Pco. purchased term bonds at a premium on the open market. these bonds represented 20 percent of the outstanding class of bonds issued at a discount by s co., p's wholly owned subsidiary. p intends to hold the bonds until maturity. in a consolidated balance sheet, the difference between the bond carrying amounts in the two companies would be: a. included as a decrease to retained earnings. b. included as an increase to retained earnings. c. reported as a deferred debit to be amortized over the remaining life of the bonds. d. reported as a deferred credit to be amortized over the remaining life of the bonds.

Your company is starting a new r& d initiative: a development of a new drug that dramatically reduces the addiction to smoking. the expert team estimates the probability of developing the drug succesfully at 60% and a chance of losing the investment of 40%. if the project is successful, your company would earn profits (after deducting the investment) of 9,000 (thousand usd). if the development is unsuccessful, the whole investment will be lost -1,000 (thousand usd). your company's risk preference is given by the expected utility function: u(x) v1000 +x, where x is the monetary outcome of a project. calculate the expected profit of the project . calculate the expected utility of the project . find the certainty equivalent of this r& d initiative . find the risk premium of this r& d initiative e is the company risk-averse, risk-loving or risk-neutral? why do you think so?