The Proper Adjusting Entry at December 31, 2009, with Regard

question 55

Multiple Choice

The proper adjusting entry at December 31, 2009, with regard to this note receivable includes a:

• A) Debit to Cash of $6,067.
• B) Debit to Notes Receivable of $10,400.
• C) Credit to Interest Revenue of $10,400.
• D) Debit to Accrued Interest Receivable of $6,067.

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Definitions:

Risk-Free Rate

The expected yield from an investment that is considered free from the risk of financial loss, often exemplified by the returns on government bonds.

Optimal Risky Portfolio

A portfolio that offers the highest expected return for a given level of risk or the lowest risk for a given level of expected return.

Expected Return

The average return anticipated on an investment over a given period, accounting for the different rates of return and their probabilities.

Portfolio Variance

A measure of the dispersion of the returns of a portfolio, indicating the level of risk involved.