Alec and Kim Used to Be Much Better Friends Than

question 8

Multiple Choice

Alec and Kim used to be much better friends than they are now.The problem is what to do about Christmas gifts? If they wait until Christmas morning and move simultaneously,their payoff matrix is If Alec commits at Thanksgiving time not to buy a gift for Kim,Kim will find it in her best interest

• A) to buy a gift for Alec to spite him.
• B) not to buy a gift for Alec.
• C) to buy a gift for Alec with probability 2/7.
• D) to buy a gift for Alec with probability 4/9.
• E) to buy a gift for Alec with probability 4/6.

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Definitions:

Unusual Items

Nonrecurring or unique charges or gains that are not expected to happen regularly, such as costs from lawsuits, restructuring, or natural disasters, that are reported separately in a company's financial statements.

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Principles that provide the framework upon which accounting standards are constructed.

Common-Sized Financial Statements

Financial statements that present all line items as a percentage of a common base figure, facilitating comparison across periods or companies.

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Financial statements that present multiple periods of data to compare and analyze changes over time.