Which of the Following Can Be Described as Involving Direct

question 134

Multiple Choice

Which of the following can be described as involving direct finance?

• A)A corporation issues new shares of stock.
• B)People buy shares in a mutual fund.
• C)A pension fund manager buys a short-term corporate security in the secondary market.
• D)An insurance company buys shares of common stock in the over-the-counter markets.

Identify different types of financial securities and differentiate between real and financial assets.

Understand the functions and significance of derivative securities.

Recognize the major components of household assets and liabilities in the U.S.

Explain the concept of asset allocation and security selection.

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Definitions:

Step-down Method

An accounting method used for allocating indirect costs to different departments based on a hierarchy where the first allocation base is the costliest department.

Personnel Department

The division of a business that is focused on activities relating to employees, such as hiring, training, and benefits administration.

Number Of Employees

The total count of individuals employed by a business or organization at a specific point in time.

Step-down Method

A method used in accounting to allocate service department costs to production departments in stages.