Use the Information for the Question(s)below

question 31

Multiple Choice

Use the information for the question(s) below.
The current price of KD Industries stock is $20.In the next year the stock price will either go up by 20% or go down by 20%.KD pays no dividends.The one-year risk-free rate is 5% and will remain constant.
-Using the binomial pricing model,the calculated price of a one-year put option on KD stock with a strike price of $20 is closest to:

• A)$2.00.
• B)$1.45.
• C)$2.40.
• D)$2.15.

Comprehend the differences between direct and indirect methods for reporting cash flows from operating activities.

Recognize the impact of accrual accounting on the measurement of earnings and cash flows.

Identify common adjustments made under the indirect method for cash flow reporting.

Distinguish between the requirements of International Financial Reporting Standards (IFRS) and U.S. Generally Accepted Accounting Principles (GAAP) regarding cash flow reporting.

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Definitions:

Fair Market Value

It's the price at which an asset would change hands between a willing buyer and a willing seller, each having reasonable knowledge of all necessary facts.

Paid-in Capital

The total amount of money that shareholders have invested in a company by purchasing shares of stock.

Paid-in Capital

The amount of money a company has received from shareholders in exchange for shares of stock.

Par Value

The nominal or face value of a bond, share of stock, or other financial instrument, representing the value at which it is issued.