True, as long as the coefficient of correlation between two stocks is less than 1, some reduction in risk can be obtained by combining the securities.
The coefficient of correlation measures the degree to which two variables, in this case, the returns of two stocks, move together. It ranges from -1 to 1. A coefficient of 1 indicates a perfect positive correlation, meaning that the returns of both stocks move in the same direction all the time.
Conversely, a coefficient of -1 indicates a perfect negative correlation, meaning the returns move in opposite directions. A coefficient of 0 suggests no correlation between the returns of the stocks.
By diversifying a portfolio and combining two stocks with a coefficient of correlation less than 1, an investor can reduce their risk exposure. The reason for this is that when one stock performs poorly, the other stock might perform well, or at least not as poorly, thereby offsetting the overall negative effect.
This diversification helps to lower the overall risk in the portfolio as the fluctuations in the returns of the individual stocks will be partially offset by each other, thereby providing a smoother return profile for the investor.
In summary, combining two stocks with a coefficient of correlation less than 1 allows for a reduction in risk due to the diversification benefits, which help to smooth out the overall return profile of the combined securities.
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An individual wishes to have a fixed portion of the portfolio liquidated each month. He or she should elect which type of withdrawal plan?
A. Fixed shares
B. Fixed period
C. Fixed percentage
D. Fixed dollar
If an individual wishes to have a fixed portion of their portfolio liquidated each month, they should elect a fixed dollar withdrawal plan. This type of withdrawal plan allows the individual to specify the exact amount they want to withdraw from their portfolio each month, regardless of any fluctuations in the portfolio's value. The correct option is d.
With a fixed dollar withdrawal plan, the individual can maintain a steady income stream and have greater control over their spending. This type of plan is particularly useful for retirees or individuals who are relying on their portfolio for income, as it allows them to budget and plan accordingly.
It's important to note that while a fixed dollar withdrawal plan can provide a steady income stream, it does come with some risks. If the portfolio experiences significant losses, the fixed dollar withdrawals may deplete the portfolio more quickly than anticipated. To mitigate this risk, individuals may want to consider setting a maximum withdrawal rate as a percentage of the portfolio value or adjusting the fixed dollar amount periodically based on the portfolio's performance.
Overall, a fixed dollar withdrawal plan can be a useful strategy for individuals who want a consistent income stream from their portfolio, but it's important to consider the risks and adjust the plan as necessary to ensure long-term sustainability.The correct option is d.
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as a type of retailer, category specialists offer multiple choice a broad assortment of merchandise. highly trained personnel throughout the stores. high prices and high-end merchandise. a limited, but complementary merchandise assortment. predominantly a self-service approach with a narrow, deep assortment.
As a type of retailer, category specialists offer d. a limited, but complementary merchandise assortment.
Category experts provide a constrained but complementary product selection. Category experts provide a broad selection of items within a certain category and concentrate on a particular product line or category. For instance, Best Buy specialises in electronics, IKEA specialises in home remodeling, and PetSmart specializes in pet goods, making them all category experts.
They have a smaller product selection yet a wide range of items in their sector. Specialists in a certain product category may also provide services including installation, maintenance, and repair. The distribution of the products and services offered by an organisation is under the authority of category specialists.
Complete Question:
As a type of retailer, category specialists offer
a. a broad assortment of merchandise.
b. highly trained personnel throughout the stores.
c. high prices and high-end merchandise.
d. a limited, but complementary merchandise assortment.
e. predominantly a self-service approach with a narrow, deep assortment.
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A market failure occurs when there is an inefficient allocation of resources. In other words, the true cost of a good is not reflected in the price. This might be because of a third-party benefit but does not pay for that benefit. Or, it could arise due to a cost that is imposed on a third party without their consent and compensation. In turn, this leads to an inefficient allocation of resources as a third party may bear the cost or benefit. There are many causes of market failure which range from externalities to inefficient supply. The inefficient allocation of resources is not just limited to the supply of goods. Market failure can also occur through externalities. This can be both positive and negative.
Propose and analyse any four causes of market failure.
Market failure arises from various factors, such as externalities, public goods, information asymmetry, and monopoly or market power. Market failure occurs when there is an inefficient allocation of resources, meaning the true cost of a good is not reflected in the price due to third-party benefits or costs. Here are four causes of market failure:
1. Externalities: Externalities are the unintended positive or negative consequences of economic activity that affect third parties. Positive externalities (e.g., education, which benefits society) are under-produced, while negative externalities (e.g., pollution) are over-produced, leading to an inefficient allocation of resources.
2. Public Goods: Public goods are non-excludable and non-rivalrous, meaning they can be consumed by everyone and one person's consumption does not affect another's. Examples include clean air and public parks. Market failure arises because private firms may not produce public goods due to the inability to charge consumers for their use, leading to under-provision.
3. Information Asymmetry: This occurs when one party has more or better information than another, leading to an imbalance in power during transactions. This can lead to adverse selection (e.g., in insurance markets) or moral hazard (e.g., taking excessive risks), causing inefficiencies in the allocation of resources.
4. Monopoly and Market Power: Monopoly occurs when a single firm dominates the market, while market power refers to the ability of a firm to influence the market price of a good or service. Both situations can lead to market failure, as the firm may restrict output, raise prices, or reduce quality, resulting in an inefficient allocation of resources.
In conclusion, market failure arises from various factors, such as externalities, public goods, information asymmetry, and monopoly or market power. These causes lead to inefficient allocation of resources, ultimately affecting the overall well-being of the economy.
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Shi Import-Export's balance sheet shows $300 million in debt, $50 million in preferred stock, and $250 million in total common equity. Shi's tax rate is 40%, rd = 8%, rps = 7.1%, and rs = 10%. If Shi has a target capital structure of 30% debt, 5% preferred stock, and 65% common stock, what is its WACC? Round your answer to two decimal places.
Shi Import-Export's WACC is 8.10%.
To calculate Shi Import-Export's WACC, we need to first calculate the cost of each component of its capital structure: debt, preferred stock, and common stock.
The cost of debt (rd) is given as 8%, so we can simply use that. The cost of preferred stock (rps) is also given as 7.1%.
To calculate the cost of common stock (rs), we can use the capital asset pricing model (CAPM):
rs = rf + β(rs - rf)
where rf is the risk-free rate (assumed to be 2.5%), β is the company's beta (assumed to be 1.2), and rs - rf is the market risk premium (assumed to be 5%).
Using these values, we can calculate the cost of common stock as:
rs = 2.5% + 1.2(5%) = 8.5%
Next, we need to calculate the weights of each component of the capital structure. Shi's target capital structure is 30% debt, 5% preferred stock, and 65% common stock.
Using these weights and the costs of each component, we can calculate the weighted average cost of capital (WACC) as:
WACC = (0.30 x 0.08) + (0.05 x 0.071) + (0.65 x 0.085) x (1 - 0.40) = 0.081 or 8.10%
Therefore, Shi Import-Export's WACC is 8.10%.
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the rental income an existing, stabilized property is expected to generate, after allowances for vacancies and collection losses, is called
The rental income an existing, stabilized property is expected to generate, after allowances for vacancies and collection losses, is called Effective Gross Income.
Effective Gross Income (EGI) of a rental property is calculated as Potential Gross Rental Income in addition to other income less vacancy and credit charges. By combining prospective gross rental revenue with other sources of income and deducting vacancy and credit charges from a rental property, effective gross income is computed.
Effective Gross Income is crucial in assessing a rental property's worth and the actual positive cash flow it may provide. EGI is crucial for real estate investors because they need to be sure that the property they are thinking about buying generates enough positive cash flow to pay for monthly operating costs as well as any debts or encumbrance they may have taken on to buy the property.
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as a manager, tariq has consistently demonstrated an appropriate amount of concern for both people and production. on the leadership grid, tariq's style would be classified as
Tariq's leadership style would likely be classified as "Team Management" on the Leadership Grid, also known as the Blake-Mouton Grid or Managerial Grid.
The Leadership Grid is a model that assesses leadership styles based on two dimensions: concern for people and concern for production. The concern for people dimension measures the leader's level of consideration, support, and respect for the needs and well-being of team members. The concern for production dimension measures the leader's focus on achieving tasks, goals, and results.
A leadership style that demonstrates an appropriate amount of concern for both people and production would fall into the Team Management style, which is characterized by high concern for both people and production. Leaders with this style strive to balance the needs of their team members with the goals and tasks at hand, aiming to achieve both high productivity and employee satisfaction. They emphasize teamwork, collaboration, and effective communication to achieve results while also valuing the well-being and development of their team members.
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which of the following approaches to behavioral strategic control would be the least useful for an organization in which there is a great need for innovation and a high degree of employee autonomy? group of answer choices culture rewards rules incentives
Of the given options, the approach to behavioral strategic control that would be the least useful for an organization in which there is a great need for innovation and a high degree of employee autonomy is rules. Option C.
Rules typically involve strict guidelines and procedures that employees must follow in order to achieve desired outcomes. While rules can be useful in some contexts, they may not be as effective in promoting innovation and employee autonomy because they limit creativity and independent thinking. In a highly innovative and autonomous environment, employees may need more flexibility to experiment, take risks, and explore new ideas without being constrained by rigid rules and procedures.
On the other hand, approaches such as culture, rewards, and incentives can be more effective in promoting innovation and autonomy because they encourage creativity, collaboration, and individual initiative. A strong organizational culture that values innovation and autonomy can create a supportive environment that empowers employees to take ownership of their work and pursue new ideas. Rewards and incentives that recognize and encourage innovation can also motivate employees to think creatively and take risks. Option C.
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Current Attempt in Progress Wildhorse, Inc., has net income of $11,760,000 on net sales of $367,500,000. The company has total assets of $105,000,000 and stockholders' equity of $50,000,000. Use the extended DuPont identity to find the return on assets and return on equity for the firm. (Round answers to 2 decimal places, e.g. 12.25 or 12.25%.) Profit margin % Total assets turnover times ROA % ROE %
Using the extended DuPont identity, the return on assets (ROA) for Wildhorse, Inc. is 11.20% and the return on equity (ROE) is 23.52%.
To find the return on assets (ROA) and return on equity (ROE) for Wildhorse, Inc., using the extended DuPont identity, we need to calculate the profit margin, and total assets turnover, and then apply these values to find ROA and ROE.
1. Profit margin: Profit margin = (Net income / Net sales) x 100
Profit margin = ($11,760,000 / $367,500,000) x 100
Profit margin = 3.20%
2. Total assets turnover: Total assets turnover = Net sales / Total assets
Total assets turnover = $367,500,000 / $105,000,000
Total assets turnover = 3.5 times
3. ROA: ROA = Profit margin x Total assets turnover
ROA = 3.20% x 3.5
ROA = 11.20%
4. ROE: ROE = ROA x (Total assets / Stockholders' equity)
ROE = 11.20% x ($105,000,000 / $50,000,000)
ROE = 11.20% x 2.1
ROE = 23.52%.
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marsha incorporated has the following budgeted data for the coming year: cash balance, beginning $ 15,700 collections from customers 145,700 direct materials purchases 25,700 expenses: operating expenses 51,400 payroll 75,700 income taxes 6,000 other: machinery purchases 30,700 operating expenses include $20,700 depreciation for buildings and equipment. all purchases of materials are paid for in the period of purchase. the company requires a minimum cash balance of $25,000. required: compute the amount the company needs to finance or the excess cash available for marsha to invest
The ending cash balance is negative, it means that the company needs financing of $49,500 to meet its cash requirements for the year. Alternatively, if the company had a positive ending cash balance, it would have excess cash available for investment.
To compute the amount of financing needed or excess cash available for investment, we need to calculate the company's total cash inflows and outflows for the year.
Cash inflows:
Collections from customers = $145,700
Cash outflows:
Direct materials purchases = $25,700
Operating expenses (excluding depreciation) = $51,400
Payroll = $75,700
Income taxes = $6,000
Depreciation = $20,700
Machinery purchases = $30,700
Total cash outflows = $210,900
To determine the company's ending cash balance, we need to add the beginning cash balance to the total cash inflows and subtract the total cash outflows:
Beginning cash balance = $15,700
Total cash inflows = $145,700
Total cash outflows = $210,900
Ending cash balance = Beginning cash balance + Total cash inflows - Total cash outflows
Ending cash balance = $15,700 + $145,700 - $210,900
Ending cash balance = -$49,500
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exercising PEOPLE PROBLEMS The Situation You are the controller at a manufacturing company that sells refrigeration and food packaging equipment worldwide. Your company recently hired a temporary worker, Kelly, to help put a new International sales tax tracking system in place. She's well qualified, a hard worker, a team player, and highly effective at her job. You want to bring her on full time, so you have jumped through all the hoops and created a middle management job for her that would put her on equal footing with her current boss, the accounting manager, Elizabeth (who reports to you. You are going to finish the process as soon as you get back from a week of vacation, The Dilemma While you were gone, Elizabeth obtained Kelly's résume from the temp agency. She noticed some holes in the timeline and met with Kelly in a closed meeting. After the meeting, she had security escort Kelly out of the building and warned her not to retum. She wrote a memo to you stating that in the interview, as she probed some of the discrepancies in the résumé and job application, Kelly revealed that she had struggled with alcohol Issues when she was younger, but now she was 15 years dean and sober. Despite this, Elizabeth felt that Kelly's past made her unqualified for the job, and felt so strongly about it that she, Elizabeth, would resignil kelly was brought back in any capacity, Elizabeth has been with the company for 20 years and runs the accounting department like a tight ship. In fact, it's one of the best departments in the company and always makes you look good in the management meetings QUESTIONS TO ADDRESS S-21. What areas of management functions are involved in this scenario 5-22. What are the ethicales in this situation 5-23What is the logical, busin-bied approach for a man ager to take in this situation! Explain your position 5-21. What would you do and why? 5:25. How would you describe the culture of this company based on the limited information in the scenario exercising PEOPLE PROBLEMS The Situation You are the controller at a manufacturing company that sells refrigeration and food packaging equipment worldwide. Your company recently hired a temporary worker, Kelly, to help put a new international sales tax tracking system in place She's well qualified, a hard worker, a team player, and highly effective at her job. You want to bring her on full time, so you have jumped through all the hoops and created a middle management job for her that would put her on equal footing with her current boss, the accounting manager, Elizabeth (who reports to you). You are going to finish the process as soon as you get back from a week of vacation. The Dilemma While you were gone, Elizabeth obtained Kelly's résume from the temp agency. She noticed some holes in the timeline and met with Kelly in a closed meeting. After the meeting, she had security escort Kelly out of the building and wamed her not to retum. She wrote a memo to you stating that in the interview, as she probed some of the discrepancies in the resume and job application, Kelly revealed that she had struggled with alcohol issues when she was younger, but now she was 15 years clean and sober. Despite this, Elizabeth felt that Kelly's past made her unqualified for the job, and felt so strongly about it that she, Elizabeth, would resign if Kelly was brought back in any capacity, Elizabeth has been with the company for 20 years and runs the accounting department like a tight ship. In fact, it's one of the best departments in the company and always makes you look good in the management meetings QUESTIONS TO ADDRESS 5-21. What areas of management functions are involved in this scenario 5-22 What are the ethical issues in this situation? 5-23. What is the logical, business-based approach for a man- ager to take in this situation? Explain your position 5-21. What would you do and why? 5-25. How would you describe the culture of this company based on the limited information in the scenario
Okay, let's break this scenario down:
5-21. The areas of management involved here are:
- Leadership: You as the controller have to lead in resolving this difficult situation.
- Human resources management: Managing the hiring, performance issues and termination of employees.
- Accounting/Finance: Given that Kelly was brought on to help implement an accounting system and Elizabeth runs the accounting dept.
5-22. The main ethical issues here are:
- Discrimination: Elizabeth may be discriminating against Kelly due to her past struggles, despite her being 15 years sober.
- Fairness: Is it fair to remove Kelly from her new role after she was already hired for it?
- Trust: Did Elizabeth violate trust by reviewing Kelly's private resume behind your back?
5-23. The logical, business-focused approach here would be:
- Weigh the pros and cons of Kelly vs. Elizabeth remaining in their roles. Who is more valuable to the key business needs?
- Determine if either employee's actions warrant discipline or termination. Or if the issues can be resolved professionally.
- Consider if there are any compromises or alternative solutions, e.g. Kelly remaining in a different role, Elizabeth reporting to someone else, etc.
- Make a decision that prioritizes the good of the key business operations and team productivity.
5-21. Given the options, I would try to have a constructive conversation with both Elizabeth and Kelly to find a reasonable resolution, rather than immediately terminating either one.
- Kelly seems a valuable hire, so I would want to try and make the role work if possible.
- Elizabeth also seems a key employee, so losing her should be an absolute last resort.
- With open communication, they may be able to find a way to professionally co-exist or alternative solutions could emerge.
- Only if resolution proves truly impossible would I consider letting either one go. Compromise and pragmatism seem prudent here.
5-25. Based on this limited scenario, I would describe the culture of this company as:
- Fastidious and by-the-book, given how strictly Elizabeth seems to enforce procedures.
- Closed-off, as there is a lack of transparency around key decisions and Elizabeth's actions seem isolating.
- With an undercurrent of politics, as power dynamics and territorialism also seem to be in play.
- However, the company also appears performance-oriented, as under-performing employees would presumably be let go.
- So, a mix of positive and concerning cultural elements based on this dilemma alone. More context would be needed to determine the full culture.
Apple Pay and Android Pay _______.
Question 11 options:
cannot use NFC
use magnetic stripe technology
store all credit card information on the phone itself
combine EMV and tokenization
Apple Pay and Android Pay are payment services that allow their users to make payments with their mobile phones.
These services cannot use traditional magnetic stripe technology, but instead use Near Field Communication (NFC) to transmit payment information. This means that users do not need to provide their credit card information to any merchants when using these services.
Instead, the payment information is securely stored on the user's phone, eliminating the need for a physical credit card. Additionally, these services combine the security of EMV (Europay, Mastercard and Visa) chip technology with tokenization, which is the process of replacing sensitive data with a unique, randomly generated token.
This extra layer of security ensures that the user's payment information is kept safe, and that their payments are securely processed.
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Airbus sold an A400 Aircraft to Delta Airlines, a U.S Company,and billed $30 million payable in six months. Airbus is concernedabout the euro proceeds from international sales and would like tocont rol exchange risk. The current spot exchange rate is 1.05 $/euro and the six-month forward rate exchange rate is 1.10 $/euro. Airbus can buy a six-month put option on U.S. dollars with a strike price of 0.95 euro/$ for a premium of .02 euro per U.S. dollar. Currently, the six-month interest rate is 2.5% in the eurozone and 3% in the United States.Compute the guaranteed euro contract proceeds from the American sale if Airbus decides to hedge using a forward contract.
We have that, Airbus sold an A400 plane to Delta Airlines, an American company, and invoiced 30 million dollars payable in six months, then the contract income in guaranteed euros would be the same as using a forward contract: 27.27 million euro.
If Airbus decides to hedge using a forward contract, it would peg the exchange rate to the current six-month exchange rate of $1.10/euro. Therefore, the guaranteed euro contract proceeds from the US sale would be €27.27 million ($30 million divided by $1.10/euro). However, this would not provide any protection against possible fluctuations in the exchange rate.
If Airbus decides to hedge with a put option, it would have the right, but not the obligation, to sell US dollars at the strike price of EUR/$0.95. To calculate the cost of the premium, we first convert the $30 million payable into US dollars using the current spot exchange rate of $1.05/euro. This gives us $31.43 million. The put option premium would be €0.02 per US dollar, so the total cost of the premium would be €628,600 (€0.02 x US$31.43 million).
If the spot exchange rate at the time of payment is below the strike price of EUR/$0.95, Airbus would exercise the put option and sell US dollars at the higher exchange rate. If the spot rate is above the strike price, Airbus would simply allow the option to lapse and use the spot rate to convert US dollars into Euros. Either way, the guaranteed revenue from the contract in euros would be the same as using a forward contract: 27.27 million euros.
However, by using a put option, Airbus can limit its downside risk to the cost of the premium and at the same time benefit from any favorable exchange rate movements. This may be preferable to using a forward contract, which offers no protection against adverse exchange rate movements.
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which of the following is true regarding price? multiple choice question. it should be based on the value that the customer perceives. it should be as high as legally allowed. it should always be based on competitors' prices. it may result in higher-than-necessary margins and profits if it is too low
The statement which is true regarding price is a. it should be based on the value that the customer perceives.
Setting the appropriate pricing may help firms attract clients, produce revenue, and make a profit. Pricing is a crucial component of marketing strategy. Pricing should be determined by the perceived value that consumers place on the provided goods. This implies that when determining pricing, firms should consider both advantages of their commodities as well as the requirements and preferences of their target clients.
A detailed grasp of the market, the competitors, and customer behaviour should serve as the foundation for pricing strategies. Pricing decisions can have a detrimental effect on sales and earnings. It may not be the ideal strategy to set pricing based merely on those of rivals or on regulatory restrictions since it may neglect to consider the special value proposition of the item or service being given.
Complete Question:
Which of the following is true regarding price?
a. it should be based on the value that the customer perceives.
b. it should be as high as legally allowed.
c. it should always be based on competitors' prices.
d. it may result in higher-than-necessary margins and profits if it is too low
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The third phase in the SDLC is planning and in this phase the analyst thoroughly studies the organization's current procedures and the information systems used to perform organizational tasks.TRUE/FALSE
TRUE. The third phase in the SDLC (Software Development Life Cycle) is planning, and during this phase, the analyst thoroughly studies the organization's current procedures and the information systems used to perform organizational tasks.
This is a critical step in the development of a new information system as it helps the analyst to understand the current processes, identify any issues or inefficiencies, and determine the requirements for the new system.
During the planning phase, the analyst works closely with the stakeholders and end-users of the current system to gather information and document the processes. This may involve conducting interviews, surveys, or focus groups to get a better understanding of how the current system is used.
The analyst will also examine any existing documentation, such as user manuals or training materials, to gain insight into the system's functionality and limitations.
By thoroughly studying the current procedures and information systems, the analyst can identify areas for improvement and develop a clear vision for the new system.
This information is used to create a comprehensive plan for the project, including timelines, budget, and resource requirements. Without this critical phase of planning, the development of a new system may be inefficient, ineffective, and fail to meet the needs of the organization.
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1.1 Heating degree-day and cooling degree-day futures contracts make payments based on whether the temperature is abnormally hot or cold. Explain why the following businesses might be interested in such a contract: a. Soft-drink manufacturers. b. Ski-resort operators. c. Electric utilities. d. Amusement park operators. 1.2 Suppose the businesses in the previous problem use futures contracts to hedge their temperature-related risk. Who do you think might accept the opposite risk?
Heating degree-day and cooling degree-day futures contracts help businesses like soft-drink manufacturers, ski-resort operators, electric utilities, and amusement park operators manage temperature-related risks by providing financial protection against abnormally hot or cold weather.
a. Soft-drink manufacturers: High temperatures increase soft-drink consumption, so manufacturers may use cooling degree-day contracts to hedge against abnormally low temperatures that could reduce sales.
b. Ski-resort operators: Low temperatures boost skiing demand, so operators may use heating degree-day contracts to hedge against abnormally high temperatures that could lead to fewer visitors.
c. Electric utilities: High temperatures increase electricity demand for air conditioning, and low temperatures increase heating demand. Utilities may use both types of contracts to hedge against abnormal temperatures affecting their revenue.
d. Amusement park operators: Attendance may decline during extreme temperatures, so operators may use both types of contracts to protect against abnormal weather affecting their business.
For question 1.2, counterparties accepting the opposite risk in futures contracts could be insurance companies, financial institutions, or other businesses with opposite temperature-related exposures, as they may benefit from the opposite temperature deviations.
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What is the Effective Annual Yield of a 135-day T-bill priced at $9,942.00? Recall:
• When using an Effective Annual Yield, you use compounded interest rate, 365 days, and the price as the initial price.
The effective annual yield is determined using the formula (1+r/n)n-1. Where n is the annual interest payment amount and r is the interest rate, sometimes referred to as the coupon rate
What is Effective Annual Yield?
If interest is compounded, the annual percentage yield (APY) is the real rate of return that will be received in a year. Compound interest is accrued on the total investment amount over time, increasing the balance. Each interest payment will be more expensive due to the increased debt.
The phrase "effective annual yield" (sometimes referred to as "the effective rate") describes the simple interest rate that causes an account to have the same amount of money at the end of a year as it would if compound interest were applied at a specific rate.
There is a simple formula that may be used to compute compound interest. It is calculated by multiplying the compound interest rate by the number of compound periods, adding the yearly interest rate, and then deducting one.
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the method that permits businesses to recover all the costs, including both fixed and variable costs and direct and indirect costs is called: question 4 options: target costing marginal cost pricing zero cost pricing full cost pricing
The method that permits businesses to recover all the costs, including both fixed and variable costs and direct and indirect costs, is called full cost pricing.
This pricing strategy involves adding up all the expenses incurred during the production process, including materials, labor, overhead costs, and any other expenses, and then adding a profit margin to arrive at a final price for the product or service. Full cost pricing is commonly used in industries where products have long lifecycles and stable demand. It helps businesses ensure that they cover all their costs and generate sufficient profits to remain competitive. However, it may not be suitable for businesses operating in highly competitive markets where price sensitivity is high.
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A regional sales manager position has opened up in your company, and the National Sales Director calls you to encourage you to apply for the position. The position would require significant international travel. Since you've recently adopted a child, the idea of international travel isn't appealing. According to _____ theory, you will not be motivated by the National Sales Director's suggestion.
a. the two-factor
b. Maslow's
c. equity
d. Hawthorne's
e. expectancy
According to the expectancy theory, you will not be motivated by the National Sales Director's suggestion to apply for the regional sales manager position that requires significant international travel. The expectancy theory, developed by Victor Vroom, states that an individual's motivation depends on three factors: expectancy, instrumentality, and valence.
Expectancy is the belief that increased effort will lead to increased performance. Instrumentality is the belief that better performance will lead to desired outcomes or rewards. Valence is the value an individual place on the rewards or outcomes.
In this scenario, you have recently adopted a child, and the idea of international travel is not appealing to you. This affects the valence factor of the expectancy theory. Since the required international travel is not perceived as a desirable outcome or reward, the overall motivation to apply for the position is reduced.
Thus, according to the expectancy theory, you will not be motivated by the National Sales Director's suggestion to apply for the regional sales manager position.
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On May 22, 2020, T. Albinoni Inc. issued a 4.15% coupon bond with a $100 face value, and incurred 2.00% of the face value as a transaction cost. The bond's issue price was $86.34 per share, and its maturity date is September 30, 2029. The firm's corporate tax rate is 21%. a) Calculate the firm's "pre-tax" cost of debt. (2 points) b) Calculate the firm's "after-tax" cost of debt.
The firm's "after-tax" cost of debt is 3.76%.
a) The "pre-tax" cost of debt is the yield to maturity (YTM) of the bond, which is the rate of return that an investor would earn if they purchased the bond at the current market price and held it until maturity. To calculate the YTM, we need to use the bond's current price, face value, coupon rate, and time to maturity.
The bond's current price is $86.34, its face value is $100, and its coupon rate is 4.15%. The bond pays interest semi-annually, so it has 19 coupon payments left until maturity. The time to maturity is 9.38 years (calculated as the number of months until maturity divided by 12).
Using a financial calculator or spreadsheet, we can calculate the YTM as follows:
N = 19
PV = -86.34
PMT = 4.15 / 2 * 100 = 2.075
FV = 100
I/Y = 4.76%
Therefore, the firm's "pre-tax" cost of debt is 4.76%.
b) The "after-tax" cost of debt is the "pre-tax" cost of debt adjusted for the tax savings that the firm receives from deducting the interest expense on its tax return. The tax savings are equal to the interest expense multiplied by the firm's tax rate.
The interest expense is equal to the coupon rate multiplied by the face value of the bond, which is $4.15 per share ($100 face value * 4.15% coupon rate). The transaction cost is also considered an interest expense, as it is a cost incurred in order to obtain financing. Therefore, the total interest expense is $6.15 per share ($4.15 + $2.00 transaction cost).
The tax savings are equal to the interest expense multiplied by the firm's tax rate, which is 21%. Therefore, the tax savings are $1.29 per share ($6.15 * 21%).
The "after-tax" cost of debt is equal to the "pre-tax" cost of debt minus the tax savings, which is:
After-tax cost of debt = Pre-tax cost of debt * (1 - Tax rate)
After-tax cost of debt = 4.76% * (1 - 21%)
After-tax cost of debt = 3.76%.
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annalucia is giving a speech on behalf of her company
Annalucia will be delivering a speech representing her company. This means that she will be speaking on their behalf, sharing the company's views and opinions with the audience. It is important for her to convey the message effectively and represent the company in a positive light.
Annalucia is delivering a speech on behalf of her company, representing the organization's values, goals, and accomplishments to the audience. This is an important responsibility as she is the voice of her company during the event. Yes, delivering a speech on behalf of a company is an important responsibility. When representing an organization, the speaker becomes the voice of the company, and their words and actions reflect on the organization as a whole. Therefore, it is important for the speaker to be well-prepared and to communicate the values, goals, and accomplishments of the organization in a clear and compelling way.To prepare for the speech, Annalucia should first research the organization's values, mission statement, and goals to gain a clear understanding of what the company stands for and what it hopes to achieve. She should also review the company's past accomplishments and successes to highlight during the speech.Annalucia should also consider the audience she will be addressing and tailor her message accordingly. If the audience consists of potential customers, she may focus on the organization's products or services and how they can benefit the audience. If the audience consists of industry peers, she may highlight the organization's innovative solutions or contributions to the industry.
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all covenants not to compete are contrary to public policy and therefore illegal. true or false?
False. Covenants not to compete are not per se illegal.
These agreements are generally enforceable in many states if they are reasonable in time and geographic scope, are necessary to protect legitimate business interests, and do not unreasonably restrict the employee’s ability to find new employment.
Courts examine covenants not to compete on a case-by-case basis and may or may not uphold them depending on the facts. Generally, courts will not enforce covenants that are overly broad and may impose reasonable restrictions on them.
Therefore, although covenants not to compete are not necessarily illegal, they must meet certain criteria to be enforceable.
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(Preferred stock valuation) What is the value of a preferred stock when the dividend rate is 13 percent on a $75 par value? The appropriate discount rate for a stock of this risk level is 9 percent.
When the dividend rate is 13 percent on a stock with a par value of $75 and the appropriate discount rate for a stock with this level of risk is 9 percent, the value of the preferred stock is $108.33.
To calculate the value of the preferred stock, we need to use the dividend discount model, which is:
Value of preferred stock = Annual dividend / Discount rate
First, we need to calculate the annual dividend by multiplying the dividend rate by the par value of the stock:
Annual dividend = Dividend rate x Par value = 0.13 x $75 = $9.75
Next, we can use the formula to calculate the value of the preferred stock:
Value of preferred stock = $9.75 / 0.09 = $108.33
Therefore, the value of the preferred stock is $108.33 when the dividend rate is 13 percent on a $75 par value, and the appropriate discount rate for a stock of this risk level is 9 percent.
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Suppose pound sterling is quoted against the dollar at $1.4419-36, and the Swiss franc is quoted at $0.6250-67. What is the cross exchange rate in Zurich in direct terms? A. 2.3020-50 B. 2.3018-88 C. 2.3035-70 D. 2.3008-98
In direct terms, the cross exchange rate in Zurich is 2.3008 to 98. the correct option is d.
To calculate the cross exchange rate in Zurich in direct terms:
1. Identify the bid and ask rates for both currencies:
- Pound sterling: $1.4419 (bid) and $1.4436 (ask)
- Swiss franc: $0.6250 (bid) and $0.6267 (ask)
2. Calculate the bid rate for the cross exchange rate by dividing the bid rate of the pound sterling by the ask rate of the Swiss franc:
- 1.4419 / 0.6267 = 2.3018
3. Calculate the ask rate for the cross exchange rate by dividing the ask rate of the pound sterling by the bid rate of the Swiss franc:
- 1.4436 / 0.6250 = 2.3098
4. Write the cross-exchange rate in direct terms:
- 2.3018-98
The correct answer is D. 2.3008–98.
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A US company expects to pay 4,000,000 Japanese yen 30 days from now. It decides to hedge thee position by buying Japanese yen forward. The current spot rate of the yen is $.0089, while the forward rate is $0.0077. The firm expects the spot rate in 30 days to be $.0094. Based on its expectations the company enters into derivative contracts to maximize its profits. How many dollars will the company pay for the 4,000,000 yen 30 days from now?
The company will pay $30,800 for the 4,000,000 yen 30 days from now by using the forward contract.
How company hedge its position by using Japanese yen forward contract?To hedge its position, the company can buy Japanese yen forward contracts at the current forward rate of $0.0077 per yen. Therefore, the cost of buying 4,000,000 yen forward would be:
4,000,000 yen x $0.0077/yen = $30,800
In 30 days, the company will have to convert the 4,000,000 yen into dollars at the prevailing spot rate. Based on its expectations, the company believes that the spot rate in 30 days will be $0.0094 per yen. Therefore, the cost of converting 4,000,000 yen into dollars would be:
4,000,000 yen x $0.0094/yen = $37,600
However, the company has already locked in the forward rate of $0.0077 per yen, so it will pay:
4,000,000 yen x $0.0077/yen = $30,800
by using the forward contract. This represents a savings of:
$37,600 - $30,800 = $6,800.
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A 20-year corporate bond with a par value of $1,000.00 paying an annual coupon of 5% costs $1,135.90. The next coupon will be paid in 1 year. A 3-year forward contract on this bond exists at a strike price of $1,100.00. A) What is the market interest rate? b) What should be the correct forward price for this contract? c) What do you do at t = 1 year?
a) The market interest rate is 3.8%. b) The correct forward price for this contract should be $1,113.28. and c) At t=1 year, if the market interest rate has not changed, we do nothing.
a) To find the market interest rate, we need to use the bond pricing formula and solve for the interest rate.
Given the bond price of $1,135.90, a par value of $1,000.00, an annual coupon payment of 5%, and a time to maturity of 20 years, the market interest rate is found to be 3.8%.
b) To find the correct forward price for this contract, we first need to calculate the future value of the bond in 3 years, assuming that the market interest rate remains constant at 3.8%.
This gives us a future value of $1,166.10. We can then discount this future value back to the present using the market interest rate of 3.8% to get a forward price of $1,113.28.
c) At t=1 year, if the market interest rate has not changed, we do nothing because the next coupon payment will be received as expected, and the bond will continue to be worth $1,135.90.
If the market interest rate has changed, the value of the bond may change, and we may need to adjust our investment strategy accordingly.
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Do you think that marketers can CREATE needs? If so, discuss an
example of this.
How do marketers create or activate wants based on needs?
Discuss an example of how marketing may activate or stimulate
Yes, marketers can create needs, or at least create the perception of needs, through various marketing tactics such as advertising, promotions, and product design.
What is an example of this?
One example of this is the smartphone industry. Before the introduction of smartphones, most people were content with their basic cell phones that could only make calls and send texts. However, with the introduction of smartphones, marketers were able to create a need for features like internet browsing, social media, and app usage. These features were marketed as essential to modern life, and the constant innovation in the smartphone industry created a desire for the latest and greatest technology.
Marketers can create or activate wants based on needs by understanding consumer behavior and preferences.
They do this by conducting market research to identify consumer needs and preferences, and then design their products and marketing campaigns to address those needs and desires. For example, a food company may conduct market research to find out that consumers are interested in healthy snacks that are easy to take on the go. Based on this information, the company may create a marketing campaign that emphasizes the portability and health benefits of their snack products, which can activate the desire for a quick and healthy snack on the go.
An example of how marketing may activate or stimulate desires based on needs is the marketing campaign for luxury cars.
Luxury cars are marketed as a status symbol and a way to express wealth and success. The desire for these cars is activated by emphasizing the features and benefits that are associated with luxury, such as comfort, performance, and exclusivity. By creating an image of luxury and exclusivity around their products, luxury car manufacturers are able to stimulate desires and create demand for their products among consumers who are seeking to display their status and success.
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An investor with a 3-year investment horizon is considering purchasing a 10-year coupon bond with a par value of $1,000. The annual coupon rate is 10% and the price is $1,000. The investor expects that she can reinvest the coupon payments at an annual interest rate of 10% and that at the end of the 3-year investment horizon 7-year bonds will be selling to offer a yield to maturity of 15%. What is the total return for this bond?
The total return for this bond over the 3-year investment horizon is 2.7% when the yield to maturity is 15%.
To calculate the total return for the bond, we need to take into account the coupon payments, reinvestment income, and capital gain or loss.
First, let's calculate the annual coupon payment. The coupon rate is 10%, so the annual coupon payment is:
$1,000 x 10% = $100
The bond has a 10-year maturity, but the investor only plans to hold it for 3 years. At the end of the third year, there will be 7 years left until maturity.
Next, let's calculate the total coupon payments over the 3-year investment horizon, assuming the investor reinvests them at 10% annually.
- Year 1: $100 coupon payment, reinvested at 10%, gives $110 at the end of the year
- Year 2: $100 coupon payment, reinvested at 10%, gives $121 at the end of the year
- Year 3: $100 coupon payment, reinvested at 10%, gives $133.10 at the end of the year
So the total reinvestment income at the end of the 3-year horizon is $110 + $121 + $133.10 = $364.10
Next, let's calculate the capital gain or loss when the investor sells the bond at the end of the third year. The bond will have 7 years left until maturity, and bonds with 7-year maturities are expected to offer a yield to maturity of 15%.
Using a bond calculator, we can find that the price of a 7-year bond with a 15% yield to maturity and a par value of $1,000 is:
PV = $1,000 / (1 + 0.15) = $386.48
So if the investor sells the bond at the end of the third year, they will receive $386.48.
Since the investor bought the bond for $1,000, the capital loss is:
Capital loss = $1,000 - $386.48 = $613.52
Finally, let's calculate the total return:
Total return = reinvestment income + captal gain or loss / initial investment
Total return = $364.10 + ($613.52) / $1,000 = 0.027 = 2.7%
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gabby is responsible for determining the quantities of specialty items to order for a chain of grocery stores. this year, she has ordered extra cases of valentine candy to be held at the distribution center because in years past many of the stores have run out in the week before that holiday. this is an example of which aspect of distribution operations?
Inventory management can be shown in Gabby's choice to order extra cases of Valentine's confectionery for the chain of supermarkets.
Is Gabby in charge of figuring out how many of the speciality items there will be?For a network of grocery stores, Gabby is in charge of choosing the amounts of speciality items to order. Because many of the retailers have historically run out of Valentine's sweets in the week leading up to the occasion, she ordered extra cases this year to be kept at the distribution center.
What are the two things that will affect Gabby's choice?Gabby's selection will be influenced by her dislike of the mornings and her desire for free Wi-Fi on the flight, both of which are relevant considerations.
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do you believe that a firm should use the same cost of capital for all of its projects? why or why not?
Your banker has analyzed your company account and has suggested that her bank has a cash management package for you. She suggests that with a concentration banking system, your float can be reduced by four days on average. You, of course, are delighted (you’re not sure why), but you do know your average daily collections amount to $360,000. Your opportunity cost of funds is 8 percent. The bank provides this service for $58,000 plus a compensating balance in your current account of $80,500.
1. is this package worth it?
2. by how much? (annual saving)
The annual savings ($115,200) is greater than the total cost of the package ($64,440), making it worth considering. The net annual saving is $115,200 - $64,440 = $50,760.
To determine if the concentration banking package is worth it, we need to calculate the annual savings from reduced float and compare it to the total cost of the package.2. With a reduction of 4 days on your float and an average daily collection of $360,000, the total float reduction amounts to $1,440,000 ($360,000 x 4 days). The opportunity cost of funds is 8%, so the annual savings from the reduced float can be calculated as follows: $1,440,000 x 8% = $115,200.Now, let's calculate the total cost of the package.
The service fee is $58,000, and there's a compensating balance requirement of $80,500. The opportunity cost of holding this balance can be calculated as $80,500 x 8% = $6,440. The total cost of the package is $58,000 (service fee) + $6,440 (opportunity cost of compensating balance) = $64,440.The annual savings ($115,200) is greater than the total cost of the package ($64,440), making it worth considering. The net annual saving is $115,200 - $64,440 = $50,760.
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