Mr John Carre Owns 67% of the Stock of JC

question 98

Multiple Choice

Mr John Carre owns 67% of the stock of JC Inc. and is employed as the corporation's CEO. The corporation is a calendar year, accrual basis taxpayer. On December 14, 2018, the board of directors authorized a $45,000 year-end bonus for Mr Carre, which was paid to him on February 1, 2019. In which year can JC Inc. deduct the bonus? 

• A) 2018
• B) 2019
• C) JC Inc. can deduct only $14,850 (33%) of the bonus in 2018.
• D) The related party accrued expense is deductible in the year Mr. Carre includes the bonus payment in gross incomeJC Inc. can never deduct the bonus.

Calculate the required rate of return for investments using the Capital Asset Pricing Model (CAPM).

Integrate the concepts of beta, risk-return relationship, and security market line (SML) in making investment decisions.

Recognize the implications of behavioral finance on investment strategies and market outcomes.

Understand the concept and interpretation of beta in the context of the market and individual securities.

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Definitions:

Hypopyon

The accumulation of pus or inflammatory cells in the anterior chamber of the eye, often seen in severe eye infections or inflammation.

Pterygium

A benign growth of the conjunctiva that extends over the cornea, often associated with prolonged exposure to sunlight.

Optic Disc

The point in the eye where the optic nerve meets the retina, appearing as a small, circular area.

Pigmented Crescents

Darkened, crescent-shaped areas often found at the margin of the optic disc in the human eye.