Company B Purchased a Large Machine at a Cash Equivalent

question 90

True/False

Company B purchased a large machine at a cash equivalent cost of $25,000 on January 1, 2001. On that date the company paid $10,000 cash and gave a one-year, 10 percent interest-bearing note payable for the remaining $15,000. Therefore, the company should debit the machinery account for $25,000.

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Definitions:

Risk-free Asset

An investment that is expected to return its original investment without any loss and with a certain rate of return. Typically, government bonds are considered close to risk-free.

Beta

Beta is a measure of a stock's volatility in relation to the overall market, indicating the stock's risk compared to the market risk.

Systematic Risk

The risk inherent to the entire market or market segment, representing factors that affect all companies such as economic, political, or social changes.

Diversifiable Risk

The portion of an investment's risk that can be reduced or eliminated through portfolio diversification, also known as unsystematic risk.