You Observe That Telstra Shares and the S&P/ASX 200 Index

question 33

Multiple Choice

You observe that Telstra shares and the S&P/ASX 200 index have the following weekly returns: If this pattern of returns is typical of Telstra shares, and you calculated a beta against the S&P/ASX 200, which of the following is true?

• A)Telstra's beta is zero.
• B)Telstra's beta is positive.
• C)Telstra's beta is negative.
• D)Cannot be determined from information given.

Understand the concept of business combinations and the process of acquiring a subsidiary company.

Learn the computation of purchase consideration and how to allocate it to acquired assets and liabilities at their fair values.

Understand the concept of goodwill, its computation, and the impairment review process.

Learn about the equity method, partial equity method, and initial value method for investment accounting.

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Definitions:

Cash Payback Period

The duration of time it takes for an investment to generate enough cash flow to recover its initial cost.

Net Income

The total earnings of a company after all expenses and taxes have been deducted from revenues, indicating profitability.

Straight-Line Rate

A method of calculating depreciation by dividing the difference between an asset's cost and its salvage value by the number of years it is expected to be used.

Annual Rate

The interest rate or growth rate over a period of one year, used for comparing investment returns or loan costs.