Answer:
2.3%
Explanation:
If nominal interest rate (10-year Treasury bond rate) = real risk free interest rate + inflation premium + default risk premium + maturity risk premium + liquidity risk premium
Then real risk free interest rate = nominal interest rate - inflation premium - default risk premium - maturity risk premium - liquidity risk premium
real risk free interest rate = 5.3% - 2.8% - 0% - 0.2% - 0% = 2.3%
The economy is in short-run equilibrium when __________. a. aggregate demand intersects short-run aggregate supply. b. short-run aggregate supply intersects long-run aggregate supply. c. aggregate demand intersects long-run aggregate supply. d. aggregate demand intersects both long-run and short-run aggregate supply. e. the economy is at full-employment output.
Answer:
A. aggregate demand intersects short-run aggregate supply
Explanation:
Short run occurs when the amount a firm wishes to supply is equal to the amount demanded from the consumers. It is the area on the graph where the aggregate demand curve intersect with the short run supply curve.
Or, simply put, when the aggregate output supplied is equal to the aggregate output demanded. The equilibrium is made up of equilibrium prices and quantity.
Short-run equilibrium in the economy occurs when the aggregate demand curve intersects with the short-run aggregate supply curve.
The economy is in short-run equilibrium when aggregate demand intersects short-run aggregate supply. This intersection determines equilibrium real GDP and the price level in the short run. In contrast, the intersection of aggregate demand and long-run aggregate supply determines the long-run equilibrium, which corresponds to the economy's potential level of output. The short-run equilibrium can see output levels both below and above potential due to nominal wage and price stickiness. Over time, the economy may adjust to reach long-run equilibrium where full wage and price flexibility is achieved.
A commercial for a floor cleaner shows a young mother cleaning her kitchen floor after feeding her toddler. The commercial is considered to be effective because it utilizes high source similarity. This is an example of a _____ commercial.
Answer: This commercial is a slice of life
Explanation:
Slice of life can be defined as the representation of everyday life in the world of art and entertainment. In the case of the commercial, projecting a mother to clean the floor after feeding her baby is something that many young mothers can identify with. Cleaning the house and feeding a baby is something that many mothers do daily as part of their daily living routine, combining this with the use of this floor cleaner can make them feel identified with this aspect of their life and decide to buy the cleaner.
Many times this type of purchase is made due to what the product represents itself. While it is true that it can be a good floor cleaner (or perhaps the best) the young mother who is going to acquire it thinks about that young mother of the commercial and how she managed her life. A floor cleaner is a form of connection.
Discuss what happens to the equilibrium price and quantity of Colgate Toothpaste when there is an increase in the demand for Colgate Toothpaste but no change in the supply. What could cause an increase in the demand for Colgate Toothpaste but no change in supply?
Answer:
The demand of a product may increase due to several factors, including a decrease in the product's price, an increase in the price of the competition (substitute products), a decrease in the price of complement, or an increase in consumer income.
The company can only control the price they charge for the product, but they do not control the other external factors. If the supplier is able to increase the quantity supplied, the equilibrium price might not vary at least in the short run. If the external factors continue then the equilibrium will probably increase.
If the quantity demanded for Colgate increases, but the supplier is not able to increase the quantity supplied, then the equilibrium price will increase due to a shortage of the product.
According to the law of demand, as prices rise, ceteris paribus A. quantity demanded decreases. B. quantity demanded increases. C. demand increases. D. demand decreases.
Answer:
A) quantity demanded decreases.
Explanation:
The law of demand states that as the price of a good or service increases, the quantity demanded (not the demand) of the good or service will decrease. This happens because less consumers are willing to purchase the goods or services and since the supply doesn't change, overstocking will result, which will decrease the equilibrium price.
*The demand of a good or service is shown by the demand curve, but the points in the curve represent the quantity demanded.
Answer:
A. Decreases
Explanation:
decreases.
increases.
stays the same.
disappears.
Suppose that you are on a date with an economics major, and you want to impress them by talking about economics. Your date challenges you to state your knowledge of positive and normative questions.
Answer:
The difference between positive and normative questions, is that positive questions have a correct answer, while normative questions have subjective answers. Positive questions ask about how something really is, e.g. what is the GDP per capita in the US? Normative questions ask about how things should be, e.g. Is the US GDP per capita large enough?
Danielle Corporation received $2,000,000 from investors and issued them shares of its stock. Danielle's journal entry to record this transaction would include a: a. Credit to revenue. b. Debit to investments. c. Credit to common stock. d. Credit to retained earnings.
Answer:
c. Credit to common stock.
Explanation:
Usually it's the credit to common stock in an amount equal to the par times stocks issued with the rest credited to Paid-in capital in excess of par.
Simon, the CEO of a consumer electronics firm, receives a huge positive response from the industry experts and consumers for introducing breakthrough technologies in the company’s products. Simon is a _____ leader.
Answer:
creative
Explanation:
He could either be a humble, extroverted, born or creative leader. From these options the most intuitive answer would be that he is a creative leader given that he has introduced "breakthrough technologies" in the companies products which would only be possible through a great amount of initiative and creativity.
The term "breakthrough technologies" is the key word in answering this question as it refers to innovation that has never been seen before. Thus, it would require a great deal of creativity to think of and successfully introduce and implement into a company.
Why should campaigns with different marketing objectives be separated into different Performance Planner plans?1. So that spend is not reallocated between two different marketing objectives2. To avoid any potential keyword duplicates between different marketing objectives3. So that seasonal trends can be better identified for each individual marketing objective4. To prevent campaigns from becoming "Limited by Budget"
Answer:
1) So that spend is not reallocated between two different marketing objectives
Explanation:
When you determine the objectives or goals of any type of activity, you must be sure that they are measurable and you can decide if they were successful or not.
If a company has two different marketing campaigns with two different objectives or goals, you will need a cost benefit analysis in order to be able to measure how successful each campaign was.
For example, marketing campaign A increased product's A sales by $100,000, but its total cost was $80,000. On the other hand, campaign B increased product's B sales by $200,000 and its total cost was $40,000. Since campaign B generated higher sales per dollar invested, then it was more efficient.
The total cost of ownership (TCO) is an estimate of the cost of an item that includes all the costs related to the procurement and use of an item, but it does not include any of the costs related to disposing of the item after it is no longer useful.True / False.
Answer:
False.
Explanation:
The total cost of ownership can be defined as the acquisition cost of an asset and the cost of it's operation. It takes into account the total value of the asset. Before making a decision on the asset one wants to purchase, the total cost of ownership should be assessed. Most buyers make the mistake of only considering the purchase cost of an item without considering other operational and maintenance cost over the items useful life. For example, one might decide to pick a cheap alternative based on it's low purchase cost and later realize very hefty operation and maintenance cost. It is therefor prudent for buyers to consider not only the short-term cost which is the price but also the long-term cost that will be incurred over the item's useful life.
Most companies in business that want to purchase an equipment usually consider the total cost of ownership to determine the best alternative in terms of long-term value. By doing a total cost of ownership analysis, the company tends to have a holistic view of all the direct and indirect costs.
In considering ending her relationship with her husband, Marie considers how they might divide up their household goods, and how it might impact their children and their friends. In interdependence theory terms, Marie is thinking about: A. comparison level. B. comparison level of alternatives. C. outcomes. D. investments.
Answer:
D) investment
Explanation:
Marie has decided to end her relation with her husband and considering how she can divide the household goods, how the end of the relationship impacts her children. By considering all this point, Marie is thinking about the investment.
Interdependence theory state that interpersonal relationships depend upon interdependence. it determine the how people interact each other and what will be the outcomes of their interaction.
The journal entry to issue 1,000,000 shares of $5 par common stock for $9 per share on July 2 would be _______.a. July 2Cash5,000,000 Common Stock5,000,000 b. July 2Cash9,000,000 Common Stock9,000,000 c. July 2Cash5,000,000 Paid-In Capital in Excess of Par—Common Stock4,000,000 Common Stock9,000,000 d. July 2Cash9,000,000 Common Stock5,000,000 Paid-In Capital in Excess of Par—Common Stock4,000,000
Answer:
d. July 2 Cash 9,000,000
Common Stock 5,000,000
Paid-In Capital in Excess of Par—Common Stock 4,000,000
Explanation:
Cash is debited with 9,000,000
Common Stock is credited with 5,000,000
and also Paid-In Capital in Excess of Par—Common Stock credited with 4,000,000
Preferred stock usually has a par value. Like common stock it can be sold at a price different from par. Preferred stock is recorded in its own separate contributed capital accounts.
The preferred stock accounts are included as a part of contributed capital.The entries for issuing preferred stock for non cash assets are similar to those for common stock.
Melanie has a choice of driving or flying from Durham, North Carolina to Knoxville, Tennessee for a one-day business trip. If she travels by air, she will be able to work seven hours in Knoxville, while if she drives, she will only have time to work four hours once there. Her expected income from each hour of work in Knoxville is $40. If Melanie a rational decision maker, she will chose to fly if and only if the price differential (air cost minus driving cost) is less than
a. $40.
b. $120.
c. $160.
d. $280.
Answer:
Correct option is (b)
Explanation:
Time available for work if Melanie chooses to travel by air = 7 hours
Income per hour = $40
Total income earned if chooses to travel by air = 40 × 7 = $280
Time available for work if Melanie chooses to drive = 4 hours
Total income earned if chooses to drive = 40 × 4 = $160
Price differential = 280 - 160 = $120
As a rational decision maker, Melanie will choose to fly over drive only if her price differential is below $120. She will choose to drive if price differential is above $120.
Melanie should choose to fly if the price differential is less than $120.
Explanation:The Question:Melanie has a choice of driving or flying from Durham, North Carolina to Knoxville, Tennessee for a one-day business trip. If she travels by air, she will be able to work seven hours in Knoxville, while if she drives, she will only have time to work four hours once there. Her expected income from each hour of work in Knoxville is $40.
To determine the price differential at which Melanie would choose to fly, we need to consider her income from working and the cost of each mode of transportation:
- If she flies, she can work for 7 hours, earning a total of $280 (7 hours * $40/hour income).
- If she drives, she can only work for 4 hours, earning a total of $160 (4 hours * $40/hour income).
Therefore, the price differential should be less than $120 for Melanie to choose to fly (her income from flying subtracted by her income from driving): $280 - $160 = $120.
The Answer:The correct answer is b. $120.
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Ritufa Foods, a food processing company, has collaborated with a nonprofit organization in an initiative to fund salad bars in schools across the country. A small percentage of the money that consumers use to buy products of Ritufa Foods will be given to the nonprofit organization. The money will then be used by the nonprofit organization to fund the salad bars. This partnership with the nonprofit organization is an example of _____.
a. relationship marketing
b. green marketing
c. effect-related marketing
d. cause-related marketing
Answer:
The correct answer is letter "D": cause-related marketing
Explanation:
Cause-related marketing results in the collaboration between a company and a non-profit organization. Usually, the company takes advantage of its position in the market to promote a good or service being introduced by the non-profit organization so its sales increase. Then, the non-profit organization uses the revenues from the sales to fund its humanitarian activities.
Eileen, a manager at an international restaurant chain, wants to know if it will be most cost effective to buy 1,000 pounds of sugar in Country X or in Country Y using U.S. dollars. Which of the following is Eileen most likely trying to determine?
A) Purchasing power parity.
B) Economic growth rate.
C) Gross domestic income.
D) Gross national product.
Answer:
A. Purchasing power parity
Explanation:
Purchasing power parity is a techniques that is used to determine the relative value or the exchange rates of currencies.
Eileen is using the purchasing power parity because she is comparing the cost effectiveness of buying a particular product in different countries using the dollar. The exchange rates of the currency of country X and country Y against will determine which country she will buy from.
In a nutshell, Purchasing power parity is a measurement of two currencies by taking the cost of living and inflation differences into account.
Today, establishing long-term, mutually beneficial arrangements in which both the buyer and seller focus on value enhancement through the creation of more satisfying exchanges is known as __________.
Answer: Relationship marketing
Explanation:
The relationship marketing is one of the type of business strategy that helps in developing the various types of long term business opportunity by interacting with the customer and also fulfill the actual requirement of the customers.
The main objective of the relationship marketing is that it helps in developing the strong connection with the consumers and promoting the products and the services to the users.
According to the given question, the relationship marketing is the helps in establishing the long term opportunities in which both the seller and the buyers are focus on the value enhancement process.
Therefore, Relationship marketing is the correct answer.
A logically related set of activities that defines how specific business tasks are performed and represents a unique way in which an organization coordinates work, information, and knowledge is called a(n) __________.
Answer:
a business process
Explanation:
A business process -
It refers to the steps involved to complete a particular task or project in an organisation or company , is referred to as a business process .
It is the set of activities or task , which are followed and performed till the completion of the project .
Hence , from the given information of the question ,
The correct term is a business process .
Janice owns a firm that provides accounting services to a number of small businesses in the area. Her firm processes payroll, prepares quarterly payroll tax returns, and provides tax consulting services. Janice is a(n) _______ accountant.
Answer:
Janice is a public accountant
Explanation:
Public accounting refers to a business that provides its services to other firms at large. By Janice being the owner of such firm she is referred to an accountant that provides her services to the public and she can also be referred to as a certified public accountant
A binding price ceiling...
(i)causes a surplus
(ii)causes a shortage
(iii)is set at a price above the equilibrium price.
(iv)is set at a price below the equilibrium price.
a) (ii) only
b) (iv) only
c) (i) and (iii) only
d) (ii) and (iv) only
Answer:
d) (ii) and (iv) only
Explanation:
A price ceiling is usually set by the government or an agency of the government. A price ceiling limits how high producers can sell their product. It sets the maximum price that can be charged for a good or service.
For a price ceiling to be effective, price has to be set below equilibrium price.
Because price is less than equilibrium price, the profits of producers would fall and producers would reduce supply. This would lead to an excess of demand over supply. This is known as a shortage.
I hope my answer helps you
A binding price ceiling leads to a shortage by setting the price of a good or service below the equilibrium price, as it increases demand and reduces supply.
Explanation:A binding price ceiling is an imposed limit on the price of a good or service that is set below the equilibrium price. This artificial capping of the price restricts the price from reaching the level where supply equals demand. As a consequence, at this ceiling price, more consumers want to buy the good than what is available, leading to a shortage. The quantity demanded increases because the good becomes cheaper, while the quantity supplied decreases, as suppliers are not willing to sell as much at the lower price.
Therefore, the correct answer to the question is: 'A binding price ceiling causes a shortage and is set at a price below the equilibrium price.' This corresponds to option (d) (ii) and (iv) only.
A non bottleneck worker currently has an idle time of 20 seconds per unit. Because of the large demand, the company improves the process by adding more capacity to the bottleneck. How does this impact the idle time of the worker?
1. The idle time would decrease.
2. The idle time would stay the same.
3. The idle time would increase.
4. Cannot determine from the given information.
Answer:The idle time would decrease
Explanation:Idle time refers to the time when employees are not doing any particular work but they are still paid for that time in simple terms it refers to an unproductive time of employees. This may be due to things beyond employees control like working with a slow machine may require that the people at the end product must weight for quite some time to have the product reach their side.
What Is a Bottleneck?
A bottleneck refers to congestion that result from being overloaded by so much work , when the work arrives too quickly such than that the production process can't handle it; this result to delays and higher production cost so increasing the capacity of the bottle neck will reduce the waiting time for the non bottle neck workers because this will increase the efficiency of production.
Adding capacity to the bottleneck improves the flow of work, but does not affect the idle time of non-bottleneck workers. Thus, the idle time would stay the same.
Explanation:The idle time of a non-bottleneck worker is affected by the capacity of the bottleneck process. In this case, the company is adding more capacity to the bottleneck. Therefore, there will be more work flowing through the system. However, since the worker in question is not a bottleneck worker, they were already able to handle the workload passing through their station. Improving the bottleneck does not affect the non-bottleneck worker's workload, so their idle time would stay the same. Therefore, the correct answer is 2. The idle time would stay the same.
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Based on an annual disposable income of $40,000, calculate the average amount o money a person would save in japan; in the united states; in france.
Answer:
Japan $760
The United States $1,600
France $6,320
Explanation:
Total personal revenue is the disposable income less personal taxes. Employee earnings minus employee actual taxes in terms of national reports reflect net established income.
The household saving rate is specified as total saving divided by disposable income.
Household saving = Disposable income * Households saving rate
Japan:
$40,000*1.9% = $760
United States :
$40,000*4% = $1,600
France :
$40,000*15.8% = $6,320
The amount people would save on average is:
$760 in Japan $1,600 in the U.S. $6,320 in France.The average savings rate in a country is indicative of the living expenses that people in that country have to incur. A lower savings rate therefore means that there are more expenses.
The average savings can be calculated by multiplying the disposable income by the average savings rate.
In Japan, the average amount saved in a year is:
= 40,000 * 1.9%
= $760
In the United States:
= 40,000 * 4%
= $1,600
In France:
= 40,000 * 15.8%
= $6,320
In conclusion, we can say that people in France incur less expenses on average.
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Organizations can utilize a(n) ________ as an internal corporate communication network that uses Internet technology to link company departments, employees, and databases. A. market intelligence system B. marketing decision support system (MDSS) C. intranet D. marketing information system (MIS) E. database
Answer:
The answer to this question is E.database.
Explanation:
Which statement is TRUE? a. The concept of equilibrium requires that all individuals have an equal amount of income. b. If a market is in equilibrium, there will be no remaining opportunities for individuals to make themselves better off. c. A market is in equilibrium when the number of buyers is equal to the number of sellers. d. If a market is in equilibrium, the price in that market will not fluctuate by more than 5%.
Answer:
b. If a market is in equilibrium, there will be no remaining opportunities for individuals to make themselves better off
Explanation:
Equilibrium refers to a state of rest. Market equilibrium refers to a situation wherein quantity demanded of a product equals quantity supplied of that product.
Market equilibrium only gets disrupted when factors affecting demand other than the price changes which leads to either increase/decrease in demand or increase/decrease in supply.
At the equilibrium level, the possibility of individuals making themselves better off get wiped out.
) Which of the following statements about "open-perils" coverage is (are) true?
I. All losses are covered except those losses specifically excluded.
II. The burden of proof is on the insured to prove that a loss is covered.
A) I only
B) II only
C) both I and II
D) neither I nor II
Answer:
A is the answer
Explanation:
A high efficiency rating indicates that the sample information is almost as good as perfect information. Group of answer choices True False
Answer:
True
Explanation:
The higher is the rating of the sample the more is the efficiency of the sample and its performance is measured by the good sample of information as the perfect information and indicates the effectiveness of the sample.Harper Co. incurred an apparently permanent inventory loss from market decline of $840,000 during June year 1. What amount of the inventory loss should be recognized in Harper’s quarterly income statement for the 3 months ended June 30, year 1?
A. $840,000
B. $280,000
C. $210,000
D. $420,000
Answer:
$840,000
Explanation:
The international Accounting Standard 2 postulates that cost be adjusted to the lower of Cost and Net Realizable Value. Hence the value of Stock to be shown has to reflect the FULL REDUCTION IN VALUE to reflect the Net Realizable Value.
Furthermore the transaction occurred in June and must be included in June's financial statement. It is not to be apportioned as the drop in value did not have across periods but in one particular period.
In 2004, TimeNow Corporation had fixed assets of $1,345, current assets of $260, current liabilities of $180 and shareholders' equity of $775. What was the net working capital for TimeNow in 2004?
Final answer:
The net working capital for Time Now Corporation in 2004 is calculated by subtracting current liabilities ($180) from current assets ($260), resulting in a net working capital of $80.
Explanation:
The student has asked for the calculation of net working capital for TimeNow Corporation in 2004. Net working capital is calculated by subtracting current liabilities from current assets. Hence, for Time Now Corporation:
Current Assets = $260Current Liabilities = $180Net Working Capital = Current Assets - Current Liabilities
Net Working Capital = $260 - $180
Net Working Capital = $80
Therefore, the net working capital for Time Now in 2004 was $80.
The net working capital for TimeNow Corporation in 2004 is calculated as $80.
Net working capital is a measure of a company's liquidity and operational efficiency. It represents the difference between a company's current assets (assets that are expected to be converted into cash or used up within one year) and its current liabilities (obligations due within one year).
In this case, we're given the following information for TimeNow Corporation in 2004:
Current Assets = $260Current Liabilities = $180To calculate the net working capital, we simply subtract the total current liabilities from the total current assets:
Net Working Capital = Current Assets - Current Liabilities
Substituting the given values:
Net Working Capital = $260 - $180Solving the equation:
Net Working Capital = $80This means that TimeNow Corporation had $80 more in current assets than it had in current liabilities in 2004. Positive net working capital indicates that a company has enough short-term assets to cover its short-term liabilities, which is generally considered a good sign of financial health and operational liquidity.
The key feature of an oligopolistic market is that Select one: a. a single firm chooses a point on the market demand curve. b. each firm produces a different product from other firms. c. a small number of firms are acting strategically. d. each firm takes the market price as given.
An oligopolistic market is characterized by a small number of firms strategically acting, having mutual interdependence and likely leading to strategic behavior and game theory in decision-making.The correct option is C.
Explanation:The key feature of an oligopolistic market is that a small number of firms are acting strategically. In an oligopoly, few firms dominate the market and each one is aware of the others' actions and decisions.
They strategically make decisions considering the reactions of the rival firms, like pricing and output level. This mutual interdependence often leads to strategic behavior and game theory in decisions related to price and output.
Hence, option C is correct. Options A, B, and D are characteristics of monopoly, monopolistic competition, and perfect competition markets respectively.
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An oligopolistic market is characterized by a small number of firms that make strategic decisions based on the actions of other firms in the market. These markets are characterized by high barriers to entry and can exhibit characteristics of both monopoly and perfect competition. Firms within an oligopolistic market may choose to behave like perfect competitors or collude and behave like a monopoly to maximize profit.
Explanation:The key feature of an oligopolistic market is that a small number of firms are acting strategically. The term oligopoly refers to a market structure wherein a small number of large firms dominate most or all of the sales in an industry. Examples of oligopoly abound and include the auto industry, commercial air travel, and the U.S. soft drink industry. These firms decide on output, pricing, and other aspects strategically based on the decisions of the other firms in the market.
Firms in an oligopolistic market can either choose to compete hard which may result in actions very similar to perfect competitors, driving down costs, or they can collude with each other to effectively act like a monopoly, pushing up prices, and earning consistently high levels of profit.
Noteworthy is the fact that high barriers to entry characterized oligopolies, resulting in fewer firms operating in the industry. Oligopolistic markets can take on elements of monopoly and perfect competition, depending on the strategic actions taken by firms within the market.
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If demand decreases and supply increases, the direction of change in the equilibrium quantity is un-predictable unless the relative magnitudes of the demand and supply changes are known.
A) True
B) False
Answer:
The correct answer is option A.
Explanation:
A decrease in the demand for a product will cause the demand curve to shift to the left. At the same time, an increase in the supply of the product will cause the supply curve to shift to the right.
In such a situation the change in the equilibrium quantity cannot be predicted. It depends on the magnitude of change in demand and supply.
If the proportionate decrease in demand is more than the increase in the supply of the product, the equilibrium quantity will decrease.
If the increase in supply is more than the decrease in demand, the equilibrium quantity will increase.
If the proportionate increase in supply is equal to a proportionate decrease in demand, the equilibrium quantity will remain the same.
Eric wants to invest in government securities that promise to pay $1,000 at maturity. The opportunity cost (interest rate) of holding the security is 5.40%. Assuming that both investments have equal risk and Eric’s investment time horizon is flexible, which of the following investment options will exhibit the lower price?A: an investment that matures in 10 years?B: an investment that matures in 9 years
To determine which investment option will exhibit the lower price, we need to calculate the present value of each investment option using the given interest rate. Option A, which matures in 10 years, has a lower price compared to Option B, which matures in 9 years.
Explanation:To determine which investment option will exhibit the lower price, we need to consider the concept of present value. The present value of an investment is the current worth of its future cash flows, discounted at the given interest rate. The lower the interest rate, the higher the present value. Using the formula for present value, we can calculate the present value of each investment option and compare them to determine which has a lower price.
For Option A, which matures in 10 years, the present value can be calculated as: PV = $1,000 / (1 + 0.054)^10 = $1,000 / 1.747422051 = $571.85.For Option B, which matures in 9 years, the present value can be calculated as: PV = $1,000 / (1 + 0.054)^9 = $1,000 / 1.646389638 = $607.70.Therefore, Option A has a lower price than Option B, with a present value of $571.85 compared to $607.70 for Option B.
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The fact that auditors should focus onmatters important to financial statements users based on the ollar amont that would influence lending or investment decisions is the concept of:_______________
Answer:
It is the concept of 'materiality'
Explanation:
The reason behind having the financial statements of a company getting audited by experienced accounting professionals, known as auditors, is to enhance the reliability of the statements for the different users of financial statements. These users can be regulators, lenders, shareholders, and potential investors among others. The important concept that auditors have to focus on is ensuring that the statements being audited comply with the relevant reporting standards and laws in all "material" aspects. The component of materiality is important.
Any deviation or mistatement is considered to be material if the size of this mistatement could potentially influence users of financial statements into making decisions that they would otherwise may not make had this omission or misstatement not occured. So, auditors need to identify what omissions or mistatements are material before having their opinions changed