Hedging is used to: Minimize tax obligations. Minimize losses due to price or ra

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Hedging is used to: Minimize tax obligations. Minimize losses due to price or rate changes. . period. Eliminate Price or Rate or rate chan c. d. Allow the buyer uring the hedging period to negotiate the best possible terms for a contract. 12. Assuming prices are rising. which statement is false a. The FIFO method overstates gross profits. b. The FIFO method understates gross profits. c. The LIFO method understates inventory d. The LIFO method understates gross profit. 13. Which of the following is not reported on the asset side of the balance sheet: a. Allowance for doubtful accounts. b. Additional Paid In Capital. c. Goodwill. d. Accumulated Depreciation. ome Services purchases 20% of the voting common stock of DEF Plumbing for o. Ed Norton, the Chairman of ABC, is also a Board Member of DEF. DEF 14, ABC H $3,000,000 reports net income of $400,000 for 2010 and pays S50,000 in cash dividends. ABC should report: a. $80,000 in investment income, $3,000,000 in the investment account. b. $10,000 in investment income, $3,000,000 in the investment account. c. $80,000 in investment income, $3,070,000 in the investment account. d. $10,000 in investment income, $3,070,000 in the investment account. Acme Widgets charges $10 for its only product, the Wonder Widget, in 2015. Revenue in 2015 is $1,000,000. In 2016, the company raises the Wonder Widget price to $11. Revenue for 2016, rises to $1,045,000. 15. Based on the information above, it is fair to say: a· The price elasticity of the Widget Wonder is high (elastic) b. The price elasticity of the Widget Wonder is low (inelastic). Hint: The change in demand is equivalent to the change in quantity Which statement would be most consistent with the Treasury Stock Method of calculating diluted earnings per share: 16. a. The current market price of a Company's common shares has no bearing on the calculation of diluted earnings per share. b. The best possible investment for a company is in its own common shares. c. The main concern with the Treasury Stock Method is that it is always anti-dilutive to per share earnings. d. It is more conservative to use basic shares outstanding than diluted share outstanding when calculating EPS.

Explanation / Answer

11. Hedging is a risk management technique. it is used to minimize the losses due to price or exchange rate changes.

Answer B

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