An Investor Earns Dividends of $450 During the Course of a Year.At

question 45

Multiple Choice

An investor earns dividends of $450 during the course of a year.At the end of the year, the stock is worth $10,700. If the capital-gains yield on the stock over the year is calculated at 8 percent the approximate worth of the stock at the beginning of the year was

• A)$9,007.
• B)$9,457.
• C)$9,907.
• D)$10,357.

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Definitions:

Consolidation Elimination

The process of removing intra-group transactions and balances from the consolidated financial statements of a group of companies.

Cost Method

An accounting approach for investments, where the investment is recorded at its acquisition cost without reflecting the investee's performance.

Straight Line Amortization

A technique for distributing the expense of an intangible asset evenly over its lifespan in yearly increments.

Goodwill

The intangible asset that arises when a company acquires another company for more than the fair value of its net identifiable assets.