Answer:
a. Steve will not have a capital gain in Year 1 for tax purposes.
Explanation:
Since Steve (the owner of Barb) sold his stocks to an ESOP (employee stock ownership plan), then he will be able to avoid capital gains taxes at least for the first year. ESOPs are qualified retirement plans and when they invest in stocks of the same sponsoring company, the transaction is not taxed if the seller reinvests (buys other stocks). As long as ESOP holds at least 30% of the company's stocks, then Steve can defer his taxes.
Answer:
(d) debt; opposite direction
Explanation:
Bonds or debentures represent fixed interest bearing instruments issued by corporates to raise long term funds i.e usually greater than 1 year repayable after a fixed duration.
Bonds could be of various forms such as zero coupon bonds, deep discount bonds, face value bonds etc
The common aspect of all being bonds represent debt which a corporation owes which must be repaid after a fixed duration. Also bonds demand periodic interest payments i.e fixed obligation which cannot be refused by the issuer company.
There is an inverse relationship between bond prices and market interest rates.
Reason : This is because if a higher interest rate prevails in the market than the coupon rate offered by the issuer, the issuer will have to reduce the price of it's bonds so as to make them attractive else investors would rather invest in other bonds in the market offering a higher rate of return.
Answer:
The demand for gasoline is elastic .
Explanation:
The elastic demand which is also termed as the price elasticity of demand, according to this concept the demand for a good is sensitive to changes in the price of goods, that means (according to this question ) if the prices of gasoline are increased by the service station owner, than the demand for gasoline would decrease . Here the demand would change by same percentage , that price would change.
Answer:
B. $ 51 per unit
Explanation:
The computation of the unit product cost using variable costing is shown below:
= Direct material per unit + direct labor per unit + variable manufacturing overhead per unit
= $7 units + $26 + $18
= $51 per unit
It recognizes only variable cost like - direct material, direct labor, and variable manufacturing cost. Hence, all other information is ignored
Answer:
2. For Joe income effect dominates while for Adam substitution effect dominates
Explanation:
Income effect refers to change in the real i.e inflation adjusted income when prices change.
In the given case, Joe works at two jobs which means that for a greater income he is willing to work for more hours. Thus, in his case it can be said that income effect is prominent.
In the case of Adam, he works overtime regularly which means for every extra hour of work, he earns an extra income. This represents change in the relative income owing to change in working habits. This is a case of substitution effect.
