Multiple Choice Questions
1. At what amount is the inventory reported on Metallic Wonders' December 31, 2014, balance sheet?
a. $ 905, 000
b. $ 910, 000
c. $1, 000, 000
d. $1, 250, 000
2. At what amount is the investment in futures reported on Metallic Wonders' December 31, 2014, balance sheet?
a. $90, 000 liability
b. $95, 000 asset
c. $95, 000 liability
d. $90, 000 asset
3. What is the gross margin on the February 5, 2015, sale of inventory?
a. $290, 000
b. $340, 000
c $430, 000
d. $490, 000
4. GE stock has a current market value of $15. A call option in GE stock has a strike price of $11 and sells for $6. Which statement is false"!
a. The time value of the option is $2.
b. The call option could be hedging a company's investment in GE stock.
c. The intrinsic value of the option is $4.
d. If the market price of GE stock falls, the option will be less valuable.