Distributions from corporations to the shareholders in a nonliquidating distribution will usually be classified as a dividend up to the amount of the corporation's retained earnings stock basis taxable income for the year earnings and profits.

a. True
b. False

Answer: Earnings and profits.

Explanation:

This is not a true or false question as the options are given first.

It is assumed that dividends comes from earnings and profits so when a company distributes dividends, the total amount of those dividends cannot exceed the total amount of accumulated earnings and profits that the company has.

If the dividends exceed this amount, then they are to be considered as a return on capital to the shareholder and this is beholden to a different tax regime.

Nontariff barriers are: _________

a. numerical limitations on the quantity of products that a country can import
b. rules, regulations, inspections, and paperwork which make it more costly or difficult to import products
c. taxes levied on the value of imported goods
d. all of the above

Revenue and expense data for Bluestem Company are as follows:

Year 2 Year 1
Administrative expenses $37,720 $20,300
Cost of goods sold 360,000 319,900
Income tax 41,000 32,200
Sales 820,000 700,000
Selling expenses 154,160 109,900

Required:
Prepare a comparative income statement, with vertical analysis, stating each item for both years as a percent of sales.

Ever since e-commerce started rising in prominence, the value of the retail showroom has diminished significantly. After all, consumers no longer need to visit a store to see what types of products are available for purchase. Not only does a quick search on Amazon accomplish this goal within seconds, but the site also provides helpful resources such as customer reviews and recommendations. Nevertheless, the online retail model doesn't work the same way for all products. Consumers on the whole still visit showrooms when they're looking to buy big expensive items like cars or mattresses.

Thanks to a new wave of startups, however, online retailers are beginning to break through these barriers of size and expense. While many consumers remain reluctant to purchase a car without driving it, online mattress sellers like Casper and Leesa Sleep are winning over thousands with a streamlined approach. Customers simply select the size they want, pay for it, and then wait for the mattress to arrive at their doorstep compressed into a single box. Most showrooms contain a variety of mattresses that can greatly fluctuate in price depending on what sales are happening at the moment. Customers then learn all these intricate details from assertive salespeople on the hunt for a commission.

Today's online mattress sellers cut out this rigmarole by using simplified inventory and fixed prices. But that doesn't necessarily mean these brands provide customers with the best deal possible. For instance, a king from Casper costs $950, not exactly a bargain for a foam mattress. In fact, customers could likely get a better deal if they were simply willing to do some haggling at a showroom. For Casper's customers, though, the company's appeal lies in its convenience rather than its value. There's also little risk in trying out a compressed mattress: Casper offers free shipping, 100-day guarantees and free returns on all of their products. While it remains to be seen if these upstarts can take on the $14 billion U.S. mattress industry, Casper's $100 million in sales during its first year of operation suggests that they're certainly on the right track.

Requried:
a. Intermediaries can be eliminated, but their activities cannot. Describe the activities provided by retail showrooms that manufacturers like Leesa and Casper are now providing. Specifically, what utility are the manufacturers providing?
b. Would you ever purchase a car or an expensive refrigerator direct from the manufacturer without seeing the product in person or testing the product? Explain why or why not. If not, what would you need from the manufacturer in order to purchase direct from them?

There are three equally-sized distinct subpopulations in Utopolis: unemployed, workers, and retirees. There are four possible social states which result in different utility levels for the three subpopulations:

Social State Unemployed Workers Retirees
A 12 50 10
B 20 20 20
C 15 15 15
D 1 40 1

a. Which social states might plausibly be chosen by the government of Utopolis? And Why?
b. There is a government election in Utopolis with two candidates: a Rawlsian and a Utilitarian candidate. Each candidate promises to enact one of the social states above. If the majority of citizens elect the candidate, which social state will be enacted?

Kenji and Lucia are building their portfolios. Kenji purchases shares in a mutual fund and pays fees to a manager who actively manages the mutual fund's portfolio. He does so because he believes that the manager can identify inexpensive stocks that will rise in value. Lucia is not convinced. She buys shares in an index fund—a type of mutual fund that simply buys all of the stocks in a given stock index rather than actively managing a portfolio.

Kenji builds his portfolio on the supposition that:________

a. Stock analysts can use fundamental analysis to identify undervalued stocks.
b. Stock prices follow a random walk
c. The stock market exhibits informational efficiency.

A 15-year maturity bond with par value of $1,000 makes annual coupon payments at a coupon rate of 10%. Find the bond equivalent and effective annual yield to maturity of the bond for the following bond prices.
List Bond Equivalent Annual Effective annual
bond prices Yield to maturity Yield to maturity
a $940 % %
b $1,000 % %
c $1,040 % %