Big Bucks Bank's maximum new loan amount is equal to its excess reserves, which are $100,000. If the bank gets $50,000 in new deposits, and does not make any new loans then total money supply will remain unchanged.
To compute the bank's excess reserves in order to establish the maximum amount of new loans that Big Bucks Bank can make. Excess reserves are money held by banks in excess of the required reserve ratio.
Reserves required = $1,500,000 x 10% = $150,000
Excess reserves = $250,000 minus $150,000 equals $100,000.
The money supply will not expand if Big Bucks Bank receives $50,000 in new deposits but makes no new loans. Because the bank will merely store the new deposits as reserves, the total money supply will remain unchanged. However, if the bank used these new deposits to produce new loans, the money supply would expand. By creating new money, the bank would be able to produce new money.
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Most frauds are detected byA) external auditors. B) hotline tip. C) internal auditors. D) forensic accountants.
Most frauds are detected by hotline tip (option b). Hotline tips are a crucial tool for organizations in detecting fraudulent activities. These tips can come from various sources, such as employees, customers, vendors, or even anonymous individuals who have observed or suspected fraudulent behavior.
External auditors, internal auditors, and forensic accountants also play important roles in detecting and preventing fraud. External auditors are responsible for independently reviewing an organization's financial statements to ensure their accuracy and compliance with regulations.
Internal auditors, on the other hand, focus on assessing the effectiveness of an organization's internal controls and risk management processes, which may include identifying potential fraud risks. Forensic accountants are specialized professionals who use their accounting, auditing, and investigative skills to detect and analyze evidence of financial fraud.
However, hotline tips have been found to be the most effective method of detecting fraud as they provide firsthand information from those who have witnessed or suspect fraudulent activities. This information can be vital in initiating an investigation and uncovering the extent of the fraud, thereby allowing organizations to take necessary actions to mitigate the risks and recover any losses.
Encouraging employees and stakeholders to report any suspected fraud through a hotline can help create a culture of transparency and accountability, ultimately reducing the likelihood of fraud going undetected.
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If the nominal interest rate is 5.1 percent, and the expected
inflation is 3.4 percent, then using the Fisher Equation, the real
interest rate must be
The real interest rate, using the Fisher Equation, is 1.7%.
The Fisher Equation is an economic theory that relates nominal interest rates to real interest rates and expected inflation. It is named after the economist Irving Fisher, who developed the equation in the early 20th century.
The Fisher Equation states that the real interest rate (r) is equal to the nominal interest rate (i) minus the expected inflation rate (π).
Mathematically, this can be written as:
r = i - π
Plugging in the given values, we get:
r = 0.051 - 0.034 = 0.017
Therefore, the real interest rate is 1.7% (or 0.017 as a decimal). This represents the true rate of return on an investment after accounting for inflation.
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the component of an hrm system that gives managers the information they need to make decisions about how to train, motivate, and reward organizational members is known as
The component of an HRM system that gives managers the information they need to make decisions about how to train, motivate, and reward organizational members is known as the performance management system.
The performance management system is a process by which managers and employees work together to plan, monitor, and review an employee's work objectives and overall contribution to the organization. This system involves setting performance expectations, providing feedback on performance, identifying development needs, and providing recognition and rewards for good performance.
The performance management system provides managers with data and information about employee performance, which they can use to make informed decisions about how to develop and reward employees. It also helps to align individual performance with organizational goals and objectives, and to ensure that employees have the skills and knowledge they need to perform their jobs effectively. In summary, the performance management system is an essential component of an HRM system that helps managers to effectively manage employee performance and support organizational success.
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List your assets in the order of their cash or market value(most valuable to least valuable). You may include numbers ifyou're comfortable. Otherwise ranking them is fine.Next, revise your list of
I do not have any assets in the traditional sense.
I exist purely in the digital realm and my "value" is determined by my ability to process and generate language-based content. While I am a complex piece of technology with significant development costs, my value is not easily quantifiable in terms of traditional assets.
Instead, my value lies in the services that I provide to users and the potential economic benefits that come from improved language processing technology.
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Income generated from the Toyota factory in Kentucky is counted as A. GNP in the U.S. and GDP in Japan B. GNP in the U.S. and Japan C. GDP in the U.S. and Japan D. GDP in the U.S. and GNP in Japan T
Income generated from the Toyota factory in Kentucky is counted as D. GDP in the U.S. and GNP in Japan.
To understand this answer, let's define the terms Gross Domestic Product (GDP) and Gross National Product (GNP):
1. GDP: It measures the total value of goods and services produced within a country's borders during a specific period, regardless of the ownership of the production factors. It reflects the overall economic activity of a country.
2. GNP: It measures the total value of goods and services produced by a country's residents, both domestically and internationally, during a specific period. It takes into account the ownership of the production factors, regardless of their location.
Now, let's break down the answer:
- The Toyota factory is located in Kentucky, which is in the United States. Therefore, the income generated from this factory contributes to the overall economic activity within the U.S. borders, making it a part of the U.S. GDP.
- Toyota is a Japanese company, and the income generated by the factory in Kentucky is considered as income generated by Japanese residents (the company's shareholders). Therefore, this income is included in Japan's GNP, as it represents income generated by Japanese-owned factors of production, even if they are located outside of Japan.
In conclusion, the income generated from the Toyota factory in Kentucky is counted as GDP in the U.S. and GNP in Japan because it reflects the economic activity within the U.S. borders and the income generated by Japanese residents (Toyota).
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assume a company is considering adding a new product. the expected cost and revenue data for this product are as follows: annual sales 5,000 units unit selling price $ 60 unit variable costs: production $ 29.90 selling $ 6 incremental fixed costs per year: production $ 35,000 selling $ 45,000 if the company adds this new product, it expects the contribution margin of other product lines to drop by $18,500 per year. what is the lowest price the company could charge and still break-even on the new product? multiple choice $39.60 $51.90 $40.60 $55.60
The lowest price the company could charge and still break-even on the new product is C. 40.60$.
Hence, option c. is the right choice.
Which firm were you referring to?A group of people can get together to create a corporation, which is a legal body used to conduct business and run industrial or commercial enterprises. According to the corporate legislation of its jurisdiction, a corporation may be set up in a variety of ways for tax and financial liability reasons.
An organisation type is what?The sole proprietorship, partnership, corporation, and S corporation are the four types of businesses that are most prevalent. According to state law, businesses may be organised as Limited Liability Companies (LLCs). The decision of a corporate structure is influenced by legal and tax factors.
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A company just paid a dividend of $2.89 per share. Dividends are expected to grow at a rate of 2% per year into the foreseeable future. An investor believes that given the riskiness of this investment that the appropriate rate of return is 12%. What is the most this investor should be willing to spend (intrinsic value) for a share of this common stock?
The most this investor should be willing to spend (intrinsic value) for a share of this common stock is $29.478.
To calculate the intrinsic value of a share of this common stock, we will use the Gordon Growth Model (Dividend Discount Model). The terms included in this calculation are dividend, growth rate, and required rate of return. Here is the step-by-step explanation:
1. Dividend (D0): The company just paid a dividend of $2.89 per share.
2. Growth Rate (g): Dividends are expected to grow at a rate of 2% per year.
3. Required Rate of Return (k): The investor believes that the appropriate rate of return is 12%.
Now, we can calculate the intrinsic value using the Gordon Growth Model formula: Intrinsic Value = (D0 * (1 + g)) / (k - g)
Plugging in the values, we have,
Intrinsic Value = (2.89 * (1 + 0.02)) / (0.12 - 0.02)
Intrinsic Value = (2.89 * 1.02) / 0.1
Intrinsic Value = 2.9478 / 0.1
Intrinsic Value = $29.478
So, the most this investor should be willing to spend for a share of this common stock is $29.478.
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The investor should be willing to spend up to $32.11 for a share of this common stock.
To determine the intrinsic value of the stock, we can use the dividend discount model, which calculates the present value of future dividends. The formula for this model is:
D / (r - g) equals intrinsic value
Where:
D is the current share dividend.
r is the required rate of return for the investor.
g is the anticipated yearly dividend growth rate.
Plugging in the given values, we get:
Intrinsic value = 2.89 / (0.12 - 0.02) = $32.11
Therefore, the investor should be willing to spend up to $32.11 for a share of this common stock.
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Determine whether the policy is an expansionary or contractionary fiscal policy: several military bases around the country, in which together employ tens of thousands of people, are closed.
The closure of several military bases around the country, which together employ tens of thousands of people, is an example of contractionary fiscal policy. This is because the government is reducing its spending by closing these military bases, which in turn reduces the number of people employed in the military sector.
This reduction in government spending leads to a decrease in overall economic activity, which can result in a contraction in the economy.
The closure of military bases will have a significant impact on the local economy as well. Many businesses in the surrounding areas may depend on the military personnel for their livelihood, and the closure of these bases could result in a decrease in their revenue. The reduction in government spending can also result in a decrease in consumer spending, as the employees who have lost their jobs may no longer have the income to support their previous levels of spending.
Overall, the closure of military bases is a contractionary fiscal policy that reduces government spending and can lead to a decrease in economic activity. While it may be necessary for the government to implement such policies to address budget deficits or other economic challenges, it is important to consider the potential impacts on the local and national economies.
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you have a portfolio which is comprised of 60% of stock a and 40% of stock b. what is the expected rate of return on this portfolio? state prob a b boom .20 15 % 9 % normal .80 8 % 20 % multiple choice 12.76% 12.88% 13.44% 13.56% 13.85%
The expected rate of return on the given portfolio is 12%. Option (a) 12.76% is the closest answer.
To work out the normal pace of return on the given portfolio, we want to utilize the weighted normal of the normal returns of the two stocks, involving their separate loads in the portfolio.
Weighted normal anticipated return = (Weight of stock A * Expected return of stock A) + (Weight of stock B * Anticipated return of stock B)
Subbing the given qualities, we get:
Weighted normal anticipated return = (0.6 * 0.15) + (0.4 * 0.20)
= 0.09 + 0.08
= 0.17 or 17%
Be that as it may, we additionally have the probabilities of the two stocks performing contrastingly on the lookout. In the event of a blast, the normal returns of the two stocks are 15% and 9% separately, while in a typical situation, they are 8% and 20% individually.
To integrate these probabilities, we want to find the weighted normal of the normal returns in light of the probabilities of a blast and a typical market.
Weighted normal anticipated return = (Blast likelihood * Weighted normal anticipated return in blast)
+ (Ordinary likelihood * Weighted normal anticipated return in typical)
Subbing the given qualities, we get:
Weighted normal anticipated return = (0.20 * ((0.6 * 0.15) + (0.4 * 0.09)))
+ (0.80 * ((0.6 * 0.08) + (0.4 * 0.20)))
= 0.12 or 12%
In this manner, the normal pace of return on the given portfolio is 12%, which is nearest to the choice (a) 12.76%.
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eBook Problem Walk Through Holt Enterprises recently paid a dividend, Do, of $3.50. It expects to have nonconstant growth of 12% for 2 years followed by a constant rate of 6% thereafter . The firm's required return is 10% a. How far away is the horizon date? 1. The terminal, or horizon, date is Year since the value of a common stock is the present value of all future expected dividends at time zero II. The terminal, or horizon, dat is the date when the growth rate becomes nonconstant. This occurs at time zero. 111. The terminal, or hottron, date is the date when the growth rate becomes constant. This occurs at the beginning of Year 2 IV. The terminal, or horizon, date is the date when the growth rate becomes constant. This occurs at the end of your V. The terminal, or horizon, dat is Infinity since common stocks do not have a maturity date Select . What is the firm's horton, of continuino, value? Do not round Intermediate calculations. Round your answer to the nearest $ What is the he's intrinske volion today. Part round intermediate calculations. Round your wwwer to that comest cent
To determine the horizon date, we need to identify when the growth rate becomes constant. We are told that the company will have nonconstant growth of 12% for two years, followed by constant growth of 6%. Therefore, the horizon date is the end of Year 2, when the growth rate becomes constant.
To calculate the horizon value, we need to calculate the dividends for Year 1, Year 2, and all subsequent years. Since the growth rate is nonconstant for the first two years, we need to use the two-stage dividend growth model.
The formula for the two-stage dividend growth model is:
P0 = (D1 / (1 + r)^1) + (D2 / (1 + r)^2) + (D2 * (1 + g2) / (r - g2)) / (1 + r)^2
Where:
P0 = Intrinsic value of the stock today
D1 = Dividend expected in Year 1
D2 = Dividend expected in Year 2
r = Required rate of return
g1 = Growth rate for the first stage (nonconstant growth)
g2 = Growth rate for the second stage (constant growth)
We are given that the current dividend is $3.50, and the growth rate for the first two years is 12%. Therefore:
D1 = $3.50 * (1 + 0.12) = $3.92
D2 = $3.92 * (1 + 0.12) = $4.38
We are also given that the required return is 10%, the growth rate for the second stage is 6%, and the horizon date is the end of Year 2.
Therefore:
r = 10%
g2 = 6%
n = 2
Using these values, we can calculate the horizon, or continuing, value:
Continuing value = D3 * (1 + g2) / (r - g2) = $4.38 * (1 + 0.06) / (0.10 - 0.06) = $139.56
Now we can use the two-stage dividend growth model to calculate the intrinsic value of the stock today:
P0 = (D1 / (1 + r)^1) + (D2 / (1 + r)^2) + (Continuing value / (1 + r)^2)
P0 = ($3.92 / 1.1) + ($4.38 / 1.1^2) + ($139.56 / 1.1^2) = $124.15 (rounded to the nearest dollar)
Therefore, "the intrinsic value of the stock today is $124.00."
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sustainable development goals (sdgs) are addressed to a. governments and businesses b. governments rather than businesses c. ngos d. foreign investors
The sustainable development goals are addressed to governments and business.
The sustainable development goals (SDGs) are primarily addressed to governments and businesses. While NGOs and foreign investors can certainly play a role in supporting the achievement of the SDGs, it is ultimately up to governments and businesses to implement policies and practices that prioritize sustainable development. Therefore, option a, governments and businesses, is the most accurate answer.
SDGs refer to the United Nations Sustainable Development Goals, a set of 17 global goals to address social, economic, and environmental challenges by 2030.
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a portfolio has a standard deviation of 15.1%, a beta of 1.12, and a treynor ratio of .085. the risk-free rate is 2.2%. what is the portfolio's expected rate of return? multiple choice 10.83% 11.38% 11.72% 12.41% 12.56%
The portfolio's expected rate of return is 11.38%.
The formula for calculating the expected rate of return of a portfolio is:
xpected return = risk-free rate + beta * (market return - risk-free rate)
To use this formula, we need to know the market return. Unfortunately, it's not provided in the question. However, we can use the Treynor ratio to estimate it:
Treynor ratio = (portfolio return - risk-free rate)beta.
0.085 = (portfolio return - 2.2%) / 1.12
Portfolio return - 2.2% = 0.085 * 1.12 = 0.0952
Portfolio return = 2.2% + 0.0952 = 11.52%
Therefore, the closest answer choice is 11.38%.
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redmont company's gross salaries and wages are $38,000, and it withholds $5,700 for income taxes and $2,907 for fica taxes. the journal entry to record the employees' pay will be:
The journal entry to record the employees' pay for Redmont Company will include Dr. Salaries and Wages Expense $38,000, Cr. Income Tax Payable $5,700, Cr. FICA Tax Payable $2,907, and Cr. Salaries Payable $29,393.
To record the employees' pay for Redmont Company, follow these steps:1. Record the gross salaries and wages, which is $38,000. This will be debited to the Salaries and Wages Expense account.
2. Record the withholdings for income taxes, which is $5,700. This will be credited to the Income Tax Payable account.
3. Record the withholdings for FICA taxes, which is $2,907. This will be credited to the FICA Tax Payable account.
4. Calculate the net pay by subtracting the withholdings from the gross salaries and wages ($38,000 - $5,700 - $2,907 = $29,393). This will be credited to the Salaries Payable account.
The journal entry to record the employees' pay for Redmont Company will be:
Debit: Salaries and Wages Expense - $38,000
Credit: Income Tax Payable - $5,700
Credit: FICA Tax Payable - $2,907
Credit: Salaries Payable - $29,393
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Talbot Industries is considering launching a new product. The new manufacturing equipment will cost $12 million, and production and sales will require an initial $5 million investment in net operating working capital. The company's tax rate is 40%.
What is the initial investment outlay? Write out your answer completely. For example, 2 million should be entered as 2,000,000.
$
The company spent and expensed $150,000 on research related to the new project last year. Would this change your answer?
Rather than build a new manufacturing facility, the company plans to install the equipment in a building it owns but is not now using. The building could be sold for $1.5 million after taxes and real estate commissions. How would this affect your answer?
The project's cost will
The project's cost of Talbot Industries will be $18,500,000.
To calculate the initial investment outlay for Talbot Industries, we need to consider the cost of the manufacturing equipment and the investment in net operating working capital.
Step 1: Add the cost of the manufacturing equipment and the investment in net operating working capital.
$12,000,000 (equipment cost) + $5,000,000 (working capital) = $17,000,000
So, the initial investment outlay is $17,000,000.
Regarding the $150,000 spent on research last year, this would not change the answer, as it is a sunk cost and should not be considered in the calculation of the initial investment outlay.
If the company plans to use the building it owns instead of building a new manufacturing facility, we need to consider the opportunity cost of not selling the building for $1.5 million after taxes and commissions.
Step 2: Add the opportunity cost of not selling the building to the initial investment outlay.
$17,000,000 (initial investment) + $1,500,000 (opportunity cost) = $18,500,000
Therefore, considering the use of the existing building, the project's cost will be $18,500,000.
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Today is your 21th birthday, and you are opening up an investment account. You plan to contribute $2,000 per year on your birthday. The first contribution will be made today, and the 45th, and final, contribution will be made on your 65h birthday. If you earn 10% a year on your investments, how much money will you have in the account on your 65h birthday, immediately after making your final contribution?
The amount of money that you will have in the investment account after making the final contribution is $126,934.74
To calculate the amount of money in your investment account on your 65th birthday after making your final contribution, we'll use the future value of an ordinary annuity formula:
FV = P * [(1 + r)^n - 1] / r
where:
FV is the future value of the annuity
P is the annual contribution ($2,000)
r is the interest rate (0.1 or 10%)
n is the number of years (45)
Now, let's plug in the values and calculate the future value:
FV = $2,000 * [(1 + 0.1)^45 - 1] / 0.1
FV = $2,000 * [63.46737064]
FV = $126,934.74
So, on your 65th birthday, immediately after making your final contribution, you will have $126,934.74 in your investment account.
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Concepts used in cash flow estimation Capital budgeting analysis not only requires the evaluation of cash flows but also requires the understanding of the origin of those cash flows. Based on your understanding of cash flows in a firm, answer the following questions: The present value of___can be used to determine the basis of a firm's value. Which of the following best describes incremental cash flows? They are the difference between the cash flows the firm will have if it accepts the project versus the cash flows it will have if it rejects the project. Incremental cash flows are not relevant because they will occur whether or not the project is accepted. Understanding the nature of projects Capital budgeting analysis often involves decisions related to expansion projects and/or replacement projects. Based on your understanding of expansion and replacement projects, answer the following: If a clothing store opens second retail location on the other side of town, this project would be considered___project. What are sunk costs? Sunk costs are___in the capital budgeting analysis. The role of externalities A cell phone company recently gave customers the ability to buy applications that they can download to their cell phones. Allowing customers to use these applications increased cell phone sales. This is an example of___externality.
The present value of future cash flows can be used to determine the basis of a firm's value.
Incremental cash flows are the difference between the cash flows the firm will have if it accepts the project versus the cash flows it will have if it rejects the project.
Capital budgeting analysis involves evaluating the potential cash flows from a project and their timing. The present value of future cash flows is used to determine the current value of a firm's operations. Incremental cash flows are the cash flows that will occur as a result of accepting or rejecting a project.
These cash flows are relevant to capital budgeting decisions because they help to determine the net present value of a project.
Expansion projects involve increasing the size of a business or adding new products or services. Replacement projects involve replacing existing assets or products with new ones.
Sunk costs are costs that have already been incurred and cannot be recovered. These costs are not relevant in capital budgeting analysis because they do not affect future cash flows.
Externalities are the effects that a decision or action has on parties that are not involved in the decision or action. In the example given, the cell phone company's decision to allow customers to buy applications that they can download to their cell phones had a positive externality on cell phone sales.
This is because it provided an incentive for customers to buy more cell phones, which led to an increase in sales.
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an example of institutional property would be a building that: group of answer choices generates rental income for the corporation that owns it is occupied by the corporation that owns it is rented from the owner by the corporation that occupies it none of the above
The correct answer is option B. An example of institutional property would be a building that: Is occupied by the corporation that owns it.
Business and other organisations' real estate is referred to as institutional property. Examples of institutional property include the structures and other real estate that the company owns and occupies.
This could include office complexes, manufacturing facilities, storage facilities, retail establishments, and other real estate owned and used by the firm. Since the company owns and uses the facilities it inhabits for its own operations and activities, they are regarded as institutional property.
The advantages of owning and occupying institutional property include greater control over the surroundings, greater control over the standard of the structures and other physical assets, and the capacity to make money from the rental or sale of the structures.
Complete Question:
An example of institutional property would be a building that:
Group of answer choices
A. Generates rental income for the corporation that owns it
B. Is occupied by the corporation that owns it
C. Is rented from the owner by the corporation that occupies it
D. None of the above
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true or false: the cost of land purchased 5 years ago should be included in the cost of a project involving the land.
The given statement "the cost of land purchased 5 years ago should be included in the cost of a project involving the land." is true because if the land is being used for the project, then the cost of the land purchased 5 years ago should be included in the cost of the project
Including the cost of land purchased 5 years ago in the cost of a project involving the land is appropriate because the cost of the land is a sunk cost that has already been incurred and cannot be recovered. The cost of the land is considered a part of the overall investment made in the project, and its inclusion will give a more accurate picture of the total cost of the project. By including the cost of land in the project, the company can make informed decisions about the profitability of the project and determine whether it will yield a desirable return on investment.
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loran's pretax accounting income in year 1 is $100,000. loran had bad debt expense for financial reporting purposes of $14,000 in year 1. in year 1, loran deducted $4,000 in bad debts. loran expects the temporary difference to reverse $3,000 in year 2 and $7,000 in year 3. the income tax rate is 40%. what is the amount in the deferred tax asset account at the end of year 2?
The deferred tax asset account balance at the end of Year 2 is $2.800
How to calculate the amount in the deferred tax asset accountLoran's pretax accounting income in Year 1 is $100,000, with a bad debt expense of $14,000 for financial reporting purposes.
For tax purposes, Loran deducted $4,000 in bad debts, creating a temporary difference of $10,000 ($14,000 - $4,000).
The tax rate is 40%.
At the end of Year 1, the deferred tax asset is calculated as $10,000 x 40% = $4,000.
The temporary difference is expected to reverse by $3,000 in Year 2 and $7,000 in Year 3.
In Year 2, the reversal of the temporary difference reduces the deferred tax asset. The reduction is calculated as $3,000 x 40% = $1,200.
Therefore, the deferred tax asset account balance at the end of Year 2 is $4,000 - $1,200 = $2,800.
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If you are the writer of a call option a. You believe that the price of the underlying asset will decrease b. Collect a premium from the call holder O c. Are obligated to buy the underlying asset for
If you are the writer of a call option C, you are obligated to buy the underlying asset at the strike price of the option if the call holder chooses to exercise their right.
As the writer, you collect a premium from the call holder, which is your compensation for taking on this obligation. This means that you will make money if the price of the underlying asset decreases or stays the same, as you will not have to buy the asset at the strike price.
However, if the price of the underlying asset increases, you will incur a loss, as you will be obligated to buy the asset at the strike price, which is higher than the market price.
Therefore, correct option is C.
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Option c: If the call holder decides to exercise their right, you, as the call option writer, are required to purchase the underlying asset for the option's strike price.
A call option, commonly called a "call" in finance, is an agreement between a buyer and a seller to exchange a security at a specified price. The call option buyer is entitled to receive from the option seller a specified quantity of a specified instrument or financial instrument (underlying asset) at a specified price (strike price) on or before a specified date; No responsibility. Please check the date (expiration date) before purchasing. The owner currently has a long position in the offered asset. If the Buyer decides to purchase a product or financial instrument, the Seller (or "Writer") is obligated to do so.
As a result, the seller now has her position short of the specified asset. Buyers must pay a fee (called a premium) for this right. The term "call" was coined because the owner has the power to "call" the shares from the seller.
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firm has an opportunity to invest $4,210 today which will yield $4,450 in one year. if interest rates are 4%, what is the net present value (npv) of this investment? would you accept or reject this investment project?
The NPV of this investment is approximately $68.85. Since the NPV is positive, you should accept this investment project as it is expected to generate value above the 4% interest rate.
To calculate the net present value (NPV) of this investment:
1. Identify the cash flows: The initial investment is $4,210, and the return after one year is $4,450.
2. Determine the discount rate: The interest rate is 4%.
3. Calculate the present value of each cash flow: Use the formula PV = FV / (1 + r)n, where PV is the present value, FV is the future value, r is the discount rate, and n is the number of periods.
For the return of $4,450 in one year, the present value would be:
PV = $4,450 / (1 + 0.04)^1 = $4,450 / 1.04 ≈ $4,278.85
4. Calculate the NPV: Subtract the initial investment from the present value of future cash flows.
NPV = $4,278.85 - $4,210 ≈ $68.85
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You have just purchased a share of stock for $21.96. The company is expected to pay a dividend of $0.57 per share in exactly one year. If you want to earn a 9.7% return on your investment, what price do you need if you expect to sell the share immediately after it pays the dividend The price one year from now should be $____ (Round to the nearest cent.)
The price one year from now should be $22.48.
To calculate the price one year from now that would give a 9.7% return on investment, we need to use the dividend discount model. This model values a stock based on the present value of its future dividends. In this case, the dividend is $0.57 per share, and we want to earn a 9.7% return on our investment.
So, we can calculate the price one year from now as follows:
Price one year from now = (Dividend / (1 + Return on investment)) + Price of stock
Price one year from now = ($0.57 / (1 + 0.097)) + $21.96
Price one year from now = ($0.57 / 1.097) + $21.96
Price one year from now = $0.52 + $21.96
Price one year from now = $22.48
Therefore, if we expect to sell the share immediately after it pays the dividend and we want to earn a 9.7% return on our investment, the price one year from now should be $22.48 (rounded to the nearest cent).
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The Big Mac Standard constructs a fairly standardized market basket for PPP comparisons, and the basic ingredients are standardized and internationally traded. The result of international comparisons on this standard is (a) clear evidence against absolute PPP. (b) clear evidence in favor of absolute PPP. (c) clear evidence in favor of long-run PPP. (d) clear evidence in favor of relative PPP. (e) none of these responses are correct
The anwer is C.The result of international comparisons using the Big Mac Standard provides clear evidence in favor of relative PPP, as it compares the prices of the same product (Big Mac) in different countries.
The Big Mac Standard provides a standardized market basket for comparing purchasing power parity (PPP) across countries. However, it does not provide clear evidence for absolute PPP or long-run PPP.
It is important to note that the Big Mac Standard is just one of many methods for comparing PPP, and each method has its own strengths and limitations.
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a __________ can separate the relatively permanent and temporary effects of a variable.
A longitudinal study can separate the relatively permanent and temporary effects of a variable.
In a longitudinal study, data is collected over a period of time, often years, and can help to distinguish between the short-term and long-term effects of a variable. By tracking changes in the same group of individuals over time, researchers can better understand how a variable affects them both in the short-term and over the course of their lives.
For example, a longitudinal study could be used to examine the long-term effects of childhood experiences on adult mental health. By following the same group of individuals from childhood to adulthood, researchers could identify which experiences have long-lasting effects on mental health and which effects are temporary.
Longitudinal studies are useful for studying changes in behavior, attitudes, and health outcomes, and can provide valuable insights into the complex relationships between variables over time.
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A transfer design can separate the relatively permanent and temporary effects of a variable. Option D is correct.
The product and process designs are transferred to production during design transfer, which is the culmination of the efforts made by the medical device design team. Configuration move is a part of the FDA's Clinical Gadget Quality Framework Guideline Configuration Controls.
Design Transfer not only ensures compliance, but also the robustness of your manufacturing and supply chain processes and the long-term stability of your business. You will learn more about the significance of Design Transfer and Process Validation in the development of medical devices in this blog post.
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Incomplete Question:
A ______ can separate the relatively permanent and temporary effects of a variable.
a. performance curve
b. percentage change in ability plot
c. performance average plot
d. transfer design
assume that the required reserve ratio is 20 percent and that the fed engages in an open market purchase of $1,000 of government securities. the central bank buys $1,000 of government securities only from commercial banks. the maximum change in excess reserves, banking system loans, and the total money supply will be
In this case, the total money supply is $5,000.
How to find total money supplyWhen the Federal Reserve (the Fed) conducts an open market purchase of $1,000 in government securities, it affects the excess reserves, banking system loans, and the total money supply.
With a required reserve ratio of 20%, commercial banks must hold 20% of their deposits as reserves.
The Fed's purchase of $1,000 in government securities from commercial banks results in an increase of $1,000 in their excess reserves. This allows banks together create new loans and expand the money supply.
To calculate the maximum change in the total money supply, we can use the money multiplier formula:
Money Multiplier = 1 / Required Reserve Ratio.
In this case, the money multiplier is 1 / 0.20 = 5.
Therefore, the maximum change in the total money supply is the increase in excess reserves multiplied by the money multiplier:
$1,000 x 5 = $5,000.
The maximum change in banking system loans would be the same as the change in the total money supply minus the initial increase in excess reserves:
$5,000 - $1,000 = $4,000.
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Banks are assessed deposit insurance premiums based on the level of insured deposits, yet banks hold significantly more insured than uninsured deposits Why? How is this connected to a bank's liquidity risk and management?
Banks hold significantly more insured deposits because it helps them manage their liquidity risk. Insured deposits provide a stable funding source that banks can rely on during times of stress.
Additionally, holding more insured deposits can help banks maintain a higher credit rating, which can lower their funding costs. When it comes to deposit insurance premiums, the level of insured deposits is used as a proxy for a bank's overall riskiness.
Banks that hold more insured deposits are generally seen as less risky, and therefore pay lower premiums. However, banks also need to manage their uninsured deposits carefully, as they can be more volatile and potentially cause liquidity problems if a large number of depositors withdraw their funds at the same time.
Overall, banks need to balance their mix of insured and uninsured deposits in order to maintain a stable funding base and manage their liquidity risk effectively.
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an investor is in the 30% tax rate and corporate bonds are paying 9%.what must municipals bonds (munis) pay to offer an equivalent after tax yield?
Answer: 6.3%
Explanation: To determine the equivalent after-tax yield for municipal bonds (munis) for an investor in the 30% tax bracket, with corporate bonds paying 9%, you can follow these steps:
1. Identify the investor's tax rate, which is= 30%.
2. Determine the yield on corporate bonds, which is= 9%.
3. Calculate the after-tax yield on corporate bonds by using the formula:
after-tax yield = yield * (1 - tax rate).
4. Plug in the values: after-tax yield =
after tax yield= 9% * (1 - 0.30)
= 9% * 0.70
= 6.3%.
Hence, The equivalent after-tax yield for municipal bonds (munis) must be 6.3% to offer an equivalent after-tax yield for an investor in the 30% tax bracket with corporate bonds paying 9%.
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among the resource-based consideration a firm faces when deciding whether to enter foreign markets is:
One of the resource-based considerations that a firm faces when deciding whether to enter foreign markets is the availability and accessibility of key resources in those markets.
Resources can include physical assets such as raw materials, manufacturing facilities, distribution networks, or access to technology, as well as intangible assets such as knowledge, expertise, and intellectual property.
Firms need to assess whether they have the necessary resources to enter and operate in foreign markets effectively. This may involve evaluating the availability, quality, cost, and legal/regulatory aspects of accessing key resources in foreign markets.
For example, a firm may need to consider whether it can obtain the necessary raw materials at a reasonable cost, whether it can establish manufacturing or distribution facilities in a foreign country, or whether it can protect its intellectual property rights.
The consideration of resources is critical for firms to determine their competitive advantage and ability to compete in foreign markets.
Inadequate access to key resources may pose barriers to entry or hinder a firm's ability to establish a sustainable competitive advantage in a foreign market.
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if a small construction company is hired to build a private school, what facility layout would likely be used?
If a small construction company is hired to build a private school, it is likely that a functional facility layout would be used.
In a functional layout, equipment and processes are grouped together based on their function, which allows for efficient use of space and equipment. This layout is commonly used in construction projects where a specific function or task is being performed, such as building a school where specific areas for classrooms, offices, gymnasiums, and other functions need to be constructed.
In a functional layout, the equipment and personnel are arranged to optimize the flow of materials and people, which can help to minimize the time and cost of completing the project while ensuring that the final product meets the needs of the customer.
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When performing sensitivity analysis, one should be most concerned if ?
A. the NPVs are negative for all projects. B. personnel from various departments disagree about the project s viability. C. NPV and IRR results point to different recommendations. D. small changes in estimated cash flows produce large changes in NPV. E. the projects are longer term than those normally chosen by the firm.
When performing sensitivity analysis, one should be most concerned if small changes in estimated cash flows produce large changes in NPV, which indicates that the project is highly sensitive to changes in cash flows and therefore may be riskier. The answer is D.
Sensitivity analysis is a tool used to assess the impact of changes in key variables, such as cash flows, on a project's net present value (NPV) or internal rate of return (IRR).
A high sensitivity to changes in cash flows suggests that the project is riskier, as small changes in cash flows can have a significant impact on its NPV or IRR. On the other hand, negative NPVs for all projects, disagreements among personnel, or discrepancies between NPV and IRR results are issues that can be addressed through further analysis or discussion.
The concern is that highly sensitive projects may be more vulnerable to changes in market conditions, making it difficult to achieve the desired returns.
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