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- Define the law of one price carefully, noting its fundamentals assumptions. Why are these assumptions so difficult to apply in the real world in order to apply the theoryWhich of the following does NOT accurately describe the requirements to apply relative valuation? a. The market value of the comps should be available. b. The valuation object should be compared with similar firms, preferably in industry, size, market and other measures. c. The market value of the valuation object should be available. d. The prices of the comps should be standardized, meaning a price ratio instead of the absolute price value should be compared.How can I explain the rationale behind the Arbitrage Pricing Theory (APT) model, and discuss its empirical evidence that tests its validity.
- Explain how useful the price mechanism is in tackling the basic economic problem?Explain briefly how do you understand the concept of Cost of Good Sold. (In your own understanding)Does GAAP distinguish between fair values that are readily determinable from current market prices versus those needing to be calculated based on the company’s own assumptions? Explain how a user will know about the reliability of the inputs used to determine fair value.
- Which two economic concepts are fundamental to the relevance of fair values to accounting? i. The Efficient Markets Hypothesis ii. Supply and Demand iii. Economic Rationalism iv. Marginal Utility Which of the following is NOT a transaction cost that should be considered in the calculation of fair value? a. Costs associated with marketing the item. b. Transport costs. c. Agent's selling fees. d. None of the above, i.e. they are all transaction costs.A quantitative analysis enables a decision maker to put a “price” on the sum total of the qualitative characteristics in a decision situation. Explain this statement, and give an example.Compare and contrast the historical cost accounting model with the fair value accounting model. What are the advantages and disadvantages of each?
- What is the economic rationale for the cost approach? Under what conditions would the cost approach tends to give the best value estimate?1. What’s the difference between fundamental analysis and technical analysis? Don’t simply define them both. 2. What’s the difference between the terms “intrinsic value” and “market price?” or in other words, what’s the difference between Value and Price?Why do you think that having a price structure important?
