Indicate in Which Cases Book Value Is a Reasonable Approximation

question 8

Essay

Indicate in which cases book value is a reasonable approximation for evaluating the asset or liability.Answer "Yes" if book value is a reasonable approximation and "No" if it is not.
A.Floating-rate debt.
B.Outstanding bonds that are secure and actively traded.
C.Discontinued operations.
D.Stake in a publicly traded subsidiary.
E.Excess real estate.
F.Loans to nonconsolidated subsidiaries and other companies (assume interest rates and credit risk have not changed).
G.An outstanding convertible bond deep in the money.
H.Employee stock options.

---

Definitions:

Rent Payment

Monetary compensation paid by a lessee to a lessor for the use of a particular property, piece of equipment, or facility.

Land Supplied

Land supplied indicates the quantity of land offered for use or development, affected by factors like pricing, zoning regulations, and market demand.

Rationing Function

The ability of market prices to allocate scarce resources efficiently among competing uses.

Incentive Function

The inducement that an increase in the price of a commodity gives to sellers to make more of it available (and conversely for a decrease in price), and the inducement that an increase in price offers to buyers to purchase smaller quantities (and conversely for a decrease in price).