RELIG 205 Study Guide - Islamic Calendar, Hajj, Tawhid
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1)Which of the following scenarios is consistent with weak form efficiency?
A) | Stocks that have increased in value over the last 6 months, on average, continue to increase in value over the next 6 months. | |
B) | Stocks that have increased in value over the last 6 months, on average, decrease in value over the next 6 months. | |
C) | The correlation between last year's stock return and this year's stock return for the S&P500 is zero. | |
D) | Apple's stock price declines after the death of Steve Jobs. |
2)Which of the following scenarios is consistent with semi-strong form efficiency?
A) | Stocks that have increased in value over the last 6 months, on average, continue to increase in value over the next 6 months. | |
B) | Stocks that have increased in value over the last 6 months, on average, decrease in value over the next 6 months. | |
C) | The Wall Street Journal newspaper publishes a short biography of Steve Jobs one year after his death. As a result of this article, Apple's stock price declines the day afterwards. | |
D) | Apple's stock price declines the day after the death of Steve Jobs. |
3) If semi-strong form efficiency is the correct theory to describe how the stock markets work, which of the following would we expect to happen after a company announces that it earned more money in the prior quarter than people expected? Assume no other news is released about the company.
A) | The stock price should increase the next day and continue to increase for several days afterwards. | |
B) | The stock price should increase the next day and then decrease for several days afterwards. | |
C) | The stock price should increase the next day and then stay the same for several days afterwards. | |
D) | The stock price should decrease the next day and then stay the same for several days afterwards. |
4) The current stock price of Apple is $100. If you expect Apple to pay a dividend next year of $5 per share, and the cost of equity capital is 12%, what would you expect the price of Apple to be next year right after the dividend is paid?
posting for sec times any incomplete work will bereported answer all 2 parts investment 1 to 7 and finacial statmentand valution 1 to 6
You are working for The Wellington Company on temporaryassignment while one of the accountants is on family leave. Youhave been asked to review the companyâs investment journal entriesand provide necessary information to the accountant preparing thefinancial statements.
PAGE 8
JOURNAL
ACCOUNTING EQUATION
DATE | DESCRIPTION | POST.REF. | DEBIT | CREDIT | ASSETS | LIABILITIES | EQUITY | |
---|---|---|---|---|---|---|---|---|
1 | Jan. 17 | Investments-Red Rock Co. Stock | 38,500.00 | ? | ||||
2 | Cash | 38,500.00 | ? | |||||
3 | Feb. 5 | Investments-Sunset Village Bonds | 35,000.00 | ? | ||||
4 | Interest Receivable | 300.00 | ? | |||||
5 | Cash | 35,300.00 | ? | |||||
6 | 23 | Investments-Mays and Co. Stock | 26,250.00 | ? | ||||
7 | Cash | 26,250.00 | ? | |||||
8 | Mar. 31 | Cash | 350.00 | ? | ||||
9 | Interest Receivable | 300.00 | ? | |||||
10 | Interest Revenue | 50.00 | ? | |||||
11 | Apr. 6 | Investment in Minions Corp. Stock | 175,000.00 | ? | ||||
12 | Cash | 175,000.00 | ? | |||||
13 | 30 | Cash | 750.00 | ? | ||||
14 | Dividend Revenue | 750.00 | ? | |||||
15 | Jul. 1 | Cash | 18,690.00 | ? | ||||
16 | Loss on Sale of Investment | 2,520.00 | ? | |||||
17 | Interest Revenue | 210.00 | ? | |||||
18 | Investments-Sunset Village Bonds | 21,000.00 | ? | |||||
19 | Aug. 14 | Cash | 41,300.00 | ? | ||||
20 | Gain on Sale of Investments | 1,800.00 | ? | |||||
21 | Investments-Harding Construction Stock | 39,500.00 | ? | |||||
22 | 27 | Cash | 3,500.00 | ? | ||||
23 | Investment in Minions Corp. Stock | 3,500.00 | ? | |||||
24 | Sep. 22 | Cash | 29,750.00 | ? | ||||
25 | Gain on Sale of Investments | 3,500.00 | ? | |||||
26 | Investments-Mays and Co. Stock | 26,250.00 | ? | |||||
27 | 30 | Cash | 140.00 | ? | ||||
28 | Interest Revenue | 140.00 | ? | |||||
29 | Nov. 1 | Investment in Minions Corp. Stock | 15,750.00 | ? | ||||
30 | Income of Minions Corp. | 15,750.00 | ? | |||||
31 | Dec. 31 | Unrealized Loss on Available-For-Sale Investments | 3,275.00 | ? | ||||
32 | Valuation Allowance for Available-For-Sale Investments | 3,275.00 | ? | |||||
33 | 31 | Valuation Allowance for Trading Investments | 2,150.00 | ? | ||||
34 | Unrealized Gain on Trading Investments | 2,150.00 | ? |
Investments
Review the journal entries on The Wellington Company panel thenanswer the following questions.
1. | Which item is likely to be atrading security? Mays and Co. Why? |
2. | How are brokerage commission feestreated on stock sales vs. stock purchases? |
3. | Based on these journal entries,what is the companyâs investment in Sunset Village bonds at the endof the year? |
4. | The journal entry on Aug. 27 mostlikely shows |
5. | As an investment, bonds are alwayscategorized as |
6. | What is the companyâs investment inMinions Corp. at the end of the year? |
7. Which of the following investments are likely to beavailable-for-sale securities? Check all that apply.
Harding Construction stock
Mays and Co. stock
Cannot be determined
Red Rock Co. stock
Sunset Village bonds
Minions Corp. stock
Financial Statements and Valuation
The accountant preparing the financial statements has asked youto provide the fair value as of the end of the year for theinvestments. Present the information as it would be shown on thefinancial statements. Last year, The Wellington Company reportedcosts of $68,000 in trading investments and $82,000 inavailable-for-sale investments. Refer to the journal entries shownon The Wellington Company panel. Assume that all investments soldduring this year were trading investments and that purchases duringthe year were new investments.
1. Select the correct label for each line and fill in theamount. In classifying the investments, choose a categorizationwhich seems most likely, given the pattern of transactions in thejournal entries. Enter all amounts as positive numbers. If anamount box does not require an entry, leave it blank.
Trading Securities | |
Available-For-Sale Securities | |
2. Where on the balance sheet dotrading securities appear? | |
3. Where is the gain or loss fromthe change in value of available-for-sale securities reported inthe financial statements? | |
4. Where are held-to-maturitysecurities reported? Based on the journal entries for this year,does the company have any held-to-maturity securities? | |
5. Where are securities held forstrategic reasons reported in the financial statements when usingthe equity method? Based on the journal entries for this year, doesThe Wellington Company have any equity securities? |
6. Which of the following items does not affect net income?Check all that apply.
only unrealized gains or losses for all investments
realized loss on available-for-sale securities
realized gain on trading securities
none of these answers is correct
both gains and losses of any sort for all investments
unrealized loss on trading securities
unrealized gain on available-for-sale securities