Under Which of the Following Conditions Is a Market-Based Transfer

question 112

Multiple Choice

Under which of the following conditions is a market-based transfer price likely to be used?

• A) There is no excess capacity.
• B) No market price exists.
• C) Excess capacity exists.
• D) Excess capacity exists and the market price covers fixed costs.
• E) There is only an internal market for the item in question.

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Definitions:

Market Risk

The risk of losses in financial markets arising from movements in market prices.

Stocks

Financial securities representing partial ownership in a company, allowing investors to claim on the company's assets and earnings.

Annuity

A financial product that pays out a fixed stream of payments to an individual, typically used as an income stream for retirees. It's a contract between an individual and an insurance company.

Utility Function

A utility function is a mathematical representation of a consumer's preference ranking for different bundles of goods, indicating the total satisfaction or utility derived from consuming these goods.