Use the Information for the Question(s)below

question 76

Multiple Choice

Use the information for the question(s) below. As an oil refiner,you are able to produce $76 worth of unleaded gasoline from one barrel of Alaska North Slope (ANS) crude oil.Because of its lower sulfur content,you can produce $77 worth of unleaded gasoline from one barrel of West Texas Intermediate (WTI) crude.
-Another oil refiner is offering to trade you 10,150 Bbls of Alaska North Slope (ANS) crude oil for 10,000 Bbls of West Texas Intermediate (WTI) crude oil.Assuming you currently have 10,000 Bbls of WTI crude,what should you do?

• A)Sell 10,000 Bbls WTI crude on the market and use the proceeds to purchase and refine ANS crude.
• B)Do nothing,refine the 10,000 Bbls of WTI crude.
• C)Trade the 10,000 Bbls WTI crude with the other refiner and refine the 10,150 Bbls of ANS crude.
• D)Trade the 10,000 Bbls WTI crude with the other refiner and then sell the 10,150 Bbls of ANS crude.

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Definitions:

Voting Stock

Shares of a corporation that give the shareholder the right to vote on matters of corporate policy and on the selection of the board of directors.

Cash Dividend

A disbursement from a corporation to its stockholders, typically coming from its earnings.

Net Income

The ultimate earnings of a company, arrived at by reducing its revenues by all incurred expenses and taxes.

Nonvoting Preferred Stock

A type of preferred stock that does not grant the holder voting rights at the corporation’s shareholders' meetings.