A Realized Gain or Loss on the Sale of an Available-For-Sale

question 67

Multiple Choice

A realized gain or loss on the sale of an available-for-sale security is determined by comparing

• A)the carrying value of the security with the proceeds from the sale
• B)the original cost of the security with the proceeds from the sale
• C)the market value at the latest balance sheet date with the proceeds from the sale
• D)the original cost with the security's carrying value

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Definitions:

Capital-Budgeting

The process by which organizations evaluate potential major projects or investments to determine their cost-effectiveness and alignment with business strategy.

Risk-Free Rate

The hypothetical yield of a risk-free investment, typically mirrored by the interest rate on sovereign debt.

IRR Method

The Internal Rate of Return method, a capital budgeting technique used to evaluate the profitability of an investment or project.

Hurdle Rate

The minimum acceptable rate of return on an investment, used as a benchmark to determine the viability of the project or investment.