If the Lowest Acceptable Transfer Price from the Viewpoint of the Selling

question 21

Multiple Choice

If the lowest acceptable transfer price from the viewpoint of the selling division is $75 and the opportunity cost per unit on outside sales is $24, then the variable cost per unit must be:

• A) $24 per unit
• B) $99 per unit
• C) $51 per unit
• D) $75 per unit

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Definitions:

Duration

A measure of the sensitivity of the price of a bond or other debt instrument to a change in interest rates, often noted in years.

Yield Spread

The difference between the yields of two bonds with differing credit qualities, maturities, or issuers.

Historical Levels

Refers to the past recorded levels or values of a financial metric, interest rate, stock price, or any other economic indicator.

Basis Points

A unit of measure used in finance to describe the percentage change in the value or rate of a financial instrument, equal to 1/100th of a percent.