Where an Area of Interest Contracts in Size and Subsequently

question 11

Multiple Choice

Where an area of interest contracts in size and subsequently becomes two distinct operations:

• A) all costs to date must be apportioned equally between the two new operations.
• B) all future costs must be accounted for separately.
• C) only the costs up to and including production should be apportioned between the two sites.
• D) pre-production cost should be accumulated and then apportioned between the two operations based on the size of the new areas of interest.

---

Definitions:

Annual Coupon

The yearly interest amount paid to bondholders, typically expressed as a percentage of the bond's face value.

Default Risk Premium

The additional yield a lender demands to compensate for the risk that the borrower may default on the loan.

Liquidity Premium

Additional yield that investors demand for holding a security that is not easily traded or sold without a significant price reduction.

Maturity Risk Premium

The extra yield that investors demand to compensate for the risk of holding a bond until its maturity date.