Besides Management and Prior Performance, What Primary Factors Should Be

question 28

Multiple Choice

Besides management and prior performance, what primary factors should be considered by the investor in a new issue?

• A)The intended use of funds from the issue
• B)Expected stock price in the secondary market
• C)The investment banker handling the distribution
• D)More than one of the above

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Definitions:

Direct Materials Purchases Variance

The difference between the actual cost of direct materials purchased and the expected cost, based on standards set for quantity and price.

Actual Operations

The real-world activities carried out by a company, as opposed to planned or projected operations.

Materials Quantity Variance

The difference between the actual amount of materials used in production and the standard amount expected to be used, multiplied by the standard cost of the materials.

Standard Costs

Predetermined costs for products or services, used as a benchmark for performance evaluation.