A Portfolio Consists of Two Stocks and Has a Beta

question 20

Multiple Choice

A portfolio consists of two stocks and has a beta of 1.25. The first stock has a beta of 1.02 and comprises 30% of the portfolio. What is the beta of the second stock?

• A).41
• B).66
• C).82
• D)1.28
• E)1.35

Understand the implications of changes in ownership percentages of subsidiaries on the parent's consolidated financial statements.

Calculate the balances of significant accounts on the consolidated statement of financial position using the parent-company extension method.

Distinguish between the equity and cost methods of accounting for investments.

Assess the impact of subsidiary share transactions on the Non-controlling interest (NCI) and the overall equity structure.

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Definitions:

LIFO

Last In, First Out, an inventory valuation method where the costs of the most recently produced or purchased items are recorded as sold first.

Inventory Unit Costs

The expense associated to procure or manufacture each unit of inventory, vital for calculating cost of goods sold and profitability.

Inventory Turnover

A ratio showing how often a company's inventory is sold and replaced over a certain period of time.

LIFO

Last In, First Out, an inventory valuation method where the most recently produced or acquired items are the first to be expensed.