Use the Following to Answer Questions

question 225

Multiple Choice

Use the following to answer questions
Table: The HP Stock Exchange

-(Table: The HP Stock Exchange) The HP Stock Exchange lets members of HP's sales team buy and sell shares that pay off when sales fall within a certain range. A typical security would pay out $1, if and only if future sales fell within the specific range of that share. Accordingly, the trading price given in the table between 15,000 and 20,000 units implies that:

• A) price per unit of sales is $0.40 if the sales ranges between 15,000 and 25,000 units.
• B) price per unit of sales will increase at $0.40 per unit for sales between 15,000 and 20,000 units.
• C) the probability of selling between 15,000 and 20,000 units is believed to be 40%.
• D) the probability of selling between 15,000 and 20,000 is believed to be at least 40%.

---

Definitions:

Deferral Method

A method of accounting that allows for income or expenses to be recognized at a later date rather than when they are initially incurred.

Donated Land

This informs the recording of land gifted to an entity, valued at its fair market value at the time of donation as an asset on the balance sheet.

Donated Machinery

Assets received for free by an entity, where the fair market value of the machinery is recorded as both income and an asset on the balance sheet.

Volunteer Hours

The amount of time individuals spend performing unpaid services for nonprofit organizations or community projects.