ECON 2710 Study Guide - Final Guide: Intangible Asset, Fair Market Value, Capital Asset

• School: York University
• Department: Economics
• Course: ECON 2710
• Professor: Elizabeth Farrell

Document Summary

Invest idle cash: low risk, easily convertible; return through interest or dividends and gain; usually sell when cash is needed. Active portfolio: normal course of business; returns based on price fluctuations; offset (hedge) gains or losses. Long-term investments: money market instruments (bonds); interest and principal cash flows; increase investment revenue. Financial instrument contract that gives rise to a financial asset (right to receive cash or another financial asset) of one party and a financial liability or equity instrument of another party; usually debt securities and share investments. All investments are initially measured at fair value (acquisition cost) plus (sometimes) transaction costs. Effective interest method: interest = investment revenue using. [type text: when not traded in active markets, cannot establish fair value, record at investment cost and add transaction costs, dividends = investment revenue. Control: power to govern financial and operating policies of an entity: share ownership, control over board of directors, right granted under shareholder agreement.