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4) Which of the following organization forms accounts for the greatest number of firms?
A) "S" corporation
B) Limited partnership
C) Sole proprietorship
D) "C" corporation
Answer: C
Diff: 1
Section: 1.1 The Four Types of Firms
Skill: Conceptual

2
Copyright © 2014 Pearson Education, Inc.
5) Which of the following is NOT an advantage of a sole proprietorship?
A) Single taxation
B) Ease of setup
C) Limited liability
D) No separation of ownership and control
Answer: C
Diff: 2
Section: 1.1 The Four Types of Firms
Skill: Conceptual

6) Which of the following statements regarding limited partnerships is TRUE?


A) There is no limit on a limited partner's liability.
B) A limited partner's liability is limited by the amount of their investment.
C) A limited partner is not liable until all the assets of the general partners have been exhausted.
D) A general partner's liability is limited by the amount of their investment.
Answer: B
Diff: 2
Section: 1.1 The Four Types of Firms
Skill: Conceptual

7) Which of the following is/are an advantage of incorporation?


A) Access to capital markets
B) Limited liability
C) Unlimited life
D) All of the above
Answer: D
Diff: 2
Section: 1.1 The Four Types of Firms
Skill: Conceptual

8) Which of the following statements is most correct?


A) An advantage to incorporation is that it allows for less regulation of the business.
B) An advantage of a corporation is that it is subject to double taxation.
C) Unlike a partnership, a disadvantage of a corporation is that has limited liability.
D) Corporations face more regulations when compared to partnerships.
Answer: D
Diff: 2
Section: 1.1 The Four Types of Firms
Skill: Conceptual

3
Copyright © 2014 Pearson Education, Inc.
9) A limited liability company is essentially:
A) a limited partnership without limited partners.
B) a limited partnership without a general partner.
C) just another name for a limited partnership.
D) just another name for a corporation.
Answer: B
Diff: 1
Section: 1.1 The Four Types of Firms
Skill: Conceptual

10) The distinguishing feature of a corporation is that:


A) their is no legal difference between the corporation and its owners.
B) it is a legally defined, artificial being, separate from its owners.
C) it spreads liability for its corporate obligations to all shareholders.
D) provides limited liability only to small shareholders.
Answer: B
Diff: 2
Section: 1.1 The Four Types of Firms
Skill: Conceptual

11) Which of the following are subject to double taxation?


A) Corporation
B) Partnership
C) Sole proprietorship
D) A and B
Answer: A
Diff: 1
Section: 1.1 The Four Types of Firms
Skill: Conceptual

12) You own 100 shares of a "C" corporation. The corporation earns $5.00 per share before
taxes. Once the corporation has paid any corporate taxes that are due, it will distribute the rest of
its earnings to its shareholders in the form of a dividend. If the corporate tax rate is 40% and
your personal tax rate on (both dividend and non-dividend) income is 30%, then how much
money is left for you after all taxes have been paid?
A) $210
B) $300
C) $350
D) $500
Answer: A
Explanation: A) EPS × number of shares × (1 - Corporate Tax Rate) × (1 - Individual Tax Rate)
$5.00 per share × 100 shares × (1 - .40) × (1 - .30) = $210
Diff: 2
Section: 1.1 The Four Types of Firms
Skill: Analytical

4
Copyright © 2014 Pearson Education, Inc.
13) You own 100 shares of a Sub Chapter "S" corporation. The corporation earns $5.00 per
share before taxes. Once the corporation has paid any corporate taxes that are due, it will
distribute the rest of its earnings to its shareholders in the form of a dividend. If the corporate tax
rate is 40% and your personal tax rate on (both dividend and non-dividend) income is 30%, then
how much money is left for you after all taxes have been paid?
A) $210
B) $300
C) $350
D) $500
Answer: C
Explanation: C) EPS × number of shares × (1 - Individual Tax Rate)
$5.00 per share × 100 shares × (1 - .30) = $350
Diff: 2
Section: 1.1 The Four Types of Firms
Skill: Analytical

14) You are a shareholder in a "C" corporation. This corporation earns $4 per share before taxes.
After it has paid taxes, it will distribute the remainder of its earnings to you as a dividend. The
dividend is income to you, so you will then pay taxes on these earnings. The corporate tax rate is
35% and your tax rate on dividend income is 15%. The effective tax rate on your share of the
corporations earnings is closest to:
A) 15%
B) 35%
C) 45%
D) 50%
Answer: C
Explanation: C) First the corporation pays taxes. It earned $4 per share, but must pay $4 × .35 =
$1.40 to the government in corporate taxes. That leaves $4.00 - $1.40 = $2.60 to distribute to the
shareholders. However, the shareholder must pay $2.60 × .15 = $0.39 in income taxes on this
amount, leaving only $2.21 to the shareholder after all taxes are paid. The total amount paid in
taxes is $1.40 + 0.39 = $1.79. The effective tax rate is then $1.79 ÷ $4 = .4475 or 44.75% which
is closest to 45%.
Diff: 3
Section: 1.1 The Four Types of Firms
Skill: Analytical

15) Explain the benefits of incorporation.


Answer:
1. Limited liability
2. Unlimited life
3. Access to capital markets/availability of outside funding
Diff: 2
Section: 1.1 The Four Types of Firms
Skill: Conceptual

5
Copyright © 2014 Pearson Education, Inc.
16) Explain the difference between a sub-chapter "S" corporation and a sub-chapter "C"
corporation.
Answer:
"C" Corporation "S" Corporation
Publicly traded stock Privately traded stock
No more than 75
Unlimited shareholders shareholders
Double taxation Taxed like a partnership

Diff: 2
Section: 1.1 The Four Types of Firms
Skill: Conceptual

1.2 Ownership Versus Control of Corporations

1) In a corporation, the ultimate decisions regarding business matters are made by:
A) the Board of Directors.
B) debt holders.
C) shareholders.
D) investors.
Answer: A
Diff: 1
Section: 1.2 Ownership Versus Control of Corporations
Skill: Conceptual

2) The person charged with running the corporation by instituting the rules and policies set by
the board of directors is called:
A) the chief operating officer.
B) the company president.
C) the chief executive officer.
D) the chief financial officer.
Answer: C
Diff: 1
Section: 1.2 Ownership Versus Control of Corporations
Skill: Definition

3) The Principal-Agent Problem arises:


A) because managers have little incentive to work in the interest of shareholders when this
means working against their own self-interest.
B) because of the separation of ownership and control in a corporation.
C) Both A and B
D) None of the above
Answer: C
Diff: 1
Section: 1.2 Ownership Versus Control of Corporations
Skill: Conceptual

6
Copyright © 2014 Pearson Education, Inc.
4) If shareholders are unhappy with a CEO's performance, they are most likely to:
A) buy more shares in an effort to gain control of the firm.
B) file a shareholder resolution.
C) replace the CEO through a grassroots shareholder uprising.
D) sell their shares.
Answer: D
Diff: 2
Section: 1.2 Ownership Versus Control of Corporations
Skill: Conceptual

5) A ________ is when a rich individual or organization purchases a large fraction of the stock
of a poorly performing firm and in doing so gets enough votes to replace the board of directors
and the CEO.
A) shareholder proposal
B) leveraged buyout
C) shareholder action
D) hostile takeover
Answer: D
Diff: 2
Section: 1.2 Ownership Versus Control of Corporations
Skill: Definition

6) Which of the following statements is FALSE?


A) In bankruptcy, management is given the opportunity to reorganize the firm and renegotiate
with debt holders.
B) Because a corporation is a separate legal entity, when it fails to repay its debts, the people
who lent to the firm, the debt holders are entitled to seize the assets of the corporation in
compensation for the default.
C) As long as the corporation can satisfy the claims of the debt holders, ownership remains in the
hands of the equity holders.
D) If the corporation fails to satisfy debt holders' claims, debt holders may lose control of the
firm.
Answer: D
Explanation: D) If the corporation fails to satisfy debt holders' claims, debt holders may take
control of the firm.
Diff: 2
Section: 1.2 Ownership Versus Control of Corporations
Skill: Conceptual

7) The most senior financial manager in a corporation is usually called:


A) the chief executive officer.
B) the chief financial officer.
C) the chief operating officer.
D) the chairman of the board.
Answer: B
Diff: 1
Section: 1.2 Ownership Versus Control of Corporations
Skill: Definition
7
Copyright © 2014 Pearson Education, Inc.
8) You overhear your manager saying that she plans to book an Ocean-view room on her
upcoming trip to Miami for a meeting. You know that the interior rooms are much less
expensive, but that your manager is traveling at the Company's expense. This use of additional
funds comes about as a result of:
A) an agency problem.
B) an adverse selection problem.
C) a moral hazard.
D) a publicity problem.
Answer: A
Diff: 1
Section: 1.2 Ownership Versus Control of Corporations
Skill: Definition

9) An agency problem can be alleviated by:


A) requiring all firms to be sole proprietorships.
B) compensating managers in such a way that acting in the best interest of shareholders is also in
the best interest of managers.
C) asking managers to take on more risk than they are comfortable taking.
D) A and B.
Answer: D
Diff: 1
Section: 1.2 Ownership Versus Control of Corporations
Skill: Definition

10) Do corporate decisions that increase the value of the firm's equity benefit society as a whole?
A) Yes, as long as the value of the firm's equity increases, society is better off.
B) Yes, as long as the increase in the value of the firm's equity does not come at the expense of
others.
C) No, any gain in the value of the firm's equity is always less than the cost to society.
D) No, any gains in the value of the firm's equity are perfectly offset by societal costs.
Answer: B
Diff: 1
Section: 1.2 Ownership Versus Control of Corporations
Skill: Conceptual

11) What strategies are available to shareholders to help ensure that managers are motivated to
act in the interest of the shareholders rather than their own interest?
Answer:
1. The threat of a hostile takeover
2. Shareholder initiatives
3. Performance based compensation
Diff: 3
Section: 1.2 Ownership Versus Control of Corporations
Skill: Conceptual

8
Copyright © 2014 Pearson Education, Inc.
1.3 The Stock Market

Use the table for the question(s) below.

Consider the following two quotes for XYZ stock:

November 11th November 18th


Ask: 25.25 Ask: 26.00
Bid: 25.20 Bid: 25.93

1) How much would you have to pay to purchase 100 shares of XYZ stock on November 18th?
A) $2520
B) $2525
C) $2593
D) $2600
Answer: D
Explanation: D) 100 shares × $26.00 (ask price) = $2600
Diff: 1
Section: 1.3 The Stock Market
Skill: Analytical

2) How much would you receive if you sold 200 shares of XYZ stock on November 11th?
A) $5050
B) $5040
C) $5186
D) $5200
Answer: B
Explanation: B) 200 shares × $25.20 (bid price) = $5040
Diff: 1
Section: 1.3 The Stock Market
Skill: Analytical

3) The largest stock market in the world is:


A) the London Stock Exchange.
B) NASDAQ.
C) the American Stock Exchange.
D) the New York Stock Exchange.
Answer: D
Diff: 1
Section: 1.3 The Stock Market
Skill: Definition

9
Copyright © 2014 Pearson Education, Inc.
4) An investment is said to be liquid if the investment:
A) has large day to day fluctuations in price.
B) has a large bid-ask spread.
C) can easily be converted into cash.
D) is traded on a stock exchange.
Answer: C
Diff: 2
Section: 1.3 The Stock Market
Skill: Definition

5) What type of company trades on an organized stock exchange?


A) A limited liability company
B) A private company
C) An "S" corporation
D) A public company
Answer: D
Diff: 1
Section: 1.3 The Stock Market
Skill: Definition

6) Which of the following statements is FALSE?


A) On Nasdaq, stocks can and do have multiple market makers who compete with each other.
Each market maker must post bid and ask prices in the Nasdaq network where they can be
viewed by all participants.
B) Bid prices exceed ask prices.
C) Because customers always buy at the ask and sell at the bid, the bid-ask spread is a
transaction cost investors have to pay in order to trade.
D) On the floor of the NYSE, market makers (known on the NYSE as specialists) match buyers
and sellers.
Answer: B
Explanation: B) Ask prices exceed bid prices.
Diff: 2
Section: 1.3 The Stock Market
Skill: Conceptual

7) If you buy shares of Coca-Cola on the primary market:


A) Coca-Cola receives the money because the company has issued new shares.
B) you buy the shares from another investor who decided to sell the shares.
C) you buy the shares from the New York Stock Exchange.
D) you buy the shares from the Federal Reserve.
Answer: A
Diff: 1
Section: 1.3 The Stock Market
Skill: Definition

10
Copyright © 2014 Pearson Education, Inc.
8) If you buy shares of Coca-Cola on the secondary market:
A) Coca-Cola receives the money because the company has issued new shares.
B) you buy the shares from another investor who decided to sell the shares.
C) you buy the shares from the New York Stock Exchange.
D) you buy the shares from the Federal Reserve.
Answer: B
Diff: 1
Section: 1.3 The Stock Market
Skill: Definition

Use the table for the question(s) below.

Consider the following two quotes for XYZ stock:

November 11th November 18th


Ask: 25.25 Ask: 26.00
Bid: 25.20 Bid: 25.93

9) What are your net proceeds if you purchased 2500 shares of XYZ stock on November 11th
and then sold them a week later on November 18th?
Answer: buy at ask price 11/11 = 2500 × $25.25 = $63,125
sell at bid price 11/18 = 2500 × $25.93 = $64,825
now subtract the price paid for the shares
so net proceeds = 64,825 - 63,125 = $1700
Diff: 2
Section: 1.3 The Stock Market
Skill: Analytical

10) Explain the main differences between the NYSE and NASDAQ stock markets.
Answer: Key points:
NYSE has physical location—NASDAQ is an electronic market.
NYSE has one specialist in each stock and his role is to match buyers and sellers.
NASDAQ has multiple market makers (dealers) in each stock who stand ready to trade on their
own accounts.
Diff: 2
Section: 1.3 The Stock Market
Skill: Conceptual

11
Copyright © 2014 Pearson Education, Inc.
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The Project Gutenberg eBook of Begin to Knit
This ebook is for the use of anyone anywhere in the United States
and most other parts of the world at no cost and with almost no
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under the terms of the Project Gutenberg License included with this
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you are located before using this eBook.

Title: Begin to Knit

Author: American Thread Company

Release date: January 5, 2020 [eBook #61105]

Language: English

Credits: Produced by Stephen Hutcheson, Lisa Corcoran and the


Online
Distributed Proofreading Team at http://www.pgdp.net

*** START OF THE PROJECT GUTENBERG EBOOK BEGIN TO KNIT


***
AMERICAN THREAD CO. STAR BOOK No. 201 29¢

BEGIN​TO​KNIT
ALL THE BASIC STITCHES • EASY NOVELTY STITCHES •
QUICK THINGS TO MAKE

SO!
YOU WANT TO KNIT?

Well, why not when it’s so easy with DAWN yarns and this easy-to-
follow instruction book. You’ll find plain and fancy stitches and
difficult looking but oh, so easy to knit designs. And when these
designs are knitted with the soft pastels or bright, gay colors of
DAWN Yarns ... Zowie, you’re in!
american thread
90 PARK AVENUE, NEW YORK, N.Y. 10016

PRINTED IN U.S.A.

3
BEGIN TO KNIT CONTENTS

Abbreviations 4
Afghan 16


Baby Set 24
Basic Needs 5
Bind Off 11
Blocking & Finishing 15
Bobbins 6
Buttonholes 12


Casting On 7
Changing Colors 13
Crochet (Slip st & single crochet) 30


Decrease 9
Duplicate stitch 13


Fancy Stitches 18


Garter Stitch 8
Gauge 6


Holders 6

Increase 10


Knit 8


Left Hand Knitting 5
Lengthen 31


Marker 6
Mittens 22
Multiple of stitches 6


Needle Types 6


Picking Up Stitches 12
Poncho 33
P.S.S.O. 10
Purl 8


Raglan sweater 28
Ribbing 9


Shell 32
Shorten 31
Size Information 14
Slip A Stitch 11
Slipovers 28, 34
Socks 20
Stockinette stitch 9

Washing 15
Weaving Toe 13
Weaving Seams 15
Winding Wool 5


Yarn Over 10
Yarns 5

TALK OF THE TRADE

ABBREVIATIONS
K Knit
P Purl
St(s) Stitch(es)
YO Yarn Over
Dec. Decrease
Inc. Increase
Tog. Together
Rnd. Round
P.s.s.o. Pass slip st over st
dpn Double pointed needle
K-O Do not work st, row or round
Beg. Beginning
Bet. Between
* an asterisk. This indicates that the instructions following are
to be repeated across row or for the number of stitches or
times specified.

5
BASIC NEEDS AND KNOW HOW....
YARNS: Yarns vary in size, twist and texture. Use the “Dawn” Yarn
indicated in the directions as only an experienced expert knitter
knows how to allow for the difference when a substitution is made.
It is also very important to purchase all the yarn needed at one time
as different dye lots frequently have different shades of color.

When you purchase your yarn always check the dye lot number to
make certain they are all the same. It is much wiser to purchase a
little extra yarn than to try and match the dye lot after your garment
is finished. Though the color may look the same in the skein more
often than not the difference will be seen in the finished work. The
“ply” of yarn means the number of strands twisted together. This can
be seen by taking the end of the yarn and untwisting.

FUNDAMENTALS & SOME TIPS


Learn the basic stitches. There are only three: Knit, Purl and slip. All
the others are produced by variations and in combination with yarn
overs. See page 10.

Practice first with heavy yarn and thick needles. Study the stitch and
the position it takes on the needle. Follow arrows in illustration.
Learn to recognize when it is wrong. Watch the yarn to see where
each loop of the stitch begins and ends. If you lay your knitting
aside for a few days or longer, always rip back a few rows before
starting again. This will prevent an uneven row. See page 12 for
ripping back.
Parentheses in our instructions are used for an explanation of a st,
a certain section of a garment, or change of sts for change of size. A
ROW is once across the needle. A RIDGE is 2 rows, back and forth.
WORK EVEN, means to continue in pattern st keeping the
continuity of the design.

Always MEASURE straight up and down unless otherwise stated.

WINDING WOOL
Winding the wool correctly is important. Never wind wool tightly as
this stretches it. Wind several strands around fingers, slip these from
fingers. Over these strands, in opposite direction, wind a few more
strands wrapping yarn around fingers and ball. Continue in this
manner, always winding over fingers and in opposite direction from
last winding.

LEFT HAND KNITTING: Follow the instructions but change your


copy to read left hand where it says “right hand” and vice versa. Use
a mirror to study diagrams and charts. This will reverse the image
for you.

JOINING YARNS ... If possible, join the new yarn with a knot 6
at the beginning of a row. If this cannot be done, work next st
with new yarn leaving a 4 inch length. Work a few sts, tie the ends
firmly and with a yarn needle weave ends into work.

MARKER ... This term is used whenever it is important that a


certain point is to be marked. Example: increase, decrease,
beginning of a row or round, buttonholes, center st, etc. To make a
marker of yarn, use a different color; make a slip knot leaving ends
about 2 inches in length. Place on needle as directed. Slip marker off
one needle to the other needle in each successive round.
MULTIPLE OF STS ... This term is used generally at beginning of
directions and means that a certain multiple of sts is necessary to
work one pattern. Example: multiple of 4 sts would mean any
number divisible by 4 or 12, 16, 24 sts, etc. A multiple of 4 plus 2
would be 14, 18, 26 sts, etc., or any number that has 2 more sts
after dividing by 4.

NEEDLE TYPES
STRAIGHT NEEDLES ... are used when working back and forth in
rows. They come in lengths of 10, 12, and 14 inches and sizes O-1-
2-3, etc. The larger the number, the thicker the needle.

DOUBLE POINTED NEEDLES ... come in sets of 4 or 5. They are


used for socks, mittens and any articles made in rounds.

CIRCULAR NEEDLES ... are used in making skirts, or parts of


garments when a seam is not desired; also in completing a large
doily or a round tablecloth.

Directions give the size and type needle required and it is not
advisable to change the size unless it is necessary in order to obtain
the correct gauge.

CABLE NEEDLES ... are short with a bend in the center to hold sts
from slipping off. They are available in thin or thick size for the
different yarns. A short double pointed needle may also be used. It
is a good idea after placing sts on the straight needle to be used for
cable to stick needle into garment slightly, this will prevent sts from
slipping off needle.

STITCH HOLDERS ... are used to hold sts to be used later.


Example: sts at back of neck or when all sts are cast on and worked
to armholes, then divided for front and back. The stitch holders can
be purchased or a safety pin or length of yarn may be used.

STITCH COUNTERS ... usually placed on knitting needles. They


have a dial and after working a row, turn the dial to the next
number.

BOBBINS ... usually made of plastic to hold small amounts of yarn


for use in making argyle socks or the Fair Isle, Scandinavian or Ski
patterns.

GAUGE ... The stitch gauge which appears at the beginning of 7


all instructions is most important to the size and fit of your
garment. Before starting, make a sample swatch of the pattern stitch
with the needles and yarn specified. If you have MORE sts than
gauge use LARGER needles. If you have LESS sts than gauge use
SMALLER needles. Check your gauge as you progress to assure a
perfectly sized garment, Ill. No. 1.

CASTING ON
Allow about ½ inch for each st for fine yarn and 1 inch for each st
for heavy yarn. Make a slip knot on needle, Ill. No. 2. * Hold needle
in right hand, hold both lengths of yarn in left hand (see arrows)
having short end of yarn under and to outside of thumb and main
length of yarn under and to outside of forefinger, Ill. No. 3. Insert
needle through loop formed on thumb, pick up yarn on forefinger
and draw through loop, Ill. No. 4, let loop drop from thumb and
tighten st on right needle with thumb. Repeat from * leaving about
¼ inch between sts until required number of sts have been cast on,
Ill. No. 5.
8

PLAIN KNITTING
Hold needle containing stitches in left hand. Follow arrows. * With
yarn in back of work, insert free needle from left to right in front of
st, yarn under and over point of needle and draw through st, slip
stitch just worked from left needle. Retain new stitch on right
needle. Repeat from * until all stitches are on right needle. 2nd
Row and Succeeding Rows: Place the needle holding stitches in
left hand with free needle in right hand. Insert free needle in 1st
stitch and complete same as 1st row.
GARTER STITCH
K each st, K each row.

PURLING
Hold work same as for Knitting, but hold yarn to front of work.
Follow arrows. * Insert needle from right to left in front of st, yarn
around and in back of point of needle, draw through st having new
stitch on right needle, slip stitch off left needle. Repeat from * until
all stitches are on right needle.

9
STOCKINETTE STITCH
Knit 1 row, Purl 1 row when working with 2 needles. K each row
when working with a circular needle or on 3 or 4 double pointed
needles.

14 Knit Side
15 Purl Side

RIBBING
Ribbing consists of an alternate number of Knit and Purl stitches. In
Knit 2, Purl 2 ribbing the number of stitches cast on is usually
divisible by 4. 1st ROW: K 2, P 2 across row. In the next row again
start with K 2. In ribbing, the smooth sts are knitted, the sts with
rough side are purled. In binding off ribbing Knit the Knit sts and
Purl the Purl stitches.
TO DECREASE OR NARROW
In Knitting, Knit 2 sts together (Ill. No. 17), in Purling, Purl 2 sts
together.

10

PASS SLIP STITCH OVER (P.S.S.O.)


(another method of decreasing).... In knitting instructions p.s.s.o.
means to slip 1 st, K (or P) next st, then pass the slip st over the K
(or P) st by inserting left needle into slip st on right needle and
passing over the K st on right needle. Follow arrows in illustrations.
TO INCREASE
Knit or Purl 1 st (as directions call for), but do not slip stitch from left
needle (Ill. No. 22 & 23). Knit or Purl into back of same st, then slip
stitch off needle (Ill. No. 24).

Illustration shows a Knit increase.


YARN OVER....
Unless otherwise instructed when knitting, bring yarn forward and
over right needle to back, K next st. When Purling bring yarn over
and under right needle and to front, P next st. The yarn over 11
forms a loop on needle which is worked as a stitch, it is used
usually for lacy patterns and beadings.
BIND OFF
Do not bind off too tightly.

Knitting: K 2 sts, * pass the 1st stitch over the 2nd stitch: follow
arrows (Ill. 27, 28, 29), K next st, repeat from * until one stitch
remains on right needle, cut yarn and draw through last st.

PURLING: P 2 sts, * pass 1st stitch over 2nd stitch, P next st,
repeat from * until one stitch remains on right needle, cut yarn and
draw through last st. Not illustrated.

IN PATTERN: Either Knit or Purl st to be bound off as it would have


been worked in corresponding row of pattern, then bind off for
knitting or purling whichever pattern calls for. Not illustrated.

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