Systemic Effects Arise When

question 6

Multiple Choice

Systemic effects arise when:

• A) changes result from government legislation.
• B) market-wide changes in share prices come from the economic system.
• C) an announcement is made regarding the future prospects of a particular company.
• D) the takeover of a large public company is announced.

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Definitions:

Ordinary Maintenance

Routine upkeep and repairs necessary to keep equipment, buildings, and other assets in working order, distinct from major renovations or upgrades.

Trade-In Allowance

The value offered for an old item when it is traded for a new item, reducing the purchase price of the new item.

Book Value

Book Value refers to the net value of a company or an asset calculated by total assets minus intangible assets (patents, goodwill) and liabilities, used to estimate the value of a company on its balance sheet.

Commercial Substance

A characteristic of transactions that indicates a change in future cash flows as a result of economic activities, leading to a real economic impact.