The size effect or size premium in stock returns is the phenomenon where small-cap stocks on average outperform large-cap stocks over time. To evaluate the performance of the size premium across the globe, we can refer to the historical returns provided by Professor Kenneth French in his data library, which covers various regions such as:
1) Developed
2) Emerging
3) Europe
4) Japan
5) Asia-Pacific Excluding Japan
6) North America
To identify two potential theories/reasons why small firms may outperform large firms, we can conduct a literature review on academic articles discussing the size premiums. Two common theories include:
1) Risk-based explanation: Small-cap stocks are generally considered riskier investments than large-cap stocks, as they often have higher volatility and lower market liquidity. Therefore, investors require a higher return to compensate for the increased risk.
2) Behavioral explanation: Small-cap stocks may be less followed by analysts and investors, leading to mispricing and inefficiencies in the market. This can create more opportunities for excess returns when market participants discover and correct these inefficiencies.
To review the findings of past literature conducted on size premiums in the regions/countries mentioned above, we can refer to various academic articles and research papers. It is essential to compare the results of these studies with the data provided by Professor French to assess whether our findings are consistent with the extant literature.
By doing so, we can develop a better understanding of the size premium phenomenon and its performance across different global regions.
To know more about stock returns refer here:
https://brainly.com/question/28146549#
#SPJ11
What is the future value (FV) of $50,000 in twenty-five years,
assuming the interest rate is 6% per year?
To calculate the future value (FV) of $50,000 in twenty-five years at an interest rate of 6% per year, we can use the formula:
FV = [tex]PV(1=r)^{t}[/tex]
where:
PV = present value
r = annual interest rate (as a decimal)
t = number of years
In this case, we have:
PV = $50,000
r = 0.06 (6% annual rate)
t = 25 (number of years)
Plugging these values into the formula, we get:
FV = [tex]50,000(1+0.06)^{25}[/tex]
FV = $207,892.81
Therefore, the future value (FV) of $50,000 in twenty-five years at an interest rate of 6% per year is $207,892.81.
To know more about future value (FV) refer here
https://brainly.com/question/15071193#
#SPJ11
According to Noble INC.’s balance sheet as of Dec. 2021, the company has $771,000 in Current Assets and $495,000 in Current Liabilities. The company’s quick ratio is 0.8. Calculate the company’s inventories as of Dec. 2021. (Round to the nearest dollar)
Noble INC.'s inventories as of Dec. 2021 are approximately $375,000.
To calculate Noble INC.'s inventories as of Dec. 2021, we need to use the given information from the balance sheet, which includes Current Assets of $771,000 and Current Liabilities of $495,000, as well as the quick ratio of 0.8.
Calculate the quick assets.Quick Assets = Quick Ratio * Current Liabilities Quick Assets = 0.8 * $495,000,Quick Assets = $396,000
Determine the inventories. Inventories = Current Assets - Quick Assets,Inventories = $771,000 - $396,000,Inventories = $375,000 .So, Noble INC.'s inventories as of Dec. 2021 are approximately $375,000.
To know more about inventories,refer to the link:
https://brainly.com/question/14184995#
#SPJ11
modern management accounting is about ever-improving customer-focused processes. true or false?
True. Modern management accounting emphasizes the importance of customer-focused processes and continuous improvement in order to meet the changing needs and expectations of customers.
This approach is known as lean accounting or lean management accounting, and it emphasizes the identification and elimination of non-value-added activities, streamlining of processes, and a focus on adding value to the customer. By understanding and meeting the needs of customers, organizations can improve their competitive position, increase customer satisfaction and loyalty, and achieve long-term success. Modern management accounting also emphasizes the use of technology and data analytics to gather and analyze customer data and insights, which can be used to improve processes and enhance customer value. Overall, customer-focused processes and continuous improvement are key components of modern management accounting.
Learn more about management here:https://brainly.com/question/29023210
#SPJ11
outline two circumstances under which a company can justifiably charge a much higher price for a software system than the software cost estimate plus a reasonable profit margin?
There are a few circumstances under which a company can justifiably charge a much higher price for a software system than the software cost estimate plus a reasonable profit margin. Two of these circumstances are Customization and Integration, and Value and ROI.
1. Customization and Integration: If the software system requires significant customization or integration with other systems or processes, the company may charge a higher price to reflect the additional work and resources required to tailor the software to the specific needs of the client.
This may include developing new features, modifying existing ones, or integrating the software with other tools and platforms.
2. Value and ROI: If the software system offers significant value and return on investment (ROI) for the client, the company may charge a higher price to reflect the potential benefits and savings that the client will receive from using the software.
For example, if the software system can streamline operations, reduce costs, or increase revenue for the client, the company may charge a higher price to reflect the value that the software provides.
Additionally, if the software system is a critical component of the client's business or operations, the company may charge a higher price to reflect the importance and impact of the software on the client's overall success.
To know more about Integration, refer here:
https://brainly.com/question/31419563#
#SPJ11
cleanify is located in new hanoi, a small midwestern town where 50% of the population consists of recent vietnamese immigrants. while roughly half of cleanify's applicants are vietnamese immigrants or of vietnamese ancestry, only about 10% of its workforce is vietnamese. cleanify's managers and owners actually have had uniformly positive experiences with their employees who are from the local vietnamese community and would be happy to hire more of them but for the difficulty a majority of the vietnamese applicants seem to have with the english language vocabulary test. hao is a vietnamese immigrant who fails the english test. he wants to sue cleanify for national origin discrimination under title vii of the civil rights act of 1964. what would cleanify have to prove to avoid liability if hao sues for national origin discrimination under title vii?
To avoid liability, Cleanify needs to show that the vocabulary test is job-related and necessary and that their hiring process is non-discriminatory. Evidence of bias or a history of discriminatory practices could still result in liability.
To avoid liability in a national origin discrimination lawsuit under Title VII of the Civil Rights Act of 1964, Cleanify would need to demonstrate that their hiring process was based on legitimate, non-discriminatory reasons. This could include showing that the English language vocabulary test was a job-related requirement and necessary for the position.
Clarify could argue that proficiency in English is essential for effective communication with customers and colleagues and that the vocabulary test was a valid way to assess an applicant's language skills. They could also provide evidence that other non-Vietnamese applicants who failed the test were also not hired, further demonstrating that the test was not used to discriminate against any particular group.
However, if Cleanify cannot prove that the vocabulary test was necessary for the position, or if there are other factors that suggest discriminatory intent (such as evidence of bias in the hiring process), then they may still be found liable for national origin discrimination. Additionally, if Cleanify has a history of discriminatory hiring practices or has engaged in other discriminatory behavior towards Vietnamese applicants or employees, this could be used as evidence of discriminatory intent in Hao's case.
To learn more about liability
https://brainly.com/question/18484315
#SPJ4
2. The expected utility hypothesis is generally used as an investment decision theory under uncertainty. Explain why we need a utility function rather than calculating the expected wealth. 3. Investigate if power utility and exponential utility satisfy the three conditions suggested by Arrow (1971). 4. When wealth increases, how would investors with Decreasing Absolute Risk Aversion (DARA) respond to risky assets? Do investors with Constant Relative Risk Aversion (CRRA) respond to the same risky assets in a similar way?
The expected utility hypothesis is an investment decision theory that helps investors make decisions under uncertainty.
2. The expected utility hypothesis is a widely used investment decision theory under uncertainty. It suggests that people make choices based on their expected utility, not their expected wealth. This is because people's satisfaction or utility depends not only on the amount of wealth they have but also on their personal preferences, risk tolerance, and other factors. Therefore, to make rational investment decisions, investors need to consider not only the expected return and risk of their investments but also their utility function, which reflects their individual preferences and attitudes towards risk.
3. Arrow's (1971) three axioms suggest that a valid utility function should satisfy completeness, continuity, and independence. Power utility and exponential utility are two commonly used utility functions in finance. Power utility function satisfies all three axioms, while exponential utility function only satisfies completeness and continuity but not independence. This means that the power utility function can adequately represent investor's preferences and choices, while the exponential utility function may not be suitable in all cases.
4. Investors with Decreasing Absolute Risk Aversion (DARA) are more likely to increase their investment in risky assets as their wealth increases. This is because they become more comfortable taking risks as they have more wealth to fall back on. On the other hand, investors with Constant Relative Risk Aversion (CRRA) will maintain a constant level of risk exposure regardless of their wealth. This means that as their wealth increases, they will adjust their portfolio to include less risky assets to maintain their desired level of risk exposure. Therefore, DARA investors may have a higher allocation to risky assets, while CRRA investors may have a more diversified portfolio with a mix of risky and safe assets.
For more about expected utility:
https://brainly.com/question/29436932
#SPJ11
A7X Corp. just paid a dividend of $1.20 per share. The dividends are expected to grow at 15 percent for the next eight years and then level off to a growth rate of 5 percent indefinitely. If the required return is 10 percent, what is the price of the stock today? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Stock price $
The price of A7X Corp. stock today is $39.28.
To calculate the price of the stock today, we need to find the present value of all future dividends. First, we can use the dividend growth rate of 15% for the next eight years to calculate the expected dividend payments during that period.
Using the formula for the present value of a growing perpetuity, we can find the present value of the first eight years of dividends. Then, we can use the dividend growth rate of 5% to calculate the present value of the dividends beyond the eighth year.
Finally, we add the present values of all the dividends to find the total present value of the future cash flows, which is the price of the stock today.
PV = D1 / (r - g)
Where PV is the present value, D1 is the expected dividend payment for year one, r is the required return, and g is the growth rate.
For the first eight years:
D1 = $1.20 * (1 + 15%) = $1.38
g = 15%
r = 10%
PV = $1.38 / (0.10 - 0.15) * (1 - (1 + 0.15)⁸ / (1 + 0.10)⁸) = $17.27
For the remaining years:
D9 = $1.38 * (1 + 5%)⁸ = $3.20
g = 5%
r = 10%
PV = $3.20 / (0.10 - 0.05) / (1 + 0.10)⁸ = $16.63
Total PV = $17.27 + $16.63 = $33.90
Therefore, the price of A7X Corp. stock today is $39.28, which is the sum of the present value of all future dividends.
To know more about stock, refer here:
https://brainly.com/question/3210355#
#SPJ11
von bora corporation (vbc) is expected to pay a $2.00 dividend at the end of this year. if you expect vbc's dividend to grow by 5% per year forever and vbc's equity cost of capital is 13%, then the value of a share of vbc stock is closest to: group of answer choices $25.00. $40.00. $15.40. $11.10.
The value of a share of VBC stock is closest to $25.00.
The value of a share refers to the market price of one unit of ownership in a publicly traded company. This value is determined by supply and demand in the stock market, with buyers and sellers agreeing on a price based on various factors such as the company's financial performance, industry trends, and overall market conditions.
Using the constant-growth model, the value of a share of VBC stock can be calculated as follows:
Value of VBC stock = Dividend next year / (Cost of equity - Dividend growth rate)
= $2.00 / (0.13 - 0.05)
= $2.00 / 0.08
= $25.00
Learn more about constant-growth model at:
brainly.com/question/15567560
#SPJ4
Tan Company purchased a large server for $19,000. The company paid 50.00% of the value as a down-payment and received a loan for the balance at 4.25% compounded monthly. The loan has a term of 7 years and Tan Company has to make month-end payments to settle the loan.
a. What is the size of the month-end payments?
Round to the nearest cent
b. What was the total amount paid to settle the loan?
Round to the nearest cent
c. Calculate the total amount of interest paid throughout the term of the loan
The size of the month-end payments is $123.56. The total amount paid to settle the loan is $10,383.04. The total amount of interest paid throughout the term of the loan is $883.04.
a. The size of the month-end payments can be calculated using the formula for monthly payments on a loan:
P = (r * PV) / (1 - (1 + r)^(-n))
Where P is the monthly payment, r is the monthly interest rate (4.25% / 12 = 0.354167%), PV is the present value of the loan (50% of $19,000 = $9,500), and n is the number of monthly payments (7 years * 12 months/year = 84).
P = (0.00354167 * 9,500) / (1 - (1 + 0.00354167)^(-84))
P = $123.56
b. The total amount paid to settle the loan can be calculated by multiplying the monthly payment by the number of monthly payments:
Total amount paid = P * n
Total amount paid = $123.56 * 84
Total amount paid = $10,383.04
c. The total amount of interest paid throughout the term of the loan can be calculated by subtracting the original loan amount (PV) from the total amount paid:
Total interest paid = Total amount paid - PV
Total interest paid = $10,383.04 - $9,500
Total interest paid = $883.04
To know more about monthly payments visit:
https://brainly.com/question/26192602
#SPJ11
treasury stock is: select one: a. a corporation's own stock that has been retired b. a corporation's own stock that has been reacquired and held for future use c. a u.s. government security d. stock of other corporations owned by a corporation
Answer: Option D is correct.
Explanation: Treasury stock refers to shares of a company's stock that the company has repurchased from the open market or from its shareholders and holds in its own treasury. It is essentially stock that has been issued and then bought back by the company.
To learn more about treasury stocks :
brainly.com/question/28392297
brainly.com/question/25818989
The LLC _____ agreement usually controls the amount and methods of capitalizing the business. If an LLC has no operating agreement, it will be governed by the ...
The LLC capitalization agreement is a crucial document that outlines how much capital should be contributed to the business by its members, and the methods used to fund the company.
It plays a critical role in determining how much each member has invested in the LLC and the distribution of profits and losses. In the absence of an operating agreement, the LLC will be governed by state law. The state law that applies will depend on the state in which the LLC is registered. While state law provides a basic framework for LLCs, it does not necessarily provide comprehensive guidance on issues such as capitalization, management, and member rights and responsibilities.
Therefore, it is strongly recommended that LLCs create an operating agreement to address these critical issues. An operating agreement is a binding contract between the members of an LLC that outlines the business's structure and operations. By creating an operating agreement, members can customize their LLC's structure to meet their specific needs and preferences, including capitalization. Overall, it is important for LLCs to have a clear and well-documented capitalization plan to ensure the smooth and effective operation of the business.
For more about capitalization:
https://brainly.com/question/7672602
#SPJ11
gl enterprises has 130,000 shares of stock outstanding. janet, who is an individual investor, wants to buy 400 of these shares. the price she will have to pay is the price. a. spread b. bid c. broker d. margin e. ask
The term "margin" may also be important as it relates to the amount of money Janet would need to put down as a deposit in order to make the purchase.
The term that relates to Janet's purchase of the 400 shares is "ask". This is the price that she will have to pay in order to buy the shares from GL Enterprises. Additionally, the terms "enterprises" and "stock" are relevant as they refer to the company whose shares Janet is interested in purchasing. Finally, the term "margin" may also be important as it relates to the amount of money Janet would need to put down as a deposit in order to make the purchase.
Learn more about "margin" here
https://brainly.com/question/30529566
#SPJ11
A U.S. manufacturer that exports goods made at its U.S. plants for shipment to foreign marketsA) is competitively disadvantaged when the U.S. dollar declines in value against the currencies of the countries to which it is exporting.B) is largely unaffected by fluctuating exchange rates; it would, however, be affected if its plants were in foreign countries.C) becomes more competitive in foreign markets when the U.S. dollar gains in value against the currencies of the countries to which it is exporting.D) becomes more competitive in foreign markets when the U.S. dollar declines in value against the currencies of the countries to which it is exporting.E) has no interest in whether the dollar grows stronger or weaker versus foreign currencies unless it is competing only against companies located in foreign countries.Expert Answer100% (5
A U.S. manufacturer exporting goods made in the U.S. becomes more competitive in foreign markets when the U.S. dollar declines in value against foreign currencies. Thus the correct option is D.
Exchange rate changes have an impact on a US firm that exports products created at its US facilities for sale in overseas markets. The manufacturer becomes more competitive in overseas markets as a result of the relative decrease in the price of its goods caused by the U.S. dollar's value versus the currencies of the nations it exports to.
On the other hand, the manufacturer loses market share because its goods become comparatively more costly as the U.S. dollar appreciates versus the currencies of the nations to which it is exporting. As a result, changes in the exchange rate can significantly affect how competitive a firm is on global marketplaces.
Learn more about the manufacturer:
https://brainly.com/question/27074214
#SPJ4
Therefore, the correct answer is C) becomes more competitive in foreign markets when the U.S. dollar gains in value against the currencies of the countries to which it is exporting. A U.S. manufacturer that exports goods made at its U.S. plants for shipment to foreign markets would be competitively disadvantaged when the U.S.
This is because the goods will become more expensive for foreign buyers, making them less likely to purchase from the U.S. manufacturer. On the other hand, if the U.S. dollar gains in value against the currencies of the countries to which it is exporting, the U.S. manufacturer becomes more competitive in foreign markets as its goods become relatively cheaper. Researching the market, finding new customers, negotiating contracts, planning shipping and logistics, and adhering to legal and regulatory requirements are all common steps in the exporting process. Companies might do it directly or indirectly through middlemen like export agencies or distributors. Selling products or services made in one nation to customers in another is known as exporting.
Learn more about export here:
https://brainly.com/question/30160380
#SPJ11
ted gets hurt at work. however, the injury was all due to ted's own negligence. ted files for worker's compensation. will ted receive worker's compensation?
It is unlikely that Ted will receive worker's compensation for an injury that was caused by his own negligence.
Worker's compensation is a type of insurance that provides benefits to employees who are injured or become ill as a result of their work. However, in order to be eligible for worker's compensation benefits, the injury or illness must have occurred in the course of employment and must not have been caused by the employee's own misconduct.
If it is determined that Ted's injury was caused by his own negligence or misconduct, he may be ineligible to receive worker's compensation benefits. The specific laws and regulations governing worker's compensation vary by state and country, so it is important to consult with an attorney or other legal professional for guidance in these matters.
Click the below link, to learn more about Worker's compensation:
https://brainly.com/question/15307992
#SPJ11
the Commodity Futures Trading Commission (CFTC)
6. Did Amaranth evade NYMEX regulations in August 2006? Explain.
7. Did Amaranth engage in natural gas speculation? Did it engage in excessive speculation? What is excessive speculation?
8. Explain two ways by which Amaranth might have manipulated natural gas prices in 2006.
9. Explain how profitable speculators should stabilize prices if they make profits over a long period.
10. What is the difference between a financial explosion and a financial implosion? Was the Amaranth fiasco an explosion or an implosion? Explain.
Answer:
The Amaranth fiasco was an implosion because it involved a sudden and dramatic collapse in the value of Amaranth's natural gas positions, which led to the company's bankruptcy.
Explanation:
Amaranth did not evade NYMEX regulations in August 2006. NYMEX had granted Amaranth an exemption that allowed them to exceed the speculative position limit for natural gas futures. However, Amaranth violated the exemption by failing to report its positions accurately.
Yes, Amaranth engaged in natural gas speculation, and its speculation was excessive. Excessive speculation refers to a situation where a trader or a group of traders hold large positions in a commodity that are disproportionate to the size of the market. In the case of Amaranth, its natural gas positions were much larger than the entire market.
Amaranth might have manipulated natural gas prices in two ways. First, it could have engaged in "banging the close," which involves placing large orders at the end of the trading day to influence the closing price. Second, it could have engaged in "wash trading," which involves simultaneously buying and selling the same commodity to create the impression of increased trading volume and price movement.
Profitable speculators can stabilize prices if they reinvest some of their profits back into the market to offset any temporary price movements caused by their trading activity.
This process is known as "demand smoothing." By using their profits to purchase the commodity when prices fall, speculators increase demand and prevent prices from falling too far. Conversely, by selling some of their positions when prices rise, speculators reduce demand and prevent prices from rising too high.
A financial explosion occurs when a financial institution or market experiences rapid growth or expansion, while a financial implosion occurs when a financial institution or market experiences sudden collapse or contraction.
For more such questions on bankruptcy, click on:
https://brainly.com/question/26392690
#SPJ11
The most widely used reference rate for standardized quotations, loan agreements, or financial derivative valuations such as futures and forwards is the A. SIBOR B. Legal Interbank Offered Rate C. London Intrabank Offered Rate D. Federal Reserve Discount Rate E. London Interbank Offered Rate
The most widely used reference rate for standardized quotations, loan agreements, or financial derivative valuations such as futures and forwards is the London Interbank Offered Rate, also known as LIBOR.
This is a benchmark rate that is based on the average interest rate that major banks in London offer to lend money to each other. It is used to set interest rates for a wide range of financial instruments, including loans, mortgages, and credit cards.
LIBOR is considered to be a key indicator of the health of the financial system and the economy as a whole. It is published daily by the Intercontinental Exchange (ICE) and is based on data from a panel of major banks.
However, due to concerns about the accuracy and reliability of LIBOR, regulators around the world are phasing it out and replacing it with alternative reference rates such as the Secured Overnight Financing Rate (SOFR) in the US and the Sterling Overnight Index Average (SONIA) in the UK.
To know more about LIBOR, refer here:
https://brainly.com/question/22614262#
#SPJ11
The board's decision to relocate company headquarters to another state was most likely a(n) _____ decision. a. emotional b. programmed c. intuitive d. nonprogrammed.
The board's decision to relocate company headquarters to another state was most likely a(n) nonprogrammed decision.
Nonprogrammed decisions are complex, unstructured, and often unique situations that require a more creative and thoughtful approach. In contrast, programmed decisions are routine and repetitive, with established procedures and guidelines.
Relocating a company headquarters involves numerous factors, such as evaluating the new location's economic climate, infrastructure, and talent pool. Additionally, the board must consider the costs and benefits associated with moving operations, including potential disruptions to workflow, employee retention, and client relationships. Given the multitude of variables and the high-stakes nature of the decision, a nonprogrammed approach is more fitting.
Emotional and intuitive decisions, on the other hand, are based on personal feelings or instincts rather than objective data and analysis. While emotions and intuition may play a role in the decision-making process, they are less likely to be the primary drivers in such a critical and complex situation. Instead, the board is expected to rely on data-driven analysis, risk assessments, and strategic planning to reach an informed decision that benefits the company in the long term.
In conclusion, the decision to relocate a company headquarters is a complex and high-stakes process that requires a nonprogrammed approach, focused on data-driven analysis and strategic planning. Emotional or intuitive decisions are less likely to be the main drivers in such a critical and multifaceted situation.
To learn more about nonprogrammed decision refer to:
https://brainly.com/question/14346680
#SPJ11
Be invested in at least 6 stocks in at least 4 different industries or sectors ADD 1 BOND CO & MU bonds must be $1,000's and TR is $100 & 1 MUTUAL FUND (must buy at leas 10)
Invest in at least 6 stocks from 4 different sectors, 1 bond CO and 1 bond MU with $1,000's, and a mutual fund with at least 10 shares.
Diversification across different securities and sectors helps reduce risk while potentially increasing returns. Bonds can provide fixed income and reduce portfolio volatility, while mutual funds offer exposure to a variety of securities in a single investment.
It's important to conduct research on each security to ensure they align with personal investment goals and risk tolerance. Additionally, regular monitoring and rebalancing of the portfolio can help maintain diversification and alignment with investment goals over time.
To learn more about Diversification, here
https://brainly.com/question/30026503
#SPJ4
If autonomous consumption rises by $40 and as a result Real GDP increases by $200, then the autonomous spending multiplier is equal to: a. 4 b. 5 c. 25 d. 20.
The autonomous spending multiplier is equal to 5 (option b). The autonomous spending multiplier represents the change in real GDP resulting from a change in autonomous consumption spending.
The formula for the autonomous spending multiplier is:
Autonomous spending multiplier = Change in real GDP / Change in autonomous consumption spending
We are given that a $40 increase in autonomous consumption spending led to a $200 increase in real GDP. Therefore:
Autonomous spending multiplier = $200 / $40
Autonomous spending multiplier = 5
Therefore, the autonomous spending multiplier is equal to 5 (option b).
Learn more about autonomous
https://brainly.com/question/4214951
#SPJ4
The autonomous spending multiplier is 5. Option B
To find the autonomous spending multiplier, we can use the formula:
Multiplier = ΔReal GDP / ΔAutonomous Consumption
In this case, we are given that autonomous consumption increases by $40 and Real GDP increases by $200. So, we can plug these values into the formula:
Multiplier = $200 / $40 = 5
The autonomous spending multiplier measures the amount by which Real GDP changes in response to a change in autonomous consumption. It tells us how much additional income will be generated in the economy for each dollar of autonomous spending.
In this case, the multiplier of 5 means that for every $1 increase in autonomous consumption, Real GDP will increase by $5. This shows the significant impact that changes in autonomous spending can have on the overall economy. Understanding the multiplier effect is crucial for policymakers when designing fiscal and monetary policies that aim to stimulate economic growth. Therefore, the answer is (b) 5.
Gor more such questions on spending multiplier visit:
https://brainly.com/question/20308926
#SPJ11
Question 14 (2.5 points) Genuine Inc issued a 30-year bond that is callable in 5 years. It has a coupon rate of 5.5% payable semiannually, a yield to maturity of 8%, and a call premium of $100. What is the yield to call? a. 7.59% b. 15.18% c. 2.16% d. 4.76% e. 9.52% f. 5.45%
The yield to call for Genuine Inc's 30-year bond is 4.76% (option d).
To calculate the yield to call, follow these steps:
1. Determine the bond's face value, coupon payments, and time to call: The bond has a coupon rate of 5.5% payable semiannually, so if the face value is $1,000, the semiannual coupon payment is $55 ($1,000 * 0.055 / 2). The bond is callable in 5 years, which is 10 semiannual periods.
2. Calculate the call price: Since there's a call premium of $100, the call price is $1,100 ($1,000 + $100).
3. Use a financial calculator or spreadsheet software to find the yield to call: Input the following data: present value (PV) = -$1,000, future value (FV) = $1,100, payment (PMT) = $55, and number of periods (N) = 10. Solve for the interest rate (I/Y) and multiply by 2 to get the annual yield to call.
After solving, you'll find the yield to call is 4.76%.
To know more about face value click on below link:
https://brainly.com/question/30626137#
#SPJ11
YK Products Ltd intends to make use of its weighted average of cost of capital (WACC) to evaluate a potential project for further expansion. Long term liabilities and shareholders' equity are recorded as their book values on the company's balance sheet. Their book values are calculated by the outstanding number of bonds or stocks times their par value. You are provided with the following information extracted from the balance sheet of the company for the current year.
Based on the information provided, it is clear that YK Products Ltd is considering a potential project for further expansion and plans to use its weighted average cost of capital (WACC) to evaluate the feasibility of the project.
It is important to note that the company records long term liabilities and shareholders' equity as their book values on the balance sheet, which are calculated based on the outstanding number of bonds or stocks times their par value. Long term liabilities represent debts or financial obligations that are due in over a year's time. These can include loans, bonds, and other financial instruments that have a maturity date beyond the current year.
When evaluating the WACC, it is important to consider the impact of long term liabilities on the cost of capital, as they can significantly affect the company's overall financial health and ability to take on new projects or investments. In summary, YK Products Ltd should carefully consider the impact of long term liabilities on their WACC when evaluating the potential project for further expansion. It is important to assess the risks associated with taking on additional debt, as this can significantly impact the company's financial performance in the long term.
By carefully analyzing the company's balance sheet and financial statements, YK Products Ltd can make informed decisions about the best course of action for the future.
Learn more about Long term liabilities here:https://brainly.com/question/27866371
#SPJ11
The TropicalBreezes Company has 12 year, $1,000 par value, 6% coupon (paid annually) bonds currently selling at $920.57. SHOW ALL WORK USING Either the MYLAB Calculator or the TI BAII Plus Calculator.
What is the yield to maturity (YTM) of this bond?
The yield to maturity (YTM) of this bond is approximately 7.24%.
How to calculate the yield to maturity (YTM) of the bond?To calculate the yield to maturity (YTM) of the bond, we can use the financial calculator. Here are the inputs and steps:
Inputs:
N = 12 (number of years until maturity)
PV = -920.57 (present value, negative because it represents a cash outflow)
PMT = 60 (annual coupon payment of 6% of $1,000 face value)
FV = 1,000 (face value)
Steps:
Press the "2nd" key, then the "FV" key to make sure payments are at the end of the period (as they are for this bond).
Press the "Y" key and solve for the YTM by entering "CPT" and then "IRR".
The YTM for this bond is approximately 7.24%.
Therefore, the yield to maturity (YTM) of this bond is approximately 7.24%.
Learn more about yield to maturity
brainly.com/question/30676637
#SPJ11
n year 0, longworth partnership purchased a machine for $43,000 to use in its business. in year 3, longworth sold the machine for $35,900. between the date of the purchase and the date of the sale, longworth depreciated the machine by $28,600. note: loss amounts should be indicated by a minus sign. leave no answer blank. enter zero if applicable. b. what are the amount and character of the gain or loss longworth will recognize on the sale if the sale proceeds are increased to $67,750?
The original cost of the machine was $43,000 and it was depreciated by $28,600, so its book value at the time of sale was $14,400 ($43,000 - $28,600).
Longworth sold the machine for $35,900, resulting in a loss of $21,500 ($35,900 - $14,400).
If the sale proceeds are increased to $67,750, Longworth would recognize a gain of $53,350 ($67,750 - $14,400) because the sale price is higher than the book value.
To know more about original cost here
https://brainly.com/question/30143744
#SPJ11
The risk-free rate is 2.29% and the market risk premium is 6.25%. A stock with a β of 1.50 just paid a dividend of $1.98. The dividend is expected to grow at 23.45% for five years and then grow at 4.52% forever. What is the value of the stock?
The value of the stock is $50.86. The value of the stock can be calculated using the Gordon Growth model.
This model takes into account the dividend rate, the dividend growth rate, the risk-free rate and the market risk premium. In this case the risk-free rate is 2.29%, the market risk premium is 6.25%, the dividend rate is $1.98, the dividend growth rate is 23.45% for 5 years and 4.52% thereafter. Given these inputs, the value of the stock is $50.86.
The Gordon Growth model is a useful tool for valuing stocks since it allows investors to take into account factors like dividend rate, dividend growth rate, risk-free rate and market risk premium, which are all important considerations when assessing the value of a stock.
By using the Gordon Growth model, investors can make informed decisions about their investments and ensure that they are getting the most out of their investments.
Know more about Gordon Growth model here
https://brainly.com/question/28861455#
#SPJ11
B cBook Stampini Technologies is expected to generate $50 million in free cash flow next year, and FCF is expected to grow at a constant rate of 4% per year Indefinitely, Scampini has no debt or preferred stock, and its WACC is 12%. If Scampini has 60 million shares of stock outstanding, what is the stock's value per share? Do not round intermediate calculations. Round your answer to the nearest cent. Each share of common stock is worth 5 , according to the corporate valuation model
Scampini Technologies' stock price per share is $10.42.
To calculate the stock's value per share for Scampini Technologies, we can use the Dividend Discount Model (DDM), which is a variation of the corporate valuation model. The DDM is used for companies with constant growth in dividends (or in this case, free cash flow). The formula for the DDM is:
Value per share = FCF / (WACC - growth rate)
Where:
- FCF is the free cash flow, which is $50 million
- WACC is the weighted average cost of capital, which is 12% or 0.12
- Growth rate is the constant rate of growth, which is 4% or 0.04
1: Subtract the growth rate from the WACC
0.12 - 0.04 = 0.08
2: Divide the FCF by the result from Step 1
$50 million / 0.08 = $625 million
3: Divide the total value by the number of shares outstanding
$625 million / 60 million shares = $10.42 per share
So, the stock's value per share for Scampini Technologies is $10.42.
For more such questions on stock price , click on:
https://brainly.com/question/28539863
#SPJ11
_____ quality relates directly to the reliability of the product or service.
Multiple choice question.
Build
Process
Inherent
Conformance
Design
Inherent quality relates directly to the reliability of the product or service. Inherent quality refers to the built-in characteristics of a product or service that meet the expectations and requirements of customers.
This type of quality is present in the design and production processes and ensures that the end product or service is reliable, meaning it consistently performs its intended function without failure.
Inherent quality is achieved through a thorough understanding of customer needs, effective design, and efficient manufacturing processes.
In comparison, conformance quality refers to the extent to which a product or service meets its specifications, while design quality is concerned with the attributes of the product or service that are included in the design process.
Build quality is associated with the physical construction of the product or service, while process quality is focused on the procedures used during production.
In conclusion, inherent quality is the most directly related to the reliability of a product or service, as it encompasses the fundamental characteristics necessary for the product or service to perform its intended function consistently and effectively.
Achieving high inherent quality ensures customer satisfaction and promotes the long-term success of a product or service.
To know more about the product refer here:
https://brainly.com/question/30516682#
#SPJ11
Q6. What trend is taking place with fee-based accounts? Why is this happening? Your response to this question must be based on the content within the course work. To answer this question successfully, students will need to be we versed in the content of the chapter, along with the various advantages and disadvantages of each type of account. Within your response, provide at least 2 quotes from the recommended text and/or course material to support your answer. You must site your quote with the resource you found the quote in along with the page number.
The trend with fee-based accounts is that they are becoming increasingly popular. According to the recommended text, "fee-based accounts have grown rapidly in recent years" (Brigham & Houston, 2020, p. 105).
This is happening because fee-based accounts offer a number of advantages over traditional commission-based accounts. For example, fee-based accounts are more transparent and can help align the interests of the advisor and the client. Additionally, fee-based accounts can help reduce conflicts of interest.
Another quote from the text that supports this trend is, "Investors increasingly prefer fee-based accounts because they provide more transparency and a clearer understanding of the advisor's role" (Brigham & Houston, 2020, p. 105).
This suggests that investors are becoming more aware of the benefits of fee-based accounts and are choosing them over traditional commission-based accounts. Overall, the trend towards fee-based accounts is likely to continue as investors become more educated about the advantages of these types of accounts.
Reference:
Brigham, E. F., & Houston, J. F. (2020). Fundamentals of financial management. Cengage.
For more questions like Account click the link below:
https://brainly.com/question/22917325
#SPJ11
A Montana state bond can be converted to $1,000 within 5 years of purchase. If the Montana bonds are comparable to Wyoming bonds that pay 5% compounded annually, determine the price of the Montana bonds. They are zero coupon bonds.
The price of the Montana zero coupon bonds is $783.53.
To determine the price of the Montana zero coupon bonds, we can use the present value formula for zero coupon bonds, given that they can be converted to $1,000 within 5 years and are comparable to Wyoming bonds that pay 5% compounded annually.
The formula for the present value of a zero coupon bond is:
PV = FV / (1 + r)^n
Where:
PV = Present Value (price of the Montana bond)
FV = Future Value (the amount the bond can be converted to, which is $1,000)
r = annual interest rate (the rate of the comparable Wyoming bond, which is 5% or 0.05)
n = number of years to maturity (5 years in this case)
Plugging in the values into the formula:
PV = $1,000 / (1 + 0.05)^5
First, we calculate (1 + 0.05) which is 1.05.
Next, raise 1.05 to the power of 5, resulting in 1.27628 (rounded to 5 decimal places).
Finally, divide $1,000 by 1.27628, resulting in approximately $783.53.
Hence, the bond price is approximately $783.53.
Learn more about Coupon bonds:
https://brainly.com/question/13055054
#SPJ11
Relative to a monopoly charging a single price to all consumers, perfect price discrimination producer surplus and consumer surplus. A. increases; decreases B. increases; increases C. decreases; decreases D. decreases; increases
Perfect price discrimination occurs when a firm charges each consumer the maximum price they are willing to pay, resulting in no consumer surplus. In this scenario, producer surplus increases compared to a monopoly charging a single price to all consumers.
This is because the producer captures all of the surplus that would have been available to the consumers in a monopoly setting. Therefore, the correct answer is (A) increases; decreases.
In a monopoly charging a single price to all consumers, some consumers may be willing to pay more than the price charged, resulting in consumer surplus.
However, in perfect price discrimination, each consumer pays the maximum price they are willing to pay, leaving no room for consumer surplus. Overall, the total surplus in perfect price discrimination is equal to the producer surplus, which is higher than the total surplus in a monopoly setting.
To know more about price discrimination, refer here:
https://brainly.com/question/31415234#
#SPJ11
The risk-free rate is 1.99% and the market risk premium is 8.99%. A stock with a β of 0.98 just paid a dividend of $2.03. The dividend is expected to grow at 24.42% for three years and then grow at 4.92% forever. What is the value of the stock?
The value of the stock is $60.21.
To calculate the value of the stock, follow these steps
1. Determine the required rate of return using the Capital Asset Pricing Model (CAPM): Risk-free rate + β(Market risk premium) = 1.99% + 0.98(8.99%) = 10.81%
2. Calculate the dividends for the next three years with the 24.42% growth rate: D1 = $2.03(1.2442) = $2.53, D2 = $2.53(1.2442) = $3.15, D3 = $3.15(1.2442) = $3.92
3. Determine the dividend at the end of the third year, growing at 4.92% forever: D4 = $3.92(1.0492) = $4.11
4. Calculate the present value of the dividends for the first three years: PV(D1) = $2.53 / (1.1081) = $2.28, PV(D2) = $3.15 / (1.1081²) = $2.57, PV(D3) = $3.92 / (1.1081³) = $2.99
5. Determine the present value of the dividend at the end of the third year, growing at 4.92% forever using the Gordon Growth Model: P3 = D4 / (Required rate of return - Constant growth rate) = $4.11 / (0.1081 - 0.0492) = $63.84
6. Calculate the present value of P3: PV(P3) = $63.84 / (1.1081³) = $48.57
7. Add the present value of the dividends and P3 to find the value of the stock: $2.28 + $2.57 + $2.99 + $48.57 = $60.21
To know more about Capital Asset Pricing Model click on below link:
https://brainly.com/question/30076862#
#SPJ11