The impairment test for an intangible asset with a definite life compares the
a. fair value of the asset to its book value.
b. sum of the undiscounted cash flows expected to be generated by the asset to its book value.
c. sum of the discounted cash flows expected to be generated by the asset to its fair value.
d. sum of the undiscounted cash flows expected to be generated by the asset to its fair value.
B
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You are planning to buy a stock, the risk on which is dependent on two factors: (1) the change over the last year in the inflation rate and (2) the spread between ten-year Treasury bonds and three-month Treasury bills. Suppose the average risk-free interest rate is 1 percent. The beta coefficients of the stock associated with the change in inflation rate and spread between ten-year Treasury bonds and three-month Treasury bills are -2 and 5 respectively. If you expect the inflation rate to rise 1 percentage point and you think the spread will be 3 percentage points. What is the expected return to this stock? Use the arbitrage-pricing theory.
A. 11 percent B. 12 percent C. 14 percent D. 18 percent
Sales positions can be a good track for promotion to supervisory-management positions
Indicate whether the statement is true or false
Freight absorption pricing
A. tends to decrease competition. B. amounts to cutting list price to appeal to new geographic markets. C. tends to restrict firms from competing in distant markets. D. forces all buyers to pay higher shipping costs. E. None of these answers is correct.
Which of the following leads to less business risks compared to other factors?
A. ?High percentage of fixed costs B. High operating leverage? C. ?More financial risk D. ?High interest rates E. ?More stable operations