If the Ending Inventory Is Overstated in Period 1

question 39

Multiple Choice

If the ending inventory is overstated in period 1:

• A)beginning inventory in period 2 is overstated.
• B)goods available for sale in period 2 are overstated.
• C)cost of goods sold in period 2 is overstated.
• D)All of these answers are correct.

Apply CAPM to calculate the expected return of individual securities based on their beta, the risk-free rate, and the market rate of return.

Analyze the effects of changes in market conditions (such as changes in market rate of return and risk premium) on the expected return of securities.

Calculate portfolio beta and understand how to adjust a portfolio to achieve a desired beta.

Understand and calculate the variance and standard deviation of returns for both individual securities and portfolios.

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Definitions:

Marginal Cost

The expenditure for assembling another unit of a product or service.

Short-Run Equilibrium

A state in which market supply and demand balance each other, and as a result, prices become stable for a short period.

Constant Returns

A situation in economics where increasing the scale of production does not affect the long-run average cost of production, implying it remains constant.

Initial Plant Sizes

The original capacity or scale of a facility when it first begins operations.