Which Statement Is Correct About an Equity Instrument

question 79

Multiple Choice

Which statement is correct about an equity instrument?

• A)A contract whose value changes according to a specified variable, requires little or no initial investment and is settled at a future date.
• B)A contract that gives the holder the residual interest in an entity after deducting all of its liabilities.
• C)Any contract that entitles the holder to joint interest in an entity after deducting all of its liabilities, and is settled at a future date.
• D)Any contract that gives rise to a financial asset for one entity and a financial liability or equity instrument for another entity.

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Definitions:

Empirical

Based on, concerned with, or verifiable by observation or experience rather than theory or pure logic.

Theoretical

Pertaining to a system of ideas intended to explain phenomena, often abstract and not immediately practical.

Black Sheep Effect

The tendency for groups to judge deviant in-group members more harshly than comparable out-group members, often leading to greater punishment or exclusion of the deviant in-group member.

Outgroup Attribution

The tendency to attribute the behavior and outcomes of individuals who are not members of one's own group to their inherent characteristics, rather than to situational factors.