1. One reason for corporations to issue convertible debt is:

a. it is easy to issue even if the company has a poor credit rating.

b. it is cheaper to issue than stock.

c. it lowers the cost of borrowing.

d. it gives the company additional flexibility.

2. The expense associated with a stock option granted to an employee should be measured when:

a. the employee has fullfilled all the conditions required before exercising the option.

b. the option is granted.

c. the option is exercised.

d. during the entire vesting period of the option, in proportional to time.

3. The following conditions are sufficient to give rise to the accrual of a loss contingency under U.S. GAAP:

a/ The likelihood of the event that leads to the loss occurring is deemed to be "remote".

b. The event that leads to the loss occurring is deemed to be "reasonably possible".

c. The event that leads to the loss occurring is "probable".

d. None of the above is sufficient.