Exhibit 4-4

question 39

Multiple Choice

Exhibit 4-4
-In Exhibit 4-4, suppose a price floor is established at $20.00. What is the result?

• A)a shortage of 10 units
• B)a surplus of 10 units
• C)a shortage of 20 units
• D)a surplus of 20 units
• E)there is no change from the situation that exists at the equilibrium price

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Definitions:

Book Value Method

A method of valuing assets or liabilities at their original cost minus any depreciation, amortization, or impairment charges.

Market Value Method

A valuation technique that determines the price an asset would fetch in the marketplace or the value of a company based on the current market price of its shares.

Convertible Bonds

Bonds that can be converted into a predetermined number of the issuing company's shares.

U.S. GAAP

Generally Accepted Accounting Principles in the United States, which are a set of rules and standards for financial reporting.