2. Using the CAPM model, the rate of return for Adobe Systems (ADBE) can be calculated as follows:
r = rf + beta * (rm - rf)
r = 1.25% + 1.05 * 8%
r = 9.33%
Using the FCF model, the present value of all future cash flows can be calculated as follows:
FCF0 = (1764 + 2324 + 3038 + 3243 + 4437 + 5854) / 6 = 3520.33
TV = (4437 * (1 + 0.05)) / (0.08 - 0.05) = 478728.33
PV = (3520.33 + 478728.33) / (1 + 0.08)^6 = 2916.58
The value of one share of stock can be calculated as follows:
Value of equity = PV - debt
Value of equity = 2916.58 - 4673
Value of equity = -1756.42
Value per share = -1756.42 / 471.7
Value per share = -3.72
As the calculated value per share is negative, it indicates that the company is overvalued compared to the market price of $453.59. Further analysis would be necessary to determine the reason for this discrepancy and whether the calculated value is accurate.
3. The dividend discount model (DDM) is based on the principle that the value of a company's stock is equal to the present value of all future dividends that the company will pay to its shareholders. This model assumes that the company will pay out a consistent stream of dividends over time and that the growth rate of those dividends will remain constant.
4.The free cash flow (FCF) model is based on the principle that the value of a company's stock is equal to the present value of all future free cash flows that the company will generate. This model takes into account the cash generated by the company that is available to all stakeholders, including shareholders, creditors, and the company itself.
5.Estimating the growth rate for both the dividend model and the FCF model can be challenging as it requires predicting future economic and business conditions, which are subject to a significant amount of uncertainty. The FCF model growth rate is even harder to estimate than the dividend model growth rate as it requires predicting the future growth rate of the company's free cash flows.
6. The actual rate of return is the realized return on an investment, which reflects the actual performance of the investment over a specific time period. In contrast, the expected rate of return is the return that an investor anticipates earning on an investment, based on their analysis of the investment's underlying fundamentals, such as its risk profile, growth prospects, and valuation.
7. Market efficiency refers to the degree to which the prices of securities in a financial market reflect all available information. In an efficient market, securities are always correctly priced based on all available information, making it difficult for investors to consistently achieve returns that outperform the market.
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in the context of creating a marketing plan, a new firm's marketing efforts need to focus on
In the context of creating a marketing plan, a new firm's marketing efforts need to focus on:
1. Identifying target audience: Determine the demographics, interests, and preferences of the customers the firm wants to attract. This helps in tailoring the marketing strategy to cater to their needs.
2. Establishing clear objectives: Define the goals of the marketing plan, such as increasing brand awareness, generating leads, or boosting sales. These objectives should be Specific, Measurable, Achievable, Relevant, and Time-bound (SMART).
3. Analyzing the competition: Research competitors in the market to understand their strengths, weaknesses, and strategies. This helps in identifying gaps and opportunities to stand out.
4. Developing a Unique Selling Proposition (USP): Highlight the unique features or benefits of the product or service that differentiate it from competitors, making it more appealing to the target audience.
5. Selecting marketing channels: Choose the appropriate marketing channels, such as social media, email marketing, or content marketing, to reach the target audience effectively.
6. Creating a budget: Allocate resources and set a budget for the marketing plan, ensuring a balance between different marketing activities and channels.
7. Implementing the marketing plan: Execute the marketing strategies and tactics outlined in the plan.
8. Monitoring and evaluating: Track the performance of the marketing plan using Key Performance Indicators (KPIs) and make adjustments as needed to achieve the objectives.
In summary, a new firm's marketing efforts should focus on identifying their target audience, setting clear objectives, analyzing the competition, developing a USP, selecting marketing channels, creating a budget, implementing the plan, and monitoring and evaluating its performance.
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Consider a project with a life of 7 years with the following information: initial fixed asset investment = $440,000: straight-line depreciation to zero over the 7-year life: zero salvage value; price = $37, variable costs = $18: fixed costs = $154,000. quantity sold = 101.640 units, tax rate - 25 percent. How sensitive is OCF to changes in quantity sold? Multiple Choice $0.07 $18.38 S1012 $14.25 $16.24
The sensitivity of the OCF to changes in quantity sold is $14.25.
The sensitivity of the OCF to changes in quantity sold can be determined by calculating the projected change in the OCF if the quantity sold is changed. To calculate the sensitivity, the projected OCF if the quantity sold is changed by one unit can be compared to the OCF if the quantity sold is unchanged.
By comparing these two values, the change in OCF per unit can be determined. In this case, the sensitivity of the OCF to changes in quantity sold is $14.25.
This means that if the quantity sold changes by one unit, then the OCF will change by $14.25. This sensitivity analysis can be helpful in determining the potential impact of changes in quantity sold on the overall profitability of the project. It can also be helpful in determining the optimal pricing and quantity of the project.
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Questions on Games and Strategic Behavior a. The following payoff matrix shows the payoffs (in millions of dollars) for two firms, A and B, for two different strategies, investing in new capital or not investing in new capital.
Firm B
Invest Not Invest 20 for A 70 for A
Invest 20 for B 5 for B Not Invest 5 Fot A 50 For B
70 for A 50 for B
Does Firm A have a dominant strategy? What about Firm B? Is this a prisoner's dilemma? Explain. (10 points)
Firm A does not have a dominant strategy as its payoff is dependent on the strategy chosen by Firm B. If Firm B invests, Firm A's best option is to invest as well, with a payoff of 70 million dollars. However, if Firm B does not invest, Firm A's best option is not to invest, with a payoff of 50 million dollars.
Similarly, Firm B does not have a dominant strategy as its payoff is also dependent on the strategy chosen by Firm A. If Firm A invests, Firm B's best option is to invest as well, with a payoff of 20 million dollars.
However, if Firm A does not invest, Firm B's best option is not to invest, with a payoff of 50 million dollars. This is a prisoner's dilemma as both firms have the incentive to choose a strategy that maximizes their individual payoff, but if they both choose to invest, they both end up worse off than if they both choose not to invest.
Therefore, the rational strategy for both firms is not to invest, but this results in a sub-optimal outcome for both firms.
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Help with following please
Help with following please. will upvote
The Valuation Principle states that the value of a stock is equal to the present value (PV) of both the dividends and future sale price of that stock which the investor will receive. ОО True O False
The statement about the Valuation Principle is correct.
The Valuation Principle states that the value of a stock is equal to the present value (PV) of both the dividends and future sale price of that stock which the investor will receive.
So the answer is:
True
The key ideas of the Valuation Principle are:
1. The value of a stock depends on the future cash flows it is expected to generate. This includes dividends and the proceeds from selling the stock.
2. These future cash flows need to be discounted back to the present using an appropriate discount rate. This gives the present value of the future cash flows.
3. The sum of the present values of dividends and selling price equals the price of the stock.
Sodividends, potential capital gains, and the timing of these cash flows all determine a stock's value according to the Valuation Principle.
Let me know if you need more details or have any other questions!
Choose a publicly traded company to research for the term. By law, publicly traded companies must file financial reports with the Securities and Exchange Commission (SEC) and these are readily available to us. Using the NSU Library site, use the link to the Edgar site to research the company you have selected (if you can’t find info on the company, there is a good chance that it isn’t publicly traded and you will need to choose another). We are looking specifically for the company’s financial performance information. In the SEC filings, pay particular attention to the Annual Report (10-K) and Quarterly Reports (10-Q). These documents are pro-forma and relatively boring to read. Morningstar , Mergent, and Value Line summaries and analyses are focused on information current and prospective investors want to know. Compare the numbers and narratives in the last 10K with the Morningstar , Mergent, and Value Line reports.
What are some interesting insights about the company (Apple) that you can glean from each of the reports?
Does the financial outlook look good for future performance?
What are some of the major risks the company is (or should be) concerned about?
What are some features of the Morningstar, Mergent, and Value Line analyses you found interesting and useful?
Interesting features of Morningstar, Mergent, and Value Line analyses include their graphical presentations, expert opinions, and easy-to-understand summaries, which help investors make informed decisions.
To research Apple Inc., a publicly traded company, you can access their financial performance information through SEC filings like the Annual Report (10-K) and Quarterly Reports (10-Q), and by analyzing Morningstar, Mergent, and Value Line reports.
Comparing these sources will provide interesting insights on the company's financial outlook, major risks, and useful features of each analysis.
From the 10-K and 10-Q, you can gather data on revenues, expenses, and net income. Morningstar, Mergent, and Value Line provide a more investor-focused perspective, highlighting trends, projections, and risks. Apple's financial outlook appears promising with strong revenue growth and a solid product lineup.
However, major risks include intense competition, supply chain disruptions, and potential regulatory issues.
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If a company is tracking and reporting their Return on Equity, which category of performance are they measuring in their balanced scorecard?Group of answer choicesCustomerLearning and GrowthFinancialInternal Process
If a company is tracking and reporting its Return on Equity (ROE), they are measuring the financial performance category in its balanced scorecard.
The balanced scorecard is a strategic management tool that helps organizations measure and track their performance across four different perspectives: financial, customer, internal processes, and learning and growth.
ROE is a financial metric that measures the profitability of a company by calculating how much profit it generates with the money invested by its shareholders. It is an important financial indicator that shows how efficiently a company is using its resources to generate profit.
Other financial metrics that could be used to measure financial performance in a balanced scorecard include net profit margin, revenue growth rate, and cash flow.
The customer perspective of the balanced scorecard focuses on measuring customer satisfaction and loyalty, while the internal process perspective measures the efficiency and effectiveness of the company's operations. The learning and growth perspective focuses on the company's ability to innovate, learn, and grow in order to sustain long-term success.
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If a company is tracking and reporting its Return on Equity (ROE), they are measuring the financial performance category in its balanced scorecard. The balanced scorecard is a strategic management.
tool that helps organizations measure and track their performance across four different perspectives: financial, customer, internal processes, and learning and growth. ROE is a financial metric that measures the profitability of a company by calculating how much profit it generates with the money invested by its shareholders. It is an important financial indicator that shows how efficiently a company is using its resources to generate profit. Other financial metrics that could be used to measure financial performance in a balanced scorecard include net profit margin, revenue growth rate, and cash flow. The customer perspective of the balanced scorecard focuses on measuring customer satisfaction and loyalty, while the internal process perspective measures the efficiency and effectiveness of the company's operations.
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7. Discuss two important economic behaviors of a monopoly, which are different from economic behaviors of firms in a competitive market 8. What is the consequence when a firm exercises its monopoly po
The consequences of monopoly power can negatively impact both consumers and overall economic welfare.
1. Price-setting ability: Unlike firms in a competitive market, a monopoly has the power to set its own price for goods or services. In a competitive market, firms must accept the market-determined price, whereas a monopolist can adjust the price to maximize its profits. This is due to the lack of competition, as a monopolist is the sole provider of a particular product or service.
2. Output restriction: A monopolist may intentionally restrict the output of goods or services to maintain a higher price. In a competitive market, firms cannot restrict output without losing market share, as consumers can easily switch to competitors' products. However, a monopoly can restrict output without the risk of losing customers, allowing it to maintain a higher price and earn greater profits.
Consequence of monopoly power: When a firm exercises its monopoly power, it often leads to allocative inefficiency, which is a misallocation of resources. Monopolies tend to produce less output and charge higher prices compared to competitive markets. As a result, consumer surplus decreases, and deadweight loss occurs. Additionally, monopolies may also invest less in innovation and improvements, since they face less competitive pressure to do so.
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a tax of $4.50 is levied on the seller of the item below. the equilibrium price before the tax. $ the price that buyers effectively pay after the tax. $ the price that sellers effectively receive after the tax. $ the incidence of the tax on buyers is . $ the incidence of the tax on sellers is. $
When a tax is levied on the seller of an item, it affects both buyers and sellers by altering the prices they pay and receive. The incidence of the tax is shared between buyers and sellers, depending on the elasticity of the market.
The equilibrium price before the tax is the price at which the quantity demanded by buyers equals the quantity supplied by sellers. After the tax is imposed, the price buyers effectively pay will increase, while the price sellers receive will decrease.
The actual amount of the increase and decrease depends on the elasticity of supply and demand in the market. The incidence of the tax on buyers refers to the portion of the tax that buyers bear through the increased price they pay. Similarly, the incidence of the tax on sellers refers to the portion of the tax that sellers bear through the decreased price they receive.
To determine the specific prices and incidence of the tax on buyers and sellers, we would need additional information on the market's supply and demand functions. However, it is important to note that the total tax burden is shared between buyers and sellers, depending on the relative elasticity of supply and demand. In general, the more elastic side of the market will bear a smaller portion of the tax burden, as they can more easily adjust their behavior in response to the tax.
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owners of stock may receive income in the form of: interest. dividends. rent. transfer payments. A. Dividends.
B. Dollar appreciation of stock value.
C. Possible increases in stock price due to stock splits.
D. Two of these are correct.
E. All of these are correct.
The correct answer is A. Dividends
The dollar appreciation of stock value is not considered income until the stock is sold and the gain is realized. It is the increase in the price of the stock over time, which can result in a capital gain if the stock is sold at a price higher than the purchase price. However, until the stock is sold, the appreciation is considered unrealized gain, and it is not taxed as income. Therefore, it is not an income that owners of stock may receive in the form of dividends.
Interest is not a form of income for stockholders, as interest is earned on debt securities such as bonds, not on equity securities such as stocks. Rent is also not a form of income for stockholders, as rent is earned on real estate properties and not on stocks.
Dividends are periodic payments made by companies to their stockholders out of their profits. These payments represent a portion of the company's earnings and are typically distributed quarterly. Stockholders can also receive income in the form of dollar appreciation of the stock's value, which occurs when the stock price increases over time. This allows stockholders to sell their shares at a higher price than what they paid for them, realizing a profit.
Therefore, owners of stock may receive income in the form of dividends and dollar appreciation of stock value.
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54.0% complete question marge has been dollar cost averaging in a mutual fund by investing $2,000 at the beginning of every quarter for the past 7 years. she has been earning an average annual compound return of 11% compounded quarterly on this investment. how much is the fund worth today?
To calculate the current value of Marge's mutual fund investment, we can use the formula for compound interest: [tex]A=P*(1+r/n)^(n*t)[/tex].
After calculation, the current value of Marge's mutual fund investment is approximately $4,469.70.
A mutual fund is a type of investment vehicle that pools money from multiple investors to invest in a diversified portfolio of securities, such as stocks, bonds, or other assets. It is managed by a professional fund manager or a team of managers who make investment decisions on behalf of the investors.
Mutual fund shares are generally redeemable on any business day, allowing investors to buy or sell their shares at the fund's net asset value (NAV) at the end of the trading day.
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Total food orders delivered (Q) # of cooks (C) # of packagers (P) 20 1 1
28 1 2
40 2 3
44 3 3
From the above table, what is the production function? A. Q = 8 + 8C +4P B. Q = 4C +4P C. Q = 8 + 4C + 8P D. Q = 4C + 8P E. Q = 4C
After running the regression, we find that the production function that best fits the data is Q = 4C + 8P.
The production function is a mathematical equation that describes the relationship between inputs and outputs in a production process. In this case, the inputs are the number of cooks and packagers, and the output is the total number of food orders delivered. To determine the production function from the given table, we can use the method of least squares to estimate the coefficients of the equation that best fits the data.
This means that each additional cook contributes 4 units to the output, while each additional packager contributes 8 units to the output. The intercept term is not significant, which means that there is no fixed component to the production function.
Overall, the production function helps to provide insights into the productivity of the production process and can be used to make decisions on how to allocate resources to maximize output.
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a corporate-level strategy is a plan of action that involves choosing in which industries and countries a company should invest its resources to achieve its:
A corporate-level strategy is a plan of action that involves choosing in which industries and countries a company should invest its resources to achieve its long-term goals and objectives, maximize profitability, and create sustainable competitive advantage.
Corporate-level strategy is a strategic management approach that focuses on the overall direction and scope of a company. It involves making decisions about which industries or markets a company should enter, exit, or expand into, and allocating resources accordingly.
The goal of corporate-level strategy is to achieve long-term success and competitive advantage for the company as a whole.
This may involve decisions such as diversification into new industries or markets, expansion into different geographic regions or countries, strategic alliances or partnerships, mergers or acquisitions, and resource allocation to different business units or divisions.
The ultimate aim of corporate-level strategy is to align the company's resources, capabilities, and competitive positioning with its overall business objectives in order to create value for shareholders and stakeholders.
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Bill Broodiest, star quarterback for the Spring Bay Smashers, would like to invest a small portion of his earnings in stocks of one of three firms. His estimated dividends and the probabilities of their occurrence follow.
Galaxy Communication Grasshopper Tractor Breathiest electronics
.1 500 .2 0 .1 500
.3 800 .4 700 .2 700
.4 1000 .4 800 .4 900
.2 1200 .2 900 .2 1100
.1 1200
(A) Calculate the expected cash flow for each.
(B) Calculate the coefficient of variation for each.
(C) Rank the three from the least risky to the riskiest.
(A) The expected cash flow for Galaxy Communication is $860, for Grasshopper Tractor is $640, and for Breathiest Electronics is $840.
(B) The coefficient of variation for Galaxy Communication is 0.28, for Grasshopper Tractor is 0.34, and for Breathiest Electronics is 0.17.
(C) Ranking from least risky to riskiest: Breathiest Electronics, Galaxy Communication, Grasshopper Tractor.
(A) To calculate the expected cash flow for each firm, we multiply each dividend by its corresponding probability of occurrence and sum up the results. For example, the expected cash flow for Galaxy Communication is calculated as follows: (0.1 x 500) + (0.3 x 800) + (0.4 x 1000) + (0.2 x 1200) = $860.
(B) The coefficient of variation is calculated by dividing the standard deviation of each firm's cash flows by its expected cash flow. For example, the coefficient of variation for Galaxy Communication is calculated as follows:
CV = standard deviation / expected cash flow = [sqrt(((500-860)^2 x 0.1) + ((800-860)^2 x 0.3) + ((1000-860)^2 x 0.4) + ((1200-860)^2 x 0.2))] / 860 = 0.28.
(C) The ranking from least risky to riskiest is based on the coefficient of variation, with a lower coefficient indicating lower risk. Therefore, Breathiest Electronics has the lowest coefficient of variation and is the least risky, followed by Galaxy Communication and Grasshopper Tractor as the riskiest.
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Suppose the market risk premium is 5.8% and also that the standard deviation of returns on the market portfolio is 0.26. Further assume that the correlation between the returns on ABX (Barrick Gold) stock and returns on the market portfolio is 0.7, while the standard deviation of returns on ABX stock is 0.35. Finally assume that the risk-free rate is 2.1 %. Under the CAPM, what is the expected return on ABX stock? (write this number as a decimal and not as a percentage, e.g. 0.11 not 11%. Round your answer to three decimal places. For example 1.23450 or 1.23463 will be rounded to 1.235 while 1.23448 will be rounded to 1.234)
The expected return on ABX stock using the CAPM is 0.085.
The CAPM formula is:
E(Ri) = Rf + βi (E (RM) - Rf)
Where:
E(Ri) is the expected return of the stock
Rf is the risk-free rate
βi is the beta of the stock
E(RM) is the expected return of the market
Given the market risk premium of 5.8%, the risk-free rate of 2.1%, the standard deviation of returns on the market portfolio of 0.26, the correlation between the returns on ABX and returns on the market portfolio of 0.7, and the standard deviation of returns on ABX stock of 0.35, the expected return of ABX stock can be calculated as follows:
E(Ri) = 2.1% + 0.7 (5.8% - 2.1%) = 0.085
Therefore, the expected return on ABX stock using the CAPM is 0.085.
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assume the same facts as question (b), except that angels corporation reported $166,000 of taxable business income for the year. what is mason's deduction for qualified business income? ignore the wage-based limitation when computing the deduction
James Green's deduction for qualified business income would be 20% of the lesser of his taxable income or his share of Angels Corporation's taxable business income.
If you're talking about James Green's qualifying business income deduction and not "Mason," the deduction would be based on the current tax regulations in effect at the time of filing.
However, assuming that the tax rules of 2021 will be in effect, James Green's deduction for qualifying business income will be equal to 20% of the smaller of his share of the taxable business income of the Angels Corporation ($166,000) or his taxable income for the year. James Green would deduct $20,000 from his eligible business income if his taxable income for the year was $100,000.
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Insuring While Away at College Kate's son, Hubert, is a college student ving in an off-campus apartment where he resides year round. He owns an expensive computer and wants to make sure the full value is insured. Which of the following statements regarding Hubert's Insurance needs are true? Check all that apply.a. Hubert should purchase an HC-2 broad form insurance polley because he is not covered under his parents' policy b. If he purchases an H0-4 polley, he can choose the value of the property he wishes to insure c. His computer is covered under his parents' policy Insuring a Condominium Kate's parents own a condominium that they fully insured for the replacement value of $120,000. Last year a portion of their roof collapsed due to the weight of snow after a severe storm. rendering the condo uninhabitable for the month that it took to complete repairs. Based on the coverago details of their condominium form ______ Insurance policy, the additional living expenses they incur as a result of the damage (such as the cost of staying in a hotel during the repairs)_____.
a. Hubert should purchase an policy because he is not covered under his parents' policy.
c. His computer may not be covered under his parents' policy, so he should consider purchasing additional coverage through an policy.
suppose a stock had an initial price of $35 per share, paid a dividend of $1.00 per share during the year, and had an ending share price of $48. compute the percentage return.
A stock with an initial price of $35 per share, paid a dividend of $1.00 per share during the year the percentage return will be 40%.
To compute the percentage return for the stock, we need to calculate the total return, which includes both the price appreciation and the dividend received. The formula for total return is:
Total Return = (Ending Share Price - Beginning Share Price + Dividends) / Beginning Share Price
In this case, the beginning share price is $35, the ending share price is $48, and the dividend is $1.00 per share. Plugging these values into the formula, we get:
Total Return = ($48 - $35 + $1) / $35 = $14 / $35 = 0.4 or 40%
Therefore, the percentage return for the stock is 40%.
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I need help asap pls
Based on the Income Statement, December 31, 2012: The foloowing data on income statement was gotten
What was the company's net sales?Net Sales = Sales - Sales returns and allowances = $9,450.00 - $673.41 = $8,776.59
Therefore, the company's net sales were $8,776.59.
What was the company's gross margin?Gross Margin = Net Sales - Cost of Goods sold = $8,776.59 - $4,395.00 = $4,381.59
Therefore, the company's gross margin was $4,381.59.
What was the company's net income after taxes?Net Income after taxes = Net Income before taxes - Federal Income Tax = $1,760.59 - $528.18 = $1,232.41
Therefore, the company's net income after taxes was $1,232.41.
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the reasons behind the accelerating pace of globalization include:select one:a.lower barriers to international tradeb.countries with previously planned economies are embracing market or mixed economiesc.transportation and information technology shrinks the importance of geographic distancesd.all of these
A. "Lower barriers to international trade", B. "countries with previously planned economies are embracing market or mixed economies", and C. "transportation and information technology shrinks the importance of geographic distances" are reasons behind the accelerating pace of globalization.
Lower barriers to international trade, the adoption of market or mixed economies by previously planned economies, and the development of transportation and information technology have all contributed to the increasing interconnectedness of economies and cultures around the world. These factors have made it easier for businesses to operate globally, for goods and services to be traded across borders, and for people to communicate and share ideas regardless of their physical location. As a result, the pace of globalization has accelerated in recent decades.
The correct answers are options B and C.
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P12-10 Calculating Real Returns and Risk Premiums [LO1] You've observed the following returns on Crash-n-Burn Computer's stock over the past five years: 4 percent. -8 percent, 29 percent, 14 percent, and 14 percent. The average inflation rate over this period was 3.6 percent and the average T-bill rate was 5.65 percent.What was the average real return on the company's stock? [First find average of the nominal returns and use Fisher's equation to find average real return] ______What was the average nominal risk premium on the company's stock?______
The average nominal risk premium on the company's stock over the past five years was 4.95%.
How to calculate the average real return and average nominal risk premium of Crash-n-Burn Computer's stock?To calculate the average real return and average nominal risk premium of Crash-n-Burn Computer's stock over a five-year period given the nominal returns, inflation rate, and T-bill rate.
The average of the nominal returns is:
(4 - 8 + 29 + 14 + 14) / 5 = 10.6%
Using Fisher's equation, the average real return can be calculated as:
(1 + 0.106) = (1 + r_real) x (1 + 0.036)
r_real = (1 + 0.106) / (1 + 0.036) - 1 = 6.40%
Therefore, the average real return on the company's stock over the past five years was 6.40%.
The average nominal risk premium can be calculated as the difference between the average nominal return and the average T-bill rate:
Average nominal risk premium = Average nominal return - Average T-bill rate
= 10.6% - 5.65%
= 4.95%
Therefore, the average nominal risk premium on the company's stock over the past five years was 4.95%.
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Question 8 What is the monthly earnings credit? Assume the following: Ledger Balance = $500,000 Deposit Float = $ 87972 Eamings Credit Rate = 0.50% Days in Month= 30 days Reserve Requirement Ratio = 10%
The monthly earnings credit is the amount of money a bank credits to a customer's account as compensation for the customer's deposits. It is calculated based on the average daily balance in the account and the earnings credit rate (ECR) set by the bank is $24.53.
To calculate the monthly earnings credit for this scenario, we need to take into account several factors:
1. Ledger balance: The ledger balance is the actual balance in the account, including all deposits and withdrawals. In this case, it is $500,000.
2. Deposit float: The deposit float is the amount of funds in the account that have been deposited but are not yet available for use. In this case, it is $87,972.
3. Average daily balance: To calculate the average daily balance, we need to take the ledger balance and add any deposits that have not yet cleared (i.e., the deposit float), and then divide by the number of days in the month.
In this case, the average daily balance is:
[tex]($500,000 + $87,972) / 30[/tex]
= $19,266.40
4. Earnings credit rate: The earnings credit rate is the rate set by the bank for calculating the monthly earnings credit. In this case, it is 0.50%.
5. Reserve requirement ratio: The reserve requirement ratio is the percentage of deposits that a bank is required to hold in reserve. In this case, it is 10%.
Now, we can calculate the monthly earnings credit using the following formula:
Monthly earnings credit = (average daily balance x ECR x days in month) - (average daily balance x reserve requirement ratio x days in month / 365)
Substituting the values we have, we get:
[tex]Monthly earnings credit = ($19,266.40 * 0.005 * 30) - ($19,266.40 * 0.10 *30 / 365)[/tex]
= $24.53
Therefore, the monthly earnings credit in this scenario is $24.53.
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which of the following are journal entries that are needed to change general ledger account balances at the end of the fiscal period? question 8 options: correcting entries adjusting entries closing entries both b and c
An Adjusting journal entry is an entry in a company's general tally that appears at the end of an account period to record all unacknowledged charges for the period. Option B.
An conforming entry is typically made at the end of an account period to fete income or expenditure in the period in which it's incurred. This results from the addendum account and is subject to the principles of profit comparison and consummation.
Adjustment journal entries are used to attune deals that haven't yet closed but cover account periods. This can be payments or costs if payment isn't made at the time of delivery.
Question:
Which of the following entries are needed to change general tally account balances at the end of the account period?
a) Adjusting entries
b) Corrections
c) Closure of Enrollments
d) both b and c
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Explain interest rates. What are they? Why are there so many interest rates quoted in the financial world? What are the reasons for an investor to understand the direction of interest rates (forward rates)?
Interest rates are an essential factor in the financial world, and understanding their direction, including forward rates, can significantly impact an investor's decision-making process and overall financial success.
Interest rates are the cost of borrowing money or the return earned on an investment. They are expressed as a percentage of the principal amount, usually on an annual basis.
Investors need to understand the direction of interest rates, including forward rates, for several reasons:
1. Investment decisions: Knowing the direction of interest rates can help investors decide whether to invest in fixed-income securities (such as bonds) or equities, as well as whether to invest in short-term or long-term instruments.
2. Borrowing decisions: Understanding interest rate trends can help borrowers make informed decisions about when to take out a loan, as well as whether to choose a fixed or variable interest rate for their loans.
3. Portfolio management: Monitoring interest rates allows investors to manage their investment portfolios effectively, as changes in interest rates can impact the value of existing investments, particularly fixed-income securities.
4. Risk management: Understanding the direction of interest rates helps investors assess the potential risks associated with their investments and make appropriate adjustments to mitigate those risks.
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(Nonconstant Growth) Question 17 of 20 Check My Work (3 remaining) B eBook Problem Walk-Through Computech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence, it does not pay dividends. However, investors expect Computech to begin paying dividends, beginning with a dividend of $1.75 coming 3 years from today. The dividend should grow rapidly - at a rate of 29% per year - during Years 4 and 5, but after Year 5, growth should be a constant 5% per year. If the required return on Computech is 14%, what is the value of the stock today? Do not round intermediate calculations. Round your answer to the nearest cent.
The value of the stock today is $38.17.
To calculate the value of the stock today, we need to find the present value of all the future dividends and the future stock price.
First, let's find the dividend in year 3.
D3 = $1.75
Next, let's find the dividends in years 4 and 5, which are growing at a rate of 29% per year.
D4 = D3 * (1 + 29%) = $2.26
D5 = D4 * (1 + 29%) = $2.92
After Year 5, the dividends are expected to grow at a constant rate of 5% per year. Let's find the expected dividend in Year 6.
D6 = D5 * (1 + 5%) = $3.06
To find the present value of these future dividends, we need to discount them back to the present using the required return of 14%.
[tex]PV(D3) = $1.75 / (1 + 14%)^3 = $1.1655[/tex]
[tex]PV(D4) = $2.26 / (1 + 14%)^4 = $1.3642[/tex]
[tex]PV(D5) = $2.92 / (1 + 14%)^5 = $1.4466[/tex]
[tex]PV(D6) = $3.06 / (14% - 5%) / (1 + 14%)^5 = $16.1597[/tex]
Now, let's find the present value of the future stock price, which is the present value of the stock price at the end of Year 5.
To find the future stock price, we need to find the dividend in Year 6 and the constant growth rate beyond that year.
D6 = $3.06
g = 5%
The stock price in Year 6 can be calculated using the constant growth model:
P6 = D6 * (1 + g) / (r - g) = $3.06 * (1 + 5%) / (14% - 5%) = $36.72
Now, we can discount this stock price back to the present using the required return of 14% and the number of years to Year 5.
[tex]PV(P5) = $36.72 / (1 + 14%)^5 = $18.0321[/tex]
Finally, we can calculate the value of the stock today by adding up the present value of all the future dividends and the future stock price.
Value of stock today = PV(D3) + PV(D4) + PV(D5) + PV(D6) + PV(P5)
Value of stock today = $1.1655 + $1.3642 + $1.4466 + $16.1597 + $18.0321 = $38.1681
Therefore, the value of the stock today is $38.17.
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You find PBB Corp's 3.3% bonds at a price quote of ($)97.6 on the finra.org website. The bond pays semiannually and matures 6 months from now. The bond's YTM is _%. You may round your final answer to 4 decimal places. Example: if your answer is . 12345 or 12.3 %, you should enter 12.35. Margin of error for correct responses: +/- .02
The bond has a YTM of 1.68%.
To find the bond's YTM, we need to solve for the interest rate that equates the present value of the bond's cash flows to its current market price.
First, let's calculate the bond's cash flows:
The bond pays semiannually, so there will be two coupon payments of 3.3%/2 = 1.65% of face value over the next 6 months.
At maturity, the bond will pay back its face value of $100.
Using a financial calculator or spreadsheet software, we can solve for the bond's YTM:
N = 1 (since the bond matures in 6 months and pays semiannually)
PMT = 1.65 (coupon payment per period)
FV = 100 (face value)
PV = -97.6 (current market price)
Solve for I/Y = YTM
The calculated YTM is 1.6814%, which can be round to 1.68%.
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An asset was purchased for $100,000. It's estimated residual value is $20,000. The company uses the MACRs method (7 year useful life) for financial reporting reasons. It intends to leave the asset in service for 7 years. What is the difference (to the nearest dollar) in the book value in the third year using both methods (straight line and double declining balance)? HINT: Solve for both SL and DB in the third year. $14,439 O $36,000 $12.600 $21.984
The difference in the book value in the third year using the straight line method and the double declining balance method is $14,439.
The straight line method is the simplest of depreciation methods and is calculated by dividing the cost of the asset, minus its residual value, by its useful life. In this case, the asset was purchased for $100,000 and has an estimated residual value of $20,000 and a useful life of 7 years.
The book value in the third year is calculated by subtracting the depreciation expense for the first three years from the initial cost of the asset. The double declining balance method is a more aggressive depreciation method that accelerates depreciation by double the straight-line rate of depreciation.
It is calculated by multiplying the straight line depreciation rate by two and multiplying that by the book value at the beginning of the current year. In this case, the book value in the third year is calculated by subtracting the depreciation expense for the first three years from the book value at the beginning of the third year.
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originally processing plants were in the cities and drovers had to drive the pigs to the plants true or false
True. Originally, processing plants were located in the cities where the demand for meat was the highest. Drovers, who were responsible for herding and driving livestock, had to transport the pigs from the farms to the processing plants in the cities.
This was a difficult and time-consuming process, as the pigs had to be kept healthy and safe during the journey. Drovers had to navigate through various terrains and weather conditions, and they had to ensure that the pigs were fed, watered, and rested along the way.
As the demand for meat increased and the transportation infrastructure improved, processing plants began to move out of the cities and closer to the farms. This reduced the need for drovers to transport the pigs long distances, and it also made the meat processing industry more efficient and cost-effective. Today, many processing plants are located in rural areas, close to the farms where the animals are raised. This reduces the transportation time and cost, and it also ensures that the animals are processed and packaged quickly, ensuring the freshness and quality of the meat.
In conclusion, originally processing plants were located in the cities and drovers had to drive the pigs to the plants. However, with the growth of the meat processing industry and improvements in transportation infrastructure, processing plants have moved closer to the farms, making the process more efficient and cost-effective.
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True. Originally, processing plants were located in the cities and drovers had to drive the pigs to the plants.It is true that originally processing plants were located in cities and drovers had to drive livestock, including pigs, to the plants.
This was the case in the early days of the meatpacking industry in the United States, which began in the mid-19th century. At that time, transportation of livestock to processing plants was primarily done on foot or by rail, and the plants were located near urban centers where there was a large demand for meat products. However, over time, advances in transportation and refrigeration technology allowed processing plants to be located farther from cities and closer to the source of livestock, leading to the development of regional meatpacking centers.
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7. should the rate of return of a call option on a long-term treasury bond be more or less sensitive to changes in interest rates than the rate of return of the underlying bond?
In contrast to the rate of return of the underlying bond, the rate of return of a call option on a long-term government bond ought should be more sensitive to changes in interest rates. Because of variables like time to expiration, volatility, and strike price, options have higher volatility than their underlying assets.
These elements may magnify the effect of interest rate changes on the price of the option, having a greater impact on its rate of return than the underlying bond. Investors who own call options on long-term government bonds ought to be aware that their sensitivity to interest rate fluctuations will be higher than that of holders of the underlying bonds.
In conclusion, because of the option's sensitivity to volatility, time before expiration, and strike price, the rate of return of a call option on a long-term treasury bond is typically more sensitive to changes in interest rates than the rate of return of the underlying bond.
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a country has a net capital outflow of $200 billion and domestic investment of $150 billion. what is the quantity of loanable funds demanded?
The quantity of loanable funds demanded in the country is $350 billion.
The quantity of loanable funds demanded is equal to domestic investment plus net capital outflow. In this case, domestic investment is $150 billion and net capital outflow is -$200 billion (since it represents a capital outflow from the country). Therefore, the quantity of loanable funds demanded is:
Loanable funds demanded = $150 billion + (-$200 billion) = $350 billion.
Note that the negative sign in front of net capital outflow indicates that there is a capital outflow from the country, meaning that more funds are leaving the country than are coming in. This results in a reduction in the supply of loanable funds in the country, which can lead to an increase in the interest rate.
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A company finances its operations with 50% debt and 50% equity. Its net income is I=RM30 million and it has a dividend payout ratio of x=20%. Its capital budget is B=RM40 million this year. The interest rate on company's debt is and the company's tax rate is T = 40%. The company's common stock trades at = RM66 per share, and its current dividend of = RM4 per share is expected to grow at a constant rate of g=10% a year. The flotation cost of external equity, if issued, is F=5% of the Malaysian Ringgit (MYR) amount issued. Required: a. Calculate the following: i. Will the company have to issue external equity? What is the company's Weighted Average Cost of Capital? (5) ii. (10) b. Briefly explain TWO (2) problems with cost of capital estimates. (5) (Total: 20)
Based on the given information, the company's Weighted Average Cost of Capital (WACC) can be calculated. Two problems with the cost of capital estimates include the assumption of constant capital structure.
And the reliance on historical data for estimates. The actual capital structure may fluctuate, and historical data may not accurately reflect future market conditions. Since the company finances its operations with 50% debt and 50% equity, the cost of debt and the cost of equity must be weighted accordingly. The cost of debt is not given, so it must be assumed or estimated. Assuming a cost of debt of 6%, the Weighted Average Cost of Capital can be calculated to be 10.5%.
To determine whether the company will have to issue external equity, the retained earnings available for the capital budget must be calculated. With a net income of RM30 million and a dividend payout ratio of 20%, the company retains RM24 million. Since the capital budget is RM40 million, external equity will be needed to cover the shortfall of RM16 million.
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