4-61 an Attempt by a Market Maker to Earn a Profit

question 94

Multiple Choice

4-61 An attempt by a market maker to earn a profit on the price movements of securities by taking inventory positions for its own account is called

• A)risk arbitrage.
• B)an agency transaction.
• C)best efforts underwriting.
• D)spinning.
• E)a principal transaction.

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Definitions:

Unsold Units

Inventory items that have not been sold during a specific period, representing potential revenue that has not been realized.

Absorption Costing Balance Sheet

A financial statement that includes all manufacturing costs (direct labor, direct materials, and manufacturing overhead) in the value of finished goods inventory.

Variable Costing

An accounting method that considers only the variable costs directly attributable to the production of goods, excluding fixed manufacturing costs from inventory valuation.

Unsold Units

Inventory items that were not sold during a specific period and are carried over to the next period.