New Stock Issues Are Considered a Special Investment Situation, Because

question 30

Multiple Choice

New stock issues are considered a special investment situation, because

• A)they exhibit a very good long-term investment potential.
• B)the spread is greater than that in the secondary market.
• C)there is some evidence that new issues are under-priced.
• D)More than one of the above

Recognize and differentiate between sunk costs and opportunity costs in decision contexts.

Evaluate the financial impact of accepting special orders on net operating income.

Understand the impact of cost allocations on product and business unit profitability.

Identify and assess the implications of bottleneck operations on production decisions.