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Flashcard 1431638510860

Tags
#cfa #cfa-level-1 #economics #microeconomics #reading-14-demand-and-supply-analysis-consumer-demand #section-3-utility-theory #study-session-4
Question
The indifference curve is drawn to be convex when viewed from the origin. This indicates that willingness to [...] the [...] and the [...] the bundle contains.

(Bread and Wine)
Answer
give up wine to obtain a bread diminishes

more bread and the less wine


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Its curvature tells us something about the strength of his willingness to trade off one good for the other. The indifference curve is drawn to be convex when viewed from the origin. This indicates that the willingness to give up wine to obtain a little more bread diminishes the more bread and the less wine the bundle contains.

Original toplevel document

3. UTILITY THEORY: MODELING PREFERENCES AND TASTES
d bread. Its negative slope simply represents that both wine and bread are seen as “good” to this consumer; in order to maintain indifference, a decrease in the quantity of wine must be compensated for by an increase in the quantity of bread. <span>Its curvature tells us something about the strength of his willingness to trade off one good for the other. The indifference curve in Exhibit 2 is characteristically drawn to be convex when viewed from the origin. This indicates that the willingness to give up wine to obtain a little more bread diminishes the more bread and the less wine the bundle contains. We capture this willingness to give up one good to obtain a little more of the other in the phrase marginal rate of substitution of bread for wine, MRS BW . The MRS BW i







Flashcard 1448307199244

Tags
#cfa-level-1 #fra-introduction #reading-22-financial-statement-analysis-intro #study-session-7
Question
A company that generates positive cash flow from operations has more flexibility in [...]
Answer
funding needed for investments

and taking advantage of attractive business opportunities


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A company that generates positive cash flow from operations has more flexibility in funding needed for investments and taking advantage of attractive business opportunities than an otherwise comparable company without positive operating cash flow.

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2. SCOPE OF FINANCIAL STATEMENT ANALYSIS
d to earn that income. Overall, profit (or loss) equals income minus expenses, and its recognition is mostly independent from when cash is received or paid. Example 1 illustrates the distinction between profit and cash flow. <span>EXAMPLE 1 Profit versus Cash Flow Sennett Designs (SD) sells furniture on a retail basis. SD began operations during December 2009 and sold furniture for €250,000 in cash. The furniture sold by SD was purchased on credit for €150,000 and delivered by the supplier during December. The credit terms granted by the supplier required SD to pay the €150,000 in January for the furniture it received during December. In addition to the purchase and sale of furniture, in December, SD paid €20,000 in cash for rent and salaries. How much is SD’s profit for December 2009 if no other transactions occurred? How much is SD’s cash flow for December 2009? If SD purchases and sells exactly the same amount in January 2010 as it did in December and under the same terms (receiving cash for the sales and making purchases on credit that will be due in February), how much will the company’s profit and cash flow be for the month of January? Solution to 1: SD’s profit for December 2009 is the excess of the sales price (€250,000) over the cost of the goods that were sold (€150,000) and rent and salaries (€20,000), or €80,000. Solution to 2: The December 2009 cash flow is €230,000, the amount of cash received from the customer (€250,000) less the cash paid for rent and salaries (€20,000). Solution to 3: SD’s profit for January 2010 will be identical to its profit in December: €80,000, calculated as the sales price (€250,000) minus the cost of the goods that were sold (€150,000) and minus rent and salaries (€20,000). SD’s cash flow in January 2010 will also equal €80,000, calculated as the amount of cash received from the customer (€250,000) minus the cash paid for rent and salaries (€20,000) and minus the €150,000 that SD owes for the goods it had purchased on credit in the prior month. Although profitability is important, so is a company’s ability to generate positive cash flow. Cash flow is important because, ultimately, the company needs cash to pay employees, suppliers, and others in order to continue as a going concern. A company that generates positive cash flow from operations has more flexibility in funding needed for investments and taking advantage of attractive business opportunities than an otherwise comparable company without positive operating cash flow. Additionally, a company needs cash to pay returns (interest and dividends) to providers of debt and equity capital. Therefore, the expected magnitude of future cash flows is important in valuing corporate securities and in determining the company’s ability to meet its obligations. The ability to meet short-term obligations is generally referred to as liquidity , and the ability to meet long-term obligations is generally referred to as solvency . Cash flow in any given period is not, however, a complete measure of performance for that period because, as shown in Example 1, a company may be obligated to make future cash payments as a result of a transaction that generates positive cash flow in the current period. Profits may provide useful information about cash flows, past and future. If the transaction of Example 1 were repeated month after month, the long-term average monthly cas







Flashcard 1450693496076

Tags
#cfa #cfa-level-1 #economics #reading-15-demand-and-supply-analysis-the-firm #section-3-analysis-of-revenue-costs-and-profit
Question
Marginal cost follows a [...] pattern.
Answer
J-shaped


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Marginal cost follows a J-shaped pattern whereby cost initially declines but turns higher at some point in reflection of rising costs at higher production volumes.

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it is not necessarily consistent with maximizing total profit. In Exhibit 13, the least-cost point of production is 3 units; ATC is 75, derived as [(225 ÷ 3) or (33.3 + 41.7)]. Any other production level results in a higher ATC. <span>Marginal cost (MC) is the change in total cost divided by the change in quantity. Marginal cost also can be calculated by taking the change in total variable cost and dividing by the change in quantity. It represents the cost of producing an additional unit. For example, at 9 units marginal cost is 300, calculated as [(1,300 – 1,000) ÷ (9 – 8)]. Marginal cost follows a J-shaped pattern whereby cost initially declines but turns higher at some point in reflection of rising costs at higher production volumes. In Exhibit 13, MC is the lowest at 2 units of output with a value of 25, derived as [(175 – 150) ÷ (2 – 1)]. <span><body><html>







Flashcard 1452545805580

Tags
#cfa #cfa-level-1 #economics #reading-15-demand-and-supply-analysis-the-firm #section-3-analysis-of-revenue-costs-and-profit
Question
The cost-minimizing behavior of the firm would dictate operating at the minimum point on its [...].
Answer
ATC curve


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The cost-minimizing behavior of the firm would dictate operating at the minimum point on its ATC curve.

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cost. However, the minimum point on the AVC does not correspond to the least-cost quantity for average total cost. In Exhibit 13, average variable cost is minimized at 2 units, whereas average total cost is the lowest at 3 units. <span>Average total cost (ATC) is calculated by dividing total costs by quantity or by summing average fixed cost and average variable cost. For instance, in Exhibit 13, at 8 units ATC is 125 [calculated as (1,000 ÷ 8) or (AFC + AVC = 12.5 + 112.5)]. Average total cost is often referenced as per-unit cost and is frequently called average cost. The minimum point on the average total cost curve defines the output level that has the least cost. The cost-minimizing behavior of the firm would dictate operating at the minimum point on its ATC curve. However, the quantity that maximizes profit (such as Q 3 in Exhibit 17) may not correspond to the ATC-minimum point. The minimum point on the ATC curve is consistent with maximizing profit per-unit, but it is not necessarily consistent with maximizing total profit. In Exhibit 13, the least-cost point of production is 3 units; ATC is 75, derived as [(225 ÷ 3) or (33.3 + 41.7)]. Any other production level results in a higher ATC. Marginal cost (MC) is the change in total cost divided by the change in quantity. Marginal cost also can be calculated by taking the change in total variable cost and divi







Flashcard 1464658693388

Tags
#art-of-memory
Question
Linked images are somehow connected: to link the images of orange and toothpaste you could [...]
Answer
imagine that you drill a hole in the orange and fill it with toothpaste.


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Linked images are somehow connected. For instance if the first two items of the list were oranges and tooth paste, then in order to link the images of orange and toothpaste you could imagine that you drill a hole in the orange and fill it with toothpaste.

Original toplevel document

How to Link Mnemonic Images - Memory Techniques Wiki
How to Link Mnemonic Images - Memory Techniques Wiki How to Link Mnemonic Images From Memory Techniques Wiki Jump to: navigation, search Images can be linked or not linked. If the images are not linked, then it is harder to recall them in the right order. For example when you made a shopping list that you forgot home, then at store you probably won't be able to recall all the items you want to buy. Linked images are somehow connected. For instance if the first two items of the list were oranges and tooth paste, then in order to link the images of orange and toothpaste you could imagine that you drill a hole in the orange and fill it with toothpaste. Types of image links r30 proposed three 3 basic ways to link images with each other: Transforming one image into another Interaction between two images Chaining multiple images with a story (a.k.a the story method) The images of the chain (Story Method) can be connected using interaction and/or transformation. Then the chain becomes what we like to call a story, be the story logical or not. This method is demonstrated at this page. More information and examples (with pictures) of all three linking techniques can be found at r30's website. See Linking Techniques Comparison discussion for some initial ideas. T







Flashcard 1481611545868

Tags
#cfa-level-1 #doubtful-accounts #expense-recognition #reading-25-understanding-income-statement
Question
When a company sells its products or services on credit, it is likely that some customers will ultimately [...] on their obligations .
Answer
default


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When a company sells its products or services on credit, it is likely that some customers will ultimately default on their obligations (i.e., fail to pay). At the time of the sale, it is not known which customer will default. (If it were known that a particular customer would ultimately default, presumably a company would not sell on credi

Original toplevel document

4.2. Issues in Expense Recognition
4.2.1. Doubtful Accounts When a company sells its products or services on credit, it is likely that some customers will ultimately default on their obligations (i.e., fail to pay). At the time of the sale, it is not known which customer will default. (If it were known that a particular customer would ultimately default, presumably a company would not sell on credit to that customer.) One possible approach to recognizing credit losses on customer receivables would be for the company to wait until such time as a customer defaulted and only then recognize the loss ( direct write-off method ). Such an approach would usually not be consistent with generally accepted accounting principles. Under the matching principle, at the time revenue is recognized on a sale, a company is required to record an estimate of how much of the revenue will ultimately be uncollectible. Companies make such estimates based on previous experience with uncollectible accounts. Such estimates may be expressed as a proportion of the overall amount of sales, the overall amount of receivables, or the amount of receivables overdue by a specific amount of time. The company records its estimate of uncollectible amounts as an expense on the income statement, not as a direct reduction of revenues. 4.2.2. Warranties At times, companies offer warranties on the products they sell. If the product proves deficient in some respect that is covered







Flashcard 1481633565964

Tags
#cfa-level-1 #expense-recognition #reading-25-understanding-income-statement
Question
A company is required to estimate the [...] resulting from its warranties, to recognize an estimated warranty expense in the period of the sale.
Answer
amount of future expenses


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sible approach would be for a company to wait until actual expenses are incurred under the warranty and to reflect the expense at that time. However, this would not result in a matching of the expense with the associated revenue. <span>Under the matching principle, a company is required to estimate the amount of future expenses resulting from its warranties, to recognize an estimated warranty expense in the period of the sale, and to update the expense as indicated by experience over the life of the warranty. <span><body><html>

Original toplevel document

4.2. Issues in Expense Recognition
receivables, or the amount of receivables overdue by a specific amount of time. The company records its estimate of uncollectible amounts as an expense on the income statement, not as a direct reduction of revenues. <span>4.2.2. Warranties At times, companies offer warranties on the products they sell. If the product proves deficient in some respect that is covered under the terms of the warranty, the company will incur an expense to repair or replace the product. At the time of sale, the company does not know the amount of future expenses it will incur in connection with its warranties. One possible approach would be for a company to wait until actual expenses are incurred under the warranty and to reflect the expense at that time. However, this would not result in a matching of the expense with the associated revenue. Under the matching principle, a company is required to estimate the amount of future expenses resulting from its warranties, to recognize an estimated warranty expense in the period of the sale, and to update the expense as indicated by experience over the life of the warranty. 4.2.3. Depreciation and Amortisation Companies commonly incur costs to obtain long-lived assets. Long-lived assets are assets expected to provi







Pope Francis has called for international mediation to ease rising tensions between the US and North Korea over Pyongyang's nuclear activity.

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North Korea crisis: Pope urges international mediation - BBC News
Image caption Pope Francis warned of a war in which "a good part of humanity" would be destroyed <span>Pope Francis has called for international mediation to ease rising tensions between the US and North Korea over Pyongyang's nuclear activity. The pontiff suggested that Norway, for example, was "always ready to help". He warned the crisis risked sparking a devastating war in which "a good part of humanity"




10 Things You Didn't Know About Jason Chaffetz

The Utah Republican announced that he would not seek re-election in 2018 and may depart Congress early.

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News National News <span>10 Things You Didn't Know About Jason Chaffetz The Utah Republican announced that he would not seek re-election in 2018 and may depart Congress early. By Sara Clarke, Assistant Managing Editor | Apri




House Oversight and Government Reform Committee Chairman Rep. Jason Chaffetz, R-Utah, speaks on Capitol Hill in Washington.

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Share on Google Plus <span>House Oversight and Government Reform Committee Chairman Rep. Jason Chaffetz, R-Utah, speaks on Capitol Hill in Washington. The Associated Press 1. Jason E. Chaffetz was born March 26, 1967, in Los Gatos, California, to John and Margaret "Peggy" Chaffetz.




Trump also cited the swift ascension of Neil Gorsuch to the U.S. Supreme Court – a move expected to restore the court's conservative majority

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RELATED CONTENT [imagelink] A Dim 100 Days [RELATED: A Dim 100 Days ] <span>Trump also cited the swift ascension of Neil Gorsuch to the U.S. Supreme Court – a move expected to restore the court's conservative majority and one that marks the first time a new justice has been confirmed within the first 100 days of an administration since 1881. "We won't get any




He touted other "law-and-order" appointments, namely those of Attorney General Jeff Sessions and Homeland Security Secretary John Kelly

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hin the first 100 days of an administration since 1881. "We won't get any credit for this, but don't worry about it, the credit is in the audience," Trump said. <span>He touted other "law-and-order" appointments, namely those of Attorney General Jeff Sessions and Homeland Security Secretary John Kelly, each of whom has been tasked with taking a hard line on immigration and bolstering the southern border, where illegal crossings have plummeted in recent months.




#politics

Trump also used the venue to boost the Republican running in Georgia's special House election, Karen Handel, saying her Democratic opponent, Jon Ossoff, would attempt to raise taxes "to the sky" and "destroy your health care."

"She's totally for the NRA and she's totally for the Second Amendment, so get out and vote," Trump said of Handel.

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his relationship with Cruz as "like, dislike, like," referring to their hard-fought presidential primary campaign. Since Trump has taken office, Cruz has morphed into a loyal ally on most issues. <span>Trump also used the venue to boost the Republican running in Georgia's special House election, Karen Handel, saying her Democratic opponent, Jon Ossoff, would attempt to raise taxes "to the sky" and "destroy your health care." "She's totally for the NRA and she's totally for the Second Amendment, so get out and vote," Trump said of Handel. [imagelink] Trump's First 100 Days EXPAND GALLERY




He also took a vicious swipe at another of the left's leading voices, Sen. Bernie Sanders of Vermont.

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rump took the podium, Wayne LaPierre, the NRA's executive vice president, delivered a biting speech that castigated "leftist zealots" and "a national media that fails to tell the truth." <span>He also took a vicious swipe at another of the left's leading voices, Sen. Bernie Sanders of Vermont. "Bernie is a political predator of young voters who were lied to by school teachers and college prof




#elizabeth #pocohontas #politics #warren
President Donald Trump on Friday floated the prospect of a potential 2020 challenge from Sen. Elizabeth Warren of Massachusetts, resurrecting his "Pocahontas" nickname for one of his staunchest critics during a speech to a National Rifle Association convention.

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President Donald Trump floated the prospect of a potential 2020 challenge from Sen. Elizabeth Warren of Massachusetts on Friday. (Scott Olson/Getty Images) <span>President Donald Trump on Friday floated the prospect of a potential 2020 challenge from Sen. Elizabeth Warren of Massachusetts, resurrecting his "Pocahontas" nickname for one of his staunchest critics during a speech to a National Rifle Association convention. "It may be Pocahontas, remember that. And she's not big for the NRA, that I can tell you," the president said of the progressive Democrat t




All signs point to a less lavish, more sober affair Saturday night, with fewer over-the-top parties, less buzz and more recognition of the First Amendment and journalism's watchdog role in American democracy.

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event of the year, the White House Correspondents' Association dinner. But circumstances this time make it possible for the organizers and participants to reform and elevate the dinner in fundamental ways. <span>All signs point to a less lavish, more sober affair Saturday night, with fewer over-the-top parties, less buzz and more recognition of the First Amendment and journalism's watchdog role in American democracy. The WHCA dinner could be comparatively dull this time around, with less glorification of fame and power, and that's not a bad thing.




The transforming moment was Donald Trump's decision to boycott the dinner – the first time a president has decided not to attend since 1981. That's when Ronald Reagan stayed away because he had been gravely wounded in an assassination attempt.

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RELATED CONTENT [imagelink] The Dinner and the Donald [RELATED: The Dinner and the Donald] <span>The transforming moment was Donald Trump's decision to boycott the dinner – the first time a president has decided not to attend since 1981. That's when Ronald Reagan stayed away because he had been gravely wounded in an assassination attempt. Trump's dumping of the dinner in turn prompted the entire White House staff to boycott in solidarity with the commander in chief. Trump's reasoning w




At the same time, comedian Samantha Bee is holding a competing event to make fun of the WHCA dinner and mock Trump and his conservative allies. Bee calls her gathering "Not the White House Correspondents' Dinner."

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had earlier declared "war" on major news organizations and called them the enemy of the people. Instead of attending, he plans to headline a rally in Harrisburg, Pennsylvania, to mark his 100th day in office, which also is Saturday. <span>At the same time, comedian Samantha Bee is holding a competing event to make fun of the WHCA dinner and mock Trump and his conservative allies. Bee calls her gathering "Not the White House Correspondents' Dinner." The big problem for the WHCA dinner in recent years is that it has been engulfed by celebrity and glitz, caused in large part by the seemingly endles




Watergate reporters Bob Woodward and Carl Bernstein will address the dinner and present journalism awards.

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ident of the WHCA, told the Hollywood Reporter that his group has "decided to focus the dinner even more so than in previous years on our core mission: the importance of the First Amendment and good journalism." To this end, he said <span>Watergate reporters Bob Woodward and Carl Bernstein will address the dinner and present journalism awards. [RELATED: Trump's Staff Skipping Correspondents' Dinner]




#comedians
Even the main entertainer – "Daily Show" comedian Hasan Minhaj, 31 – is not nearly as famous as some other entertainers in past years, such as Stephen Colbert and Jay Leno.

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And because there is such antagonism to Trump in the show-business world, fewer celebrities are expected to show up, which should result in a diminution of star power. <span>Even the main entertainer – "Daily Show" comedian Hasan Minhaj, 31 – is not nearly as famous as some other entertainers in past years, such as Stephen Colbert and Jay Leno. And there have been other positive developments. Some media organizations that have held the most extravagant pre- and post-dinner parties – Vanity Fair, the New Yorker, People – aren't