Use the Following Information for Questions

question 55

Multiple Choice

Use the following information for questions
Rodman Co.owns 3,000 of the 10,000 outstanding common shares of Gavin Corp.and exercises significant influence.During 2011, Gavin earns $60,000 and pays cash dividends of $20,000.
-If the beginning balance in the investment account was $90,000, the balance at December 31, 2011 should be

• A)$90,000.
• B)$108,000.
• C)$120,000.
• D)$102,000.

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Definitions:

Exercise Prices

The price at which the option holder has the right to buy or sell the underlying security, synonymous with strike price.

Stock Price

The cost of purchasing a share of a company on the stock market, influenced by various factors including company performance, investor sentiment, and market conditions.

Stock Option

A financial derivative that gives the buyer the right, but not the obligation, to buy or sell a stock at an agreed-upon price within a certain period.

Listed

Refers to a security that is traded on an official stock exchange.