If the Price of Nike⁽ᵗᵐ⁾ Running Shoes Increased from $100

question 59

Multiple Choice

If the price of Nike⁽ᵗᵐ⁾ running shoes increased from $100 to $120, and the price of comparable New Balance⁽ᵗᵐ⁾ shoes increased from $100 to $130, how have the prices changed?

• A) The nominal prices of both shoes have decreased, and the relative price of the Nike shoes has fallen.
• B) The nominal prices of both shoes have decreased, and the relative price of the Nike shoes has risen.
• C) The nominal prices of both shoes have increased, and the relative price of the Nike shoes has fallen.
• D) The nominal prices of both shoes have increased, and the relative price of the Nike shoes has risen.

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Definitions:

Goodwill Impairment

The decrease in the value of goodwill on a company's balance sheet when the carrying amount exceeds the fair value.

Private Companies

Businesses whose ownership is private, meaning their shares are not traded on public stock exchanges, and often their financial information is not disclosed to the public.

Amortization Expense

The gradual reduction of a debt over time or the allocation of the cost of an intangible asset over its useful life.

Fair Value

The revenue generated from liquidating an asset or cost of moving a liability in a coordinated market operation on the day of measurement.