 50.
Further, in case joint return is filed then there is different formula to calculate the deductible contribution amount.
Here it shall be $6,000 each for both of them.
You deposit $2,200 in a bank account that pays 11% stated annual interest compounded continuously. What is the value of your investment at the end of 7 years? Please round your answer to the nearest hundredth.
Answer: $4,751.49
Explanation:
When the compounding is continuous, the following expression is used;
Amount = P * (e)^rt
= 2,200 * (e) ^ ( 0.11 * 7)
= 4751.485758
= $4,751.49
3. Prepare journal entries to record the machine’s disposal under each separate situation: (a) it is sold for $22,000 cash; (b) it is sold for $88,000 cash; and (c) it is destroyed in a fire and the insurance company pays $32,500 cash to settle the loss claim.
Answer and Explanation:
The Journal entries are shown below:-
1. Cash Dr, $22,000
Accumulated depreciation-machine Dr, $148,800
($201,600 - $23,040 ÷ 6 × 5)
Loss on Sale of Machine Dr, $30,800
To Machine $201,600 ($192,000 + $8,000 + $1,600)
(To record Sale of the machine)
2. Cash Dr, $88,000
Accumulated depreciation-machine $148,800
($201,600 - $23,040 ÷ 6 × 5)
To Gain on Sale of Machine $35,200
To Machine $201,600
(Being Sale of the machine is recorded)
3. Cash Dr, $32,500
Accumulated depreciation-machine Dr, $148,800
Loss on disposal of Machine $20,300
To Machine $201,600
(Being Sale of the machine is recorded)
Finance balance sheet: KneeMan Markup Company has total debt obligations with book and market values equal to $30 million and $28 million, respectively. It also has total equity with book and market values equal to $20 million and $70 million, respectively. If you were going to buy all of the assets of KneeMan Markup today, how much should you be willing to pay
Answer:
$98 million
Explanation:
Kneeman markup company has a total debt obligation with a book value of $30 million
The market value is $28 million
The total equity has a book value of $20 million and a market value of $70
Therefore, the price that you should be willing today can be calculated as follows
Debt obligation market value+total equity market value
= $28 million + $70 million
= $98 million
Hence the amount that you should be willing to pay today is $98 million
Lusk Corporation produces and sells 15,900 units of Product X each month. The selling price of Product X is $29 per unit, and variable expenses are $23 per unit. A study has been made concerning whether Product X should be discontinued. The study shows that $71,000 of the $109,000 in monthly fixed expenses charged to Product X would not be avoidable even if the product was discontinued. If Product X is discontinued, the annual financial advantage (disadvantage) for the company of eliminating this product should be:__________
A) ($57,400)
B) $51,600
C) $13,600
D) ($51,600)
Comment on the statement from an opportunity cost perspective: "The major cost of going to college is the $15,000 per year in tuition." Assume that a person could have earned $30,000 a year if the person did not go to college.
Answer:
Opportunity cost = $30,000
Explanation:
Opportunity cost is the value of the next best alternative sacrificed in favor of a decision. Opportunity cost is also known as implicit cost. It is the value of the sacrificed made to take a course of action.
For example, should the person in question decides to go to college, that would mean him forfeiting the sum of $30,000 which he would have earned had he decide otherwise.
The accounting cost of going to college is amount is $15,000,the cost to be incurred.
While the economic cost would be the sum of the accounting cost plus the opportunity cost
Economic cost = 30,000 + 15,000 = $45,000
Leslie McCormack is in the spring quarter of her freshman year of college. She and her friends already are planning a trip to Europe after graduation in a little over three years. Leslie would like to contribute to a savings account over the next three years in order to accumulate enough money to take the trip. Assume an interest rate of 16%, compounded quarterly. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) How much will she accumulate in three years by depositing $520 at the end of each of the next 12 quarters, beginning three months from now
Answer:
$7,813.52
Explanation:
future value = quarterly contribution x annuity factor
quarterly contribution = $520
total quarterly contributions = 3 x 4 = 12 periods
interest rate = 16% / 4 = 4% compounded quarterly
future value annuity factor, 4%, 12 periods = 15.026
future value = $520 x 15.026 = $7,813.52
On January 1, 2021, a company issues $800,000 of 10% bonds, due in ten years, with interest payable semiannually on June 30 and December 31 each year. Assuming the market interest rate on the issue date is 9%, the bonds will issue at $852,031.
Required:
A. Fill in the blanks in the amortization schedule below:
Date Cash Paid Interest Change in Carrying Value Carrying Value
Expense
01/01/2021
06/30/2021
12/31/2021
2. Record the bond issue on January 1, 2021, and the first two semi-annual interest payments on June 30, 2021, and December 31, 2021.
Answer:
I will start with question 2)
January 1, 2021, bonds issued at a premium
Dr Cash 852,031
Cr Bonds payable 800,000
Cr Premium on bonds payable 52,031
June 30, 2021, first coupon payment
Dr Interest expense 37,398.45
Dr Premium on bonds payable 2,601.55
Cr Cash 40,000
December 31, 2021, first coupon payment
Dr Interest expense 37,398.45
Dr Premium on bonds payable 2,601.55
Cr Cash 40,000
2)
Date Cash Interest Change in Carrying Value
paid expense carrying value
01/01 - - 52,031 852,031
06/30 40,000 37,398.45 49,429.45 849,429.45
12/21 40,000 37,398.45 46,827.90 846,827.90
Oriole Company accumulates the following data concerning a mixed cost, using miles as the activity level. Miles Driven Total Cost Miles Driven Total Cost January 7,990 $14,170 March 8,510 $14,721 February 7,495 13,503 April 8,200 14,485 Compute the variable cost per mile using the high-low method. (Round answer to 2 decimal places, e.g. 2.25.)
Answer:
$1.2 per mile
Explanation:
Computation of the variable cost per mile using the high-low method
Using this formula
Variable cost per mile = (Highest activity cost - Lowest activity cost)/(Highest activity - Lowest activity)
Let plug in the
Variable cost per mile= (14,721 - 13,503)/(8,510 - 7,495)
Variable cost per mile= 1,218/1,015
Variable cost per mile=$1.2 per mile
Therefore the Variable cost per mile will be $1.2 per mile.
Recently, a certain bank offered a 5-year CD that earns 3.26% compounded continuously. Use the given information to answer the questions.
(a) If $30,000 is invested in this CD, how much will it be worth in 5 years?(Round to the nearest cent.)
(b) How long will it take for the account to be worth $45,000?(Round to two decimal places as needed)
Answer:
a. The CD will worth $35,311 in five years.
b. It will take 12.44 years for the account to be worth $45,000.
Explanation:
a) If $30,000 is invested in this CD, how much will it be worth in 5 years?(Round to the nearest cent.)
This can be determined using the formula for calculating the future value (FV) compounding formula as follows:
FV = PV * e^(rn) ................................... (1)
FV = Future value in five years = ?
PV = Present value of amount invested = $30,000
e = Mathematical constant approximated as 2.7183
r = Interest rate = 3.26%, or 0.0326
n = number of years = 5
Substituting the values into equation (1), we have:
FV = $30,000 * 2.7183^(0.0326 * 5)
FV= $35,311
Therefore, the CD will worth $35,311 in five years.
(b) How long will it take for the account to be worth $45,000?(Round to two decimal places as needed)
Also, using equation (1) part a, we have:
FV = Future value in n years = $45,000
PV = Present value of amount invested = $30,000
e = Mathematical constant approximated as 2.7183
r = Interest rate = 3.26%, or 0.0326
n = number of years it will take to have $45,000 = ?
Substituting the values into equation (1), we have:
$45,000 = $30,000 * 2.7183^(0.0326 * n)
$45,000 / $30,000 = 2.7183^(0.0326 * n)
1.50 = 2.7183^(0.0326 * n)
Loglinearise both sides and solve for n, we have:
Log(1.50) = (0.0326 * n)Log(2.7183)
0.176091259055681 = 0.0326 * n * 0.434297385124509
0.176091259055681 = n * 0.014158094755059
n = 0.176091259055681 / 0.014158094755059
n = 12.44 years
Therefore, it will take 12.44 years for the account to be worth $45,000.
Regarding the tax treatment of payments to securities holders, it is true that _______________, while ____________________.
Answer: (d)common stock dividends and preferred stock dividends are not tax-deductible; interest is tax-deductible
Explanation:
Here is the complete question:
Regarding the tax treatment of payments to securities holders, it is true that _________, while _________.
(a)interest and preferred stock dividends are not tax-deductible; common stock dividends are tax deductible
(b)interest and preferred stock dividends are tax-deductible; common stock dividends are not tax-deductible
(c)common stock dividends and preferred stock dividends are tax-deductible; interest is not tax-deductible
(d)common stock dividends and preferred stock dividends are not tax-deductible; interest is tax-deductible
Regarding the tax treatment of payments to securities holders, it is true that common stock dividends and preferred stock dividends are not tax-deductible while interest is tax-deductible.
It should be noted that the profit of a company is gotten when the expenses are deducted from the revenue. The dividends are not tax deductible as they are not expenses.
When a business adopts a strategy of reducing and/or discontinuing production in response to a sustained pattern of losses, it is *
Answer:
preparing to exit operations.
Explanation:
Dori is 58 years old and retired in 2019. She receives a pension of $25,000 a year and no other income. She wishes to put the maximum allowed into an IRA. How much can she contribute to her IRA?
Answer:
$7,000 per year
Explanation:
Since Dori is over 50 years old, she can contribute up to $7,000 per year to her IRA or Roth IRA account. If she was a little younger, less than 50 years old, her maximum contribution would have been $6,000 per year.
The IRS sets the maximum contribution limits that anyone can contribute to an IRA account, and that limit was set for 2019 and continues to be valid.
If you were reviewing a Financial company such as JPMorgan Chase, which of the following metrics is most relevant?
A) Net Interest Margin.
B) Advertising Revenue.
C) Same Store Sales (SSS).
D) Days Sales Outstanding.
Answer: A) Net Interest Margin.
Explanation:
JPMorgan Chase as a financial company would not deal with actual inventory so the Days sales outstanding is not a relevant measure. Neither is the SSS as the company is not a retail chain.
The relevant metric would be the Net Interest Margin which is used to measure the difference between the interest income that a bank or similar financial institution makes vs the interest payments that the company will pay out to its lenders.
You purchase 200 shares for $70 a share ($14,000), and after a year the price rises to $80. Calculate the percentage return on your investment if you bought the stock on margin and the margin requirement was (ignore commissions, dividends, and interest expense): 20 percent. Round your answer to one decimal place. % 45 percent. Round your answer to one decimal place. % 85 percent. Round your answer to one decimal place. %
Answer:
14.29%
Explanation:
Number of shares purchased= 200
Purchase price per share= $70
Year end price = $80
Total Investment cost = 200 shares * $70 per shares = $14,000
Percentage return earned on investment = Number of shares * (Year end price - Purchase price) / Investment
= 200 * ($80 - $70) / $14,000
= $2,000 / $14,000
= 0.142857
= 14.2857%
= 14.29%
What is one drawback shared by both monopolies and oligopolies?
A. They do not have the capital needed for research.
B. They allow more businesses to form in industries.
C. They devote too much money to advertising.
D. They can harm consumers by fixing prices.
Answer:A.They can harm consumers by fixing prices.
One drawback of both monopolies and oligopolies is that they can harm consumers by fixing prices. Thus, the correct answer is option D.
What is a monopoly market ?A monopoly is a market arrangement where one producer or seller holds a disproportionate amount of power within a given market. Monopolies are discouraged in free-market economies as they limit customer alternatives and stifle rivalry.
When there is insufficient rivalry, market structures called monopolies and oligopolies arise. An oligopoly occurs when a small number of comparatively big companies produce similar but slightly different goods, whereas a monopoly occurs when a single company produces goods that have no direct competitors. Both of these marketplaces harm customers by fixing prices and eliminating the advantages of competition in the economy.
Therefore, option D is one drawback shared by both monopolies and oligopolies.
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ravis, the CEO of Riplon Corp., used company funds to buy a car worth $1 million and a house for $6 million in Santa Fe. This is an example of _____.
Answer:
on-the-job consumption
Explanation:
On-the-job consumption is when senior management staff uses company funds to purchase items that enhances his status.
This is a way to promote the image of the company. When senior management of the company projects an impression of doing well it will attract more customers.
In this case used company funds to buy a car worth $1 million and a house for $6 million in Santa Fe.
Driving the expensive car and living in Santa Fe will grant the CEO access to wealthy people who will be beneficial to Riplon Corp.
Your company has compiled the following data on the small set of products that comprise the specialty repair parts division. Perform ABC analysis on the data. Over which product do you suggest the firm keep the least control? SKU Annual Demand Unit Cost R11 250 $25 S22 60 $90 T33 100 $500 U44 150 $550 V55 2000 $2 V55 S22 R11 U44 T33
Answer : R11 & U44
Explanation:
Considering the aforementioned data on the small set of products that comprise the specialty repair parts division. After performing ABC analysis on the data. I would suggest R11 and U44 for the firm keep the least control.
The following information was available for the year ended December 31, 2013:
Earnings before interest and taxes ( operating income) = $108,000 net incocme= $ 51,000
interest expense = $26,000 total assets at year-end = $ 360,000
income tax expense = $31,000 total liabilities = $184,0000
Required:
a. Calculate the debt ratio at December 31, 2013. (Round your answer to 1 decimal place.)
b. Calculate the debt/equity ratio at December 31, 2013. (Round your answer to 2 decimal places.)
c. Calculate the times interest earned for the year ended December 31, 2013. (Round your answer to 2 decimal places.)
Answer:
A. Debt ratio=51%
B. Debt Equity ratio = 104%
C. Times interest earned= 4.15
Explanation:
A. Calculation for the debt ratio at December 31 2013.
Using this formula
Debt ratio=Total liabilities / Total assets
Let plug in the formula
Debt ratio=$184,000/$360,000
Debt ratio =0.51×100
Debt ratio=51%
B. Calculation for debt equity ratio at December 31 2013
First step is to find the Total stockholders equity at year end .
using this formula
Total stockholders equity at year-end = Total asset- Total liabilities
Let plug in the formula
Total stockholders equity at year-end=$360,000-$184,000
Total stockholders equity at year-end=$176,000
The second step is to calculate for debt equity ratio
Using this formula
Debt Equity ratio = Total liabilities / Total stockholders equity
Let plug in the formula
Debt Equity ratio =$184,000 / $176,000
Debt Equity ratio = 1.04×100
Debt Equity ratio = 104%
C. Calculation for the times interest earned for the year ended December 31 2013
Using this formula
Times interest earned = Earnings before interest and taxes / Interest expense
Let plug in the formula
Times interest earned= $108,000 / $26,000
Times interest earned= 4.15 times
Therefore :
A. Debt ratio=51%
B. Debt/Equity ratio = 104%
C.Times interest earned= 4.15 times
Strategic management requires managers to take an integrative view of the organization. This is achieved when
Answer:
employees and work teams are empowered.
Explanation:
Every organization should be established with a motive to generate high and high revenues by do strategic planning so the things could go in a right way
The employees and the employer roles in the organization is very important
Due to the performance of the employees, the company could able to accomplish its predefined target so here the motivation, learning is required also working in a team could easy the task as compared to before at less time
Therefore the last option is correct
Which of the following would reduce inventory costs thereby reducing operations costs?
A. Increasing inventory dollar days
B. Increasing inventory turnover
C. Increasing order lead time
D. Increasing safety stock
Answer: B. Increasing inventory turnover
Explanation:
Increasing inventory turnover would reduce inventory costs thereby reducing operations costs. Since there's increase in inventory turnover, it means that there's an increase in demand or sales or generally production level has risen.
This will therefore help to reduce inventory costs thereby reducing operations costs.
"In connection with a new issue offering of a sought-after tech company issue, the underwriter offers shares to the officers of a manufacturing company that hired the firm 6 months ago to advise on a potential acquisition. Under FINRA rules, this is:"
Answer:
Under FINRA rules, this is:
A conflict of interest.
Explanation:
The underwriter has advised on the potential acquisition and is now offering the shares to the officers of the manufacturing company that hired the underwriting firm. The underwriter should have allowed the officers of the manufacturing company to purchase the shares on their own since it is a public offering and not a private placement. The information is already in the public domain. By offering the shares directly to the officers, it looks as if the underwriter is trying to compensate them for the contract it received earlier.
Determine if the following situations describe a game or a decision. Indicate what specific features of the situation caused you to classify itas you did.
a) A party nominee for president of the United States must choose whether to use private financing or public financing for her campaign.
b) China chooses a level of tariffs to apply to American imports.
Answer:
China chooses a level of tariffs to apply to American imports.