Which of the following statements is CORRECT?
A. Sensitivity analysis is a good way to measure market risk because it explicitly takes into account diversification effects.
B. One advantage of sensitivity analysis relative to scenario analysis is that it explicitly takes into account the probability of specific effects occurring, whereas scenario analysis cannot account for probabilities.
C. Well-diversified stockholders do not need to consider market risk when determining required rates of return.
D. Market risk is important, but it does not have a direct effect on stock prices because it only affects beta.
E. Simulation analysis is a computerized version of scenario analysis where input variables are selected randomly on the basis of their probability distributions.
Answer: E
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Because the allowance method results in better matching, accounting standards require its use rather than the direct write-off method, unless bad debts are immaterial
a. True b. False Indicate whether the statement is true or false
Disclosure of a retrospective adjustment should include
A) why the new principle is preferable. B) the net impact on assets of the retrospective adjustment. C) the retrospective computation of earnings per share only for the current period. D) ending balance in Retained Earnings before and after the retrospective adjustment.
Which is not true of the z?, formula for a population percentage estimation?
A) The z stands for the z value for the level of confidence. B) The z value will typically be for a 95% or 99% level of confidence. C) The a equals the sample percentage. D) The a will typically be for a 95% or 99% level of confidence. E) The z value will normally correspond to ±1.96 or ±2.58 standard errors.
When Gap, Inc was developing the concept for its chain of Old Navy stores, the company gave employees who fit the desired Old Navy customer profile $200 apiece
They set them loose on a shopping spree, and then interviewed them about what they purchased so these products would be on the Old Navy shelves when the stores opened. Gap, Inc utilized what format of participant sampling? A) probability sampling B) systematic sampling C) stratified sampling D) nonprobability sampling E) simple random sampling