Question: Carlos bought a building for $113,000 in 2011. He added an addition to the building for $26,000. In 2015, he sold it for $212,000. What was his long-term capital gain? a. $212,000 b. $73,000 c. $47,000 d. $0 e. $99,000

Q: Differentiate between unacceptable investment alternatives and potentially acceptable ones?

A: An unacceptable investment refers to a financial asset or opportunity that carries significant risks…

Q: Define stand-alone risk

A: Stand-alone risk:This refers to the risk linked with a single aspect of a firm or any particular…

Q: Explain the call-put parity relation and how it is justified?

A: call-put parity relation 1. It shows the prices of calls and puts , consistency of underlying…

Q: What are the advantages and disadvantages of  FIFO?

A: First-in-First-Out:  In First-in-First-Out method, the costs of the initially purchased items are…

Q: Explain Anti-dilutive Security

A: Explanation to Securities Securities are referred to as the tradeable financial instruments which…

Q: important to have an FMS option

A: FMS Stock Options refers to all outstanding options to buy stocks of FMS Common Stock bestowed under…

Q: Explain what is risk decompositon

A: Risk is referred as the future uncertainty with reference to the deviation from an expected earnings…

Q: How do you calulate breakeven point ?

A: Break even point (BEP): Breakeven is the point where total expenses are equal to total revenue. at…

Q: What are some disadvantages of the APT?

A: APT is the abbreviation used for the arbitrage pricing theory. A theory or a model for asset pricing…

Q: What is the purpose of a Limit Test?

A: Definition:   Limit test: It checks the data by evaluating it with the predetermined upper and…

Q: Why is the NPV preferred over the IRR?

A: Net Present Value is a method of finding the profitability of a project by discounting future cash…

Q: Which decision is called the abandonment decision?

A: Answer: The decisions relating to the company that provides flexibility to discontinue the project…

Q: FMS option

A: Options are called financial derivatives that provide buyers with the right, but not the obligation,…

Q: A project with a negative NPV should be rejected. O True O False

A: Net present value  = present value of future cash inflows discounted at desired rate of return -…

Q: what method is preferred method IRR or NPV and why

A: This is related to capital budgeting.Both NPV and IRR are tools of capital budgeting that we use to…

Q: Do you think the Ricardian Equivalence is realistic?

A: Ricardian equivalence theory : In simple words, Ricardian equivalence can be understood as an…

Q: What is the definition of "FMS option"?

A: Stock Option:A stock option (additionally referred to as a fairness option), offers an investor the…

Q: 1. Which entry strategy has the least risk and why?

A: When a company is looking to enter a new market especially a new foreign market (i.e. a market in…

Q: Using Put Call Parity, a protective put is equivalent to what simple options position?

A: Put-Call Parity is a fundamental concept in options trading that establishes an essential…

Q: What is a constraint?

A: Internal Control:   It refers to a set of rules, policies adopted by a business to ensure accuracy…

Q: Why would a proposal not be accepted

A: A proposal refer to a document containing details of how to implement the plans for achieving the…

Q: What are the advantages and disadvantages of  LIFO?

A: Last-in-First-Out: In Last-in-First Out method, the costs of last purchased items are considered as…

Q: Which alternative is considered to be riskier, all else equal? and why?

A: Debt and Equity mix or only equity are the forms of capital structure which is chosen by the entity…

Q: When is a GAAP departure appropriate?

A: Definition:   Generally Accepted Accounting Principles (GAAP): These are the guidelines necessary to…

Q: Determine the theoretical ex-rights price?

A: The determination of the theoretical ex-rights price is generally done when stocks are issued and…

Q: Explain put option

A: Introduction: This question is related to the concept of financial derivatives. Derivative…

Q: Define asymmetric hedge

A: A strategy that helps to reduce the loss which occurs from the movement of the asset's price is term…

Q: Give a detail example of option to expand

A: In order to expand the business operations and to invest in a particular project in the future with…

Q: What are valid weaknesses of NPO?

A: Not for profit organization have certain weaknesses. some for them are- 1. Limited Purposes In order…

Q: What is the Allowable Risk of Over-reliance?

A: Auditor has to test the account balances and classes of transactions and has to do both control…

Q: Why is EBITDA controversial?

A: Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) is a metric used to assess…