Use the Following to Answer the Question(s) Below

question 26

Multiple Choice

Use the following to answer the question(s) below.
As a result of the financial crisis in the fall of 2008, when the government intervened to help the economy, an investor was considering various strategies for her money and the estimated profits would depend on how successful the intervention would be in helping the economy. The estimated annual return for two different investment strategies are shown in the following table.
-Using the maximax approach, the investor should

• A) choose 20% stocks 80% bonds.
• B) choose 80% stocks 20% bonds.
• C) choose 20% stocks 80% bonds if the economy rebounds.
• D) choose 80% stocks 20% bonds if the economy declines.
• E) choose 20% stocks 80% bonds if there is no change.

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Definitions:

Unrecorded Revenue

Revenue that has been earned but has not yet been documented in the accounting records.

Revenues

The income generated from normal business operations, often from the sale of goods and services to customers.

Expenses

Costs incurred by a business in the process of earning revenues.

Revenue Recognition Principle

The concept that supports recording revenues when services have been performed or products delivered to customers.