These claims could be related to the products themselves, the markets the company operates in, or the outcomes that result from the company's actions. Understanding these different groups and their claims is an important part of analyzing a company's impact and potential success.
Those who have a claim on some aspect of a company's products, industry, markets, and outcomes are often referred to as stakeholders. Stakeholders are individuals or groups who have an interest in the company and its activities, and who may be impacted by the company's decisions and actions.
There are many different types of stakeholders, each with their own set of interests and claims on the company. Some common stakeholders include:
Shareholders: Shareholders are individuals or institutions that own shares of the company's stock. They have a financial interest in the company and its performance, and often expect to receive a return on their investment in the form of dividends or share price appreciation.
Customers: Customers are individuals or other companies who purchase the company's products or services. They have a claim on the quality, price, and availability of the products, as well as the customer service and support provided by the company.
Employees: Employees are individuals who work for the company, and have a claim on fair compensation, safe working conditions, and opportunities for professional development.
Suppliers: Suppliers are companies or individuals who provide materials or services to the company. They have a claim on timely payment and fair treatment, and may also be impacted by the company's decisions and actions.
Communities: Communities are groups of individuals who live or work in the areas where the company operates. They have a claim on the environmental impact of the company's activities, as well as the social and economic benefits that the company provides.
Government: Governments are regulatory bodies that oversee the company's activities, and have a claim on compliance with laws and regulations, as well as the payment of taxes and other fees.
Understanding the different stakeholders and their claims on the company is important for analyzing the company's impact and potential success. By considering the needs and interests of all stakeholders, companies can create more sustainable and responsible business practices, and build stronger relationships with their customers, employees, and communities.
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true or false: it is typical for an organization to only inspect work-in-process and finished items that the company produced. it is not typical to inspect purchased items.
The given statement is False. Quality control is a critical aspect of any organization's operations, and it is essential to ensure that all products meet the required standards before they are shipped to customers.
This includes purchased items as well. Inspecting purchased items is necessary to ensure that they meet the same quality standards as the organization's own products.
This is particularly important when the purchased items are key components of the organization's products or services. A failure in a purchased item can result in the entire product or service being of poor quality, leading to customer dissatisfaction and damage to the organization's reputation.
Therefore, organizations should have a well-defined process for inspecting all incoming materials, including purchased items, to ensure they meet the necessary quality standards. By doing so, the organization can avoid potential quality issues and ensure customer satisfaction.
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why does a government policy to reduce the supply of illegal drugs greatly increase the price of illegal drugs? how might this policy result in more crime? might a government policy to reduce the demand for drugs have a different effect?
A government policy to reduce the supply of illegal drugs can increase the price of illegal drugs due to the basic principles of supply and demand. A government policy to reduce the demand for drugs can have a different effect.
If the supply of illegal drugs is reduced, while the demand for the drugs remains the same, the price of the drugs will rise. This is because there are fewer drugs available in the market, but the demand for the drugs remains the same, or even increases as some people may be willing to pay higher prices for the drugs.
The increase in the price of illegal drugs may result in more crime as individuals who are addicted to drugs may resort to criminal activities, such as theft or drug-related crimes, to obtain the funds to purchase the drugs at the higher prices. Moreover, drug dealers may also become more violent to protect their supply or increase their profits.
If the demand for drugs is reduced, while the supply remains constant, the price of illegal drugs may decrease. This is because there are fewer buyers in the market for the same amount of drugs. However, the effectiveness of such a policy in reducing drug-related crime would depend on the specific measures implemented to reduce demand, as well as the willingness of individuals to seek treatment or reduce their drug use.
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Consider a project with a life of 4 years with the following information: initial fixed asset investment = $360,000; straight-line depreciation to zero over the 4-year life; zero salvage value; price = $40; variable costs = $18; fixed costs = $172,800; quantity sold = 100,224 units; tax rate = 23 percent. How sensitive is OCF to changes in quantity sold? Multiple Choice a. $19.31 b. $16.94 c. $0.06
The sensitivity of OCF to changes in quantity sold is $19.31.(A)
To calculate the sensitivity of OCF (Operating Cash Flow) to changes in quantity sold, follow these steps:
1. Calculate the contribution margin per unit: price - variable costs = $40 - $18 = $22.
2. Calculate the operating income before tax: (contribution margin * quantity sold) - fixed costs = ($22 * 100,224) - $172,800.
3. Calculate the income tax: operating income before tax * tax rate = operating income before tax * 23%.
4. Calculate the OCF: operating income before tax - income tax.
5. Calculate the sensitivity of OCF to changes in quantity sold: contribution margin per unit * (1 - tax rate) = $22 * (1 - 23%) = $19.31.(A)
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if nominal gdp in 2010 is greater than real gdp in 2011 (using 2010 prices), then
The given scenario is possible when there's a combination of inflation and/or economic contraction between 2010 and 2011. Real GDP, adjusted for inflation using 2010 prices, provides a more accurate picture of the economy's performance, as it allows for a fair comparison between different time periods.
Nominal GDP refers to the monetary value of all goods and services produced in an economy within a specific time period, without considering inflation or changes in the price level. It is measured using the current market prices during that time period. Real GDP, on the other hand, measures the value of all goods and services produced within an economy during a specific time period, but adjusts for inflation or changes in the price level. This situation can occur due to the following reasons:
1. Inflation: If the prices of goods and services increased significantly between 2010 and 2011, nominal GDP in 2010 could be greater than real GDP in 2011, as the latter adjusts for changes in the price level. This means that the economy's growth rate may be overstated when comparing nominal GDP values without accounting for inflation
. 2. Economic Contraction: If the economy experienced a contraction between 2010 and 2011, the production of goods and services could have decreased, leading to a lower real GDP in 2011.
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true or false? any component that, if it fails, could interrupt business processing is called a single point of failure (spof).
True. Any component that is crucial to the normal operation of a system or process and whose failure could cause a complete or partial shutdown is considered a single point of failure (SPOF).
This could be a hardware component like a server or network switch, or a software component like an operating system or database server. The failure of a SPOF can have significant consequences, including financial losses, loss of customer confidence, and damage to reputation.
Therefore, it is essential to identify and mitigate potential SPOFs through redundancy, backup systems, and disaster recovery planning.
In summary, any component that can interrupt business processing if it fails is a SPOF, and identifying and mitigating SPOFs is critical for ensuring system reliability and availability.
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T/F the company's bank reconciliation is a critical means by which an auditor completes audit procedures over the cash balance in the financial statements.
The statement "The company's bank reconciliation is a critical means by which an auditor completes audit procedures over the cash balance in the financial statements" is true. Bank reconciliations are an essential part of the audit process as they help auditors verify the accuracy of a company's cash balance in the financial statements.
A bank reconciliation involves comparing the company's internal records of cash transactions and balances with the corresponding information provided by the bank. This process helps identify any discrepancies between the two sets of records, such as timing differences, errors, or potential fraud.
1. Obtain the company's cash records and bank statements for the period being audited.
2. Compare the beginning and ending balances in the company's cash records to the corresponding balances on the bank statements.
3. Identify any outstanding deposits, checks, or other transactions that have been recorded by the company but not yet reflected in the bank statement.
4. Adjust the company's cash records for any errors or omissions discovered during the reconciliation process.
5. Confirm that the adjusted cash balance in the company's records agrees with the adjusted bank balance.
By completing a thorough bank reconciliation, the auditor can gain assurance that the company's cash balance is fairly stated in the financial statements. This process not only helps to detect errors or fraud but also strengthens the overall reliability of the financial reporting.
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What determines life expectancy?
For this home assignment you will be required to model life expectancy worldwide.
Please use the file: life_expectancy.Rdata (World Bank Database – 2016 values). Please read the description
at the end of this document to understand the variables. In this home assignment we are going to model
life expectancy at birth (dependent variable).
QUESTION 1
Please model the determinants of life expectancy using R:
a) Decide if will use the logarithm or the level of the dependent variable and why? (2 marks)
b) Include a minimum of 5 (five) explanatory variables in the regression equation and provide a scatter
plot of your dependent and independent variables (5 scatter plots worth 0.5 x 5 marks).
When modelling, explain each of your functional form specification choices with respect to:
Economic or common sense behind the model - why do you pick this variable? (0.5 x 5 marks)
Multicollinearity – are the independent variables multicollinear? (0.5 x 5 marks)
Functional form specification- potential nonlinear relationships, eg: log-linear or quadratic
relationships. Explain why you use a linear or logarithmic form of a variable. (0.5 x 5 marks)
in writing. You will be graded on model accuracy in this section.
Use OLS standard errors.
(Subtotal: 10 marks) 1 Table [regression output] & Explanations, 5 scatter plots
c) Interpret the coefficients on the 5 explanatory variables. Describe if the coefficients are elasticities
or semi-elasticities, or simple level variables.
(5 marks)
d) Interpret the statistical significance of these coefficients using the p-values AND calculate the t-
stats.
Hint: The t-stat should be calculated as per the formula we learned, and interpreted accordingly.
Taking a t-value out of the regression is not acceptable.
(5 marks)
RMIT Classification: Trusted
e) Describe each of the five "Gauss Markov" assumptions, (define them) and explain in the context
of the regression output in (b) whether these assumptions are likely to be met in these models.
(5 marks)
f) Test for heteroscedasticity in R using the Breusch-Pagan test and copy below the results. Interpret
the results of the Breusch Pagan test. (2 marks)
g) Present the results from (b) using HAC robust errors! Did any of the standard errors change
significantly? (3 marks) 1 Table & Explanations
h) Define the three major causes of endogeneity and why these arise. (6 marks)
i) What is an instrumental variable estimation and which of the endogeneity biases you described above
is most commonly addressed with it? (2 marks)
Life expectancy is determined by various factors, including healthcare, sanitation, nutrition, education, and economic development. To model life expectancy worldwide, we will use the World Bank Database 2016 values in R.
We will model the determinants of life expectancy at birth using regression analysis. We will use the logarithm of the dependent variable since it is more appropriate for modeling exponential relationships. We will include at least five explanatory variables and provide scatter plots of the dependent and independent variables.
We will also explain our choices of functional form specifications based on economic or common sense reasoning, multicollinearity, and potential nonlinear relationships.
We will interpret the coefficients on the explanatory variables as elasticities or semi-elasticities and determine their statistical significance using p-values and t-stats. We will also test for heteroscedasticity using the Breusch-Pagan test and present the results using HAC robust errors.
Lastly, we will define the three major causes of endogeneity and explain instrumental variable estimation, which is commonly used to address endogeneity biases.
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describe each of the five objectives of the phoenix project. what level of effort would be required to accomplish these objectives?
The five objectives of improvement of the Phoenix Project are to improve:
Business/IT Alignment, Project Delivery Efficiency, IT Operations Efficiency, Continuous Improvement and Security and Compliance.
What are the objectives of the Phoenix ProjectThe five objectives of the Phoenix Project are to improve the following areas:
1. Business/IT Alignment:
Ensuring that IT projects and resources are aligned with the organization's strategic goals, requiring effective communication and collaboration between business and IT teams.
2. Project Delivery Efficiency:
Streamlining the delivery of IT projects by eliminating bottlenecks, adopting agile methodologies, and utilizing automation where appropriate. This may require significant effort in process improvement and team training.
3. IT Operations Efficiency:
Enhancing the performance and reliability of IT systems by implementing best practices in areas like incident management, monitoring, and capacity planning. This can be moderately to highly effort-intensive, depending on the current state of operations.
4. Continuous Improvement:
Fostering a culture of continuous learning and improvement within the organization, which may involve regular reviews, feedback, and training. The level of effort required varies based on the organization's current maturity and willingness to adapt.
5. Security and Compliance:
Ensuring that IT systems and processes comply with relevant regulations and are secure from potential threats. This objective typically requires a significant amount of effort in the form of regular audits, vulnerability assessments, and remediation of identified issues.
The level of effort required to accomplish these objectives depends on the organization's current state and the resources allocated for the project. The more mature an organization is in these areas, the less effort will be needed to achieve the objectives.
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which one of the following statements is correct? multiple choice at the accounting break-even level, the pretax profit is equal to the aftertax profit. the contribution margin is equal to sales minus fixed costs. the larger the contribution margin, the higher the financial break-even point. the accounting break-even point is higher than the financial break-even point for the same project. taxes are considered when computing the accounting break-even point but not the financial break-even point.
The statement that is correct is: at the accounting break-even level, the pretax profit is equal to the aftertax profit.
Accounting Break- even level:
The correct statement is: at the accounting break-even level, the pretax profit is equal to the aftertax profit. This is because at the accounting break-even point, the company is earning just enough revenue to cover all its expenses, including taxes, so there is no net profit or loss. The other statements are not necessarily true.
The contribution margin is sales minus variable costs, not fixed costs. The larger the contribution margin, the lower the financial break-even point, not higher. The accounting break-even point and the financial break-even point may be the same or different depending on the level of fixed costs and financing costs. Taxes are considered in both the accounting and financial break-even analysis.
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A 20-year maturity bond with face value of $1,000 makes annual coupon payments and has a coupon rate of 9.7%. (Do not round intermediate calculations. Enter your answers as a percent rounded to 3 decimal places.) a. What is the bond's yield to maturity if the bond is selling for $1,070? Yield to maturity __% b. What is the bond's yield to maturity if the bond is selling for $1,000? Yield to maturity __ % c. What is the bond's yield to maturity if the bond is selling for $1,270? Yield to maturity __ %
a. The bond's yield to maturity is 8.000%. b. The bond's yield to maturity is 9.700%. c. The bond's yield to maturity is 6.316%.
a. To calculate the bond's yield to maturity when it is selling for $1,070, we need to solve for the interest rate (yield) that equates the present value of the bond's future cash flows (coupons and principal) to its current price.
Using a financial calculator or spreadsheet, we can enter the following values into the appropriate formula:
N = 20 (number of years)
I/Y = ? (yield to maturity)
PMT = $97 (annual coupon payment, which is 9.7% of the face value)
FV = $1,000 (face value)
PV = -$1,070 (negative because we are buying the bond)
Solving for I/Y, we find that the bond's yield to maturity is 8.000%.
b. When the bond is selling for its face value of $1,000, its yield to maturity is simply equal to its coupon rate of 9.7%.
c. When the bond is selling for $1,270, its yield to maturity can be calculated using the same formula as in part a, but with PV = -$1,270:
N = 20
I/Y = ?
PMT = $97
FV = $1,000
PV = -$1,270
Solving for I/Y, we find that the bond's yield to maturity is 6.316%.
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On April 1st last year, Company S had assets of £79.0 million and liabilities of £27.1 million. In the year ended March 31st this year, Company S made a profit of £12.3 million before tax, of which £2.3 million is payable in tax and £3.3 million has been distributed as a dividend. No further dividends have been announced. Company S has 300 million ordinary shares in issue, each with a nominal value of 10p of which 200 million are listed on the London Stock Exchange. On April 1st last year, the market price of each of these shares was 165.56p. On March 31st this year it was 140.25p. None of Company S's assets were revalued during the year. Company S did not acquire or sell any other companies, did not issue any further shares or bonds and did not redeem any shares or bonds. There were no changes in reserves other than those stated above. How much was the book value of the shareholders' equity in Company S at March 31st this year, in millions of £? Give your answer to 1 decimal place in £ million, without commas. For example, for £33.762 million enter 33.76 Answer:
The book value of the shareholders' equity in Company S at March 31st this year was £60.4 million.
To find the book value of the shareholders' equity, we need to calculate the total equity of the company by subtracting its liabilities from its assets.
As no revaluations were done during the year and there were no changes in reserves other than those stated in the problem, we can assume that the equity at the beginning of the year was equal to the book value of the equity at the end of the year.
Therefore, the total equity of the company at March 31st this year can be calculated as:
Total Equity = Assets - Liabilities
Total Equity = £79.0 million - £27.1 million
Total Equity = £51.9 million
We can then calculate the book value of the shareholders' equity by multiplying the number of outstanding ordinary shares by the nominal value of each share:
Book Value of Shareholders' Equity = Number of Ordinary Shares x Nominal Value of each Share
Book Value of Shareholders' Equity = 300 million x £0.10
Book Value of Shareholders' Equity = £30 million
Finally, we can calculate the book value of the listed shareholders' equity by multiplying the book value of the total shareholders' equity by the ratio of listed ordinary shares to total ordinary shares:
Book Value of Listed Shareholders' Equity = Book Value of Shareholders' Equity x (Listed Ordinary Shares / Total Ordinary Shares)
Book Value of Listed Shareholders' Equity = £30 million x (200 million / 300 million)
Book Value of Listed Shareholders' Equity = £20 million
To convert this to the book value of the listed shareholders' equity in millions of £, we divide by 1 million:
Book Value of Listed Shareholders' Equity in millions of £ = £20 million / £1 million
Book Value of Listed Shareholders' Equity in millions of £ = £20.0 million
As the question asks for the book value of the shareholders' equity, not just the listed shareholders' equity, we add the book value of the unlisted shareholders' equity:
Book Value of Shareholders' Equity = Book Value of Listed Shareholders' Equity + Book Value of Unlisted Shareholders' Equity
Book Value of Shareholders' Equity = £20.0 million + (£51.9 million - £30.0 million)
Book Value of Shareholders' Equity = £60.4 million
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Melissa Inc. has an outstanding issue of perpetual preferred stock with an annual dividend of $1.00 per share. If the required return on this preferred stock is 5.24%, at what price should the stock sell? (Multiple Choice) a. $16.46 b. $11.69 c. $19.08 d. $13.69 e. $15.38
A higher yield (return) is expected from investing in an AA-rated corporate bond than investing in a BBB-rated corporate bond if both bonds have the same maturity. True/False) a
The price at which Melissa Inc.'s perpetual preferred stock should sell is $19.08.(C)
To calculate the price of the perpetual preferred stock, use the formula:
Price = Annual Dividend / Required Return
Step 1: Identify the annual dividend and required return.
Annual Dividend = $1.00
Required Return = 5.24% (0.0524 as a decimal)
Step 2: Use the formula to calculate the price.
Price = $1.00 / 0.0524 = $19.08
Thus, the stock should sell at $19.08, which corresponds to option (C).
Regarding the statement about bond yields, it is True. A higher yield is expected from investing in an AA-rated corporate bond than in a BBB-rated corporate bond if both bonds have the same maturity.
This is because the AA-rated bond has a lower credit risk, and investors require a higher yield for taking on the additional risk associated with the BBB-rated bond.
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a strategy that promotes a superior alignment between the organization and its environment and the achievement of strategic goals is a(n) .
A strategy that promotes a superior alignment between the organization and its environment and the achievement of strategic goals is called a strategic fit.
A strategic fit ensures that an organization's resources, capabilities, and competitive advantages are aligned with its external environment, including the market, competition, and technological changes.
A strategic fit involves assessing the external environment to identify opportunities and threats, and aligning the organization's resources and capabilities to capitalize on those opportunities and overcome the threats. This includes aligning the organization's mission, values, and culture with the external environment to achieve a shared vision and purpose.
A strategic fit is essential for achieving long-term success and sustainability, as it helps organizations adapt to changing environments and stay competitive. It also enables organizations to optimize their resources and capabilities to achieve their strategic goals efficiently and effectively. A strategic fit is a dynamic process that requires ongoing evaluation and adjustment to ensure that the organization remains aligned with its environment and strategic goals.
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true or false if the stock owned by a mutual fund increases in value the net value of the fund will fall
The statement "If the stock owned by a mutual fund increases in value, the net value of the fund will fall" is false because When the stock owned by a mutual fund increases in value, it means the assets held by the fund are appreciating.
As a result, the net asset value (NAV) of the mutual fund will also increase. The NAV is calculated by dividing the total value of the fund's assets by the number of shares outstanding.
When the value of the underlying assets, such as stocks, goes up, the NAV will also rise, as the total value of the fund's assets increases. Therefore, an increase in the stock value will not cause the net value of the fund to fall, but rather to rise.
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Make a list of the legal issues that created confusion in the dispute between Katy Perry and the nuns from the Los Angeles convent. Discuss the impact on the various stakeholders of these points of legal confusion.
The legal issues that created confusion in the dispute between Katy Perry and the nuns from the Los Angeles convent include the ownership of the property, the authority of the Archdiocese of Los Angeles, and the validity of the sale.
The nuns argued that they had the right to sell the property to a local restaurateur, while the Archdiocese of Los Angeles claimed ownership of the property and argued that the nuns did not have the authority to sell it. Furthermore, there were questions surrounding the validity of the sale and whether it followed proper procedures.
The impact on the various stakeholders of these points of legal confusion was significant. The nuns faced legal action and potential penalties for the attempted sale, while the Archdiocese of Los Angeles faced negative publicity and potential loss of property ownership.
Katy Perry and the restaurateur faced uncertainty regarding the status of their purchase, as well as the possibility of legal repercussions. Overall, the legal issues created confusion and tension among the stakeholders involved, leading to a prolonged and contentious dispute.
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AllCity Inc. is financed 40% with debt, 15% with preferred stock, and 45% with common stock. Its pre-tax cost of debt is 6%; its preferred stock pays an annual dividend of $3.25 and is priced at $28. It has an equity beta of 1.3. Assume the risk-free rate is 2%, the market risk premium is 6%, and AllCity's tax rate is 35%. What is its after-tax WACC? What is its after-tax WACC? 'wacc (Round to five decimal places.)
The after tac WACC for the AllCity Inc. financed 40% with debt, 15% with preferred stock, and 45% with common stock is 7.71%.
The weighted average cost of capital (WACC), which includes ordinary stock, preferred stock, bonds, and other types of debt, is the average after-tax cost of capital for a company. The WACC is the typical interest rate that a business anticipates paying to finance its assets.
Because WACC reflects the return that both bondholders and shareholders require in order to provide the firm with capital in a single value, it is frequently used to calculate necessary rate of return (RRR). Because investors will want larger returns, a company's WACC is likely to be higher if its stock is very volatile or if its debt is seen as hazardous.
Debt = 40%
Preferred Stock = 15%
Common Stock = 45%
Pre Tax Cost of Debt = 6%
Annual Dividend of Preferred Stock = $3.25
Price of Preferred Stock = $28
Using the Formula of Preferred Stock,
Cost of Preferred stock = [tex]\frac{Annual\ dividend}{Market\ Price}[/tex]
= 3.25 / 28
= 0.1160714285714
= 11.61%.
Using the Formula of Capital Asset Pricing Model
Equity Beta = 1.3
Risk-free rate = 2%
Market Risk Premium = 6%
[tex]ER_i=R_f+\beta(ER_m-R_f)[/tex]
= 2% + 1.3(6%)
= 2% + 7.8%
[tex]ER_i[/tex] = 9.8%.
Tax rate = 35%
Using the Formula of After-Tax WACC
[tex]WACC=W_D K_P(1-T)+W_EK_E+W_PK_P[/tex]
= 040 x 6%(1-0.35) + 0.45 x 9.8% + 0.15 x 11.61%
= 1.56 + 4.41 + 1.7415
WACC = 7.71%.
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Define what is meant by basis. State three situations that couldresult in non-zero basis at maturity.
A non-zero basis at maturity in finance refers to the difference between the spot price and the futures price of an asset, and it can occur due to supply and demand imbalances, transportation costs, or changes in interest rates.
What is definition and causes of non-zero basis at maturity in finance?In finance, the term "basis" refers to the difference between the spot price of an asset and the futures price of the same asset. This difference is usually expressed as a percentage or a dollar amount.
A non-zero basis at maturity occurs when the spot price of the asset and the futures price of the same asset are not equal when the futures contract expires. Here are three situations that could result in a non-zero basis at maturity:
Supply and demand imbalances: If there is a shortage of a particular commodity, the spot price may be higher than the futures price. Conversely, if there is an oversupply of the commodity, the spot price may be lower than the futures price. These imbalances can result in a non-zero basis at maturity.Transportation costs: If the cost of transporting a commodity from the spot market to the delivery location specified in the futures contract is higher than expected, the spot price may be higher than the futures price. This can result in a non-zero basis at maturity.Interest rates: If interest rates rise during the term of a futures contract, the futures price may be lower than the expected spot price at maturity. This is because the cost of carrying the commodity over the term of the contract is higher when interest rates are high. This can result in a non-zero basis at maturity.Learn more about non-zero basis.
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QUESTION 5 Rocket corp has 100 bonds outstanding. The bonds are annual coupon bonds with a face value of $1000, a coupon rate of 6.4%, and 11 years until the bond matures. If the YTM of the bonds is 7.5%, what is the total market value of the bonds for Rocket corp?
The total market value of the bonds for Rocket Corp is $94,480.
To find the total market value of the bonds for Rocket Corp, you need to calculate the present value of the bond's cash flows, which consists of the annual coupon payments and the face value at maturity. Here's a step-by-step explanation:
1. Calculate the annual coupon payment: Face value ($1000) x coupon rate (6.4%) = $64
2. Determine the number of periods (years) until maturity: 11 years
3. Find the yield to maturity (YTM) as a decimal: 7.5% = 0.075
4. Calculate the present value of the coupon payments using the formula:
(Coupon payment x (1 - (1 + YTM)^(-number of periods))) / YTM = ($64 x (1 - (1 + 0.075)^(-11))) / 0.075 ≈ $525.42
5. Calculate the present value of the face value at maturity:
Face value / (1 + YTM)^(number of periods) = $1000 / (1 + 0.075)^11 ≈ $419.38
6. Add the present values of the coupon payments and the face value to find the market value of a single bond:
$525.42 + $419.38 ≈ $944.80
7. Multiply the market value of a single bond by the number of bonds outstanding (100) to find the total market value of the bonds for Rocket Corp:
$944.80 x 100 = $94,480
So, the total market value of the bonds for Rocket Corp is $94,480.
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Topic: BOND AND STOCK VALUATION
solve by hand, using a financial calculator or excel.b. ABC Retailers just issued 200 16-year bonds with face value of €5,000. The quoted price of those bonds is 96.268, and they pay coupon twice a year. If the yield to maturity on this bond is 5.27%, what is the coupon rate? What is the dollar price of each of those bonds? What is the total value of the bonds outstanding?
The coupon rate for ABC Retailers' 16-year bonds is 5.674%, the dollar price of each bond is €4,813.40, and the total value of the bonds outstanding is €962,680.
To calculate the coupon rate, we can use the following formula:
Coupon Rate = (Yield to Maturity * Face Value) / Quoted Price
Plugging in the given values:
Coupon Rate = (0.0527 * €5,000) / 96.268 = €273.34 / 96.268 = 2.837
Since the bond pays coupons twice a year, the annual coupon rate is:
Annual Coupon Rate = 2 * 2.837 = 5.674%
Now, let's find the dollar price of each bond. The quoted price is given as a percentage of the face value, so:
Dollar Price = (Quoted Price / 100) * Face Value
Dollar Price = (96.268 / 100) * €5,000 = €4,813.40
Lastly, to find the total value of the bonds outstanding, multiply the dollar price by the number of bonds:
Total Value = Dollar Price * Number of Bonds
Total Value = €4,813.40 * 200 = €962,680
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All of the following are needed to determine the annual accretion amount on an original issue municipal discount bond EXCEPT:
A Dated date
B Maturity date
C Acquisition cost
D Sale price
To determine the annual accretion amount on an original issue municipal discount bond, you need the following information:
A. Dated date
B. Maturity date
C. Acquisition cost
The one term you do NOT need to determine the annual accretion amount is:
D. Sale price
Dated date: The dated date of a municipal discount bond is the date from which the bond starts accruing interest. It is also known as the "issue date" or "origination date" of the bond.
The dated date is an important factor in calculating the annual accretion amount as it determines the number of days for which the bond has been outstanding and accruing interest.
Maturity date: The maturity date of a municipal discount bond is the date on which the bond is scheduled to mature and the principal amount is due to be repaid to the bondholder.
The maturity date is used in determining the total period for which the bond is held until maturity, which is an important factor in calculating the annual accretion amount.
Acquisition cost: The acquisition cost of a municipal discount bond is the price at which the bond was purchased or acquired by the bondholder. It includes the purchase price, any transaction costs, and any accrued interest that may be due at the time of acquisition.
The acquisition cost is used in calculating the annual accretion amount as it forms the basis for determining the increase in the bond's value over time.
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Astro Burger announced today that it will begin paying annual dividends. The first dividend of $0.41 will be paid in one year. The second and third annual dividends will be $0.46 and $0.61, respectively. The forth annual dividend will be $0.91, and subsequent dividends will increase at 3.0 percent per year in perpetuity. If your required return is 11 percent, how much are you willing to pay today to buy this stock?
You would be willing to pay $5.23 today to buy Astro Burger's stock.
To calculate this, first, we need to find the present value of the dividends. We will divide each dividend by (1+required return) raised to the power of the year in which the dividend is paid:
PV1 = $0.41 / (1+0.11)¹ = $0.369
PV2 = $0.46 / (1+0.11)² = $0.373
PV3 = $0.61 / (1+0.11)³ = $0.440
PV4 = $0.91 / (1+0.11)⁴ = $0.564
Next, we need to calculate the present value of the perpetuity (constant growth) part of the dividend stream, which begins with the 4th annual dividend of $0.91 and grows at 3% per year. We'll use the perpetuity formula:
PV Perpetuity = (D4 * (1 + growth rate)) / (required return - growth rate)
PV Perpetuity = ($0.91 * 1.03) / (0.11 - 0.03) = $11.703
Finally, we'll sum the present values to find the total value of the stock:
Stock Value = PV1 + PV2 + PV3 + PV4 + PV Perpetuity = $0.369 + $0.373 + $0.440 + $0.564 + $11.703 = $5.23
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jordan is 45 and wants to retire in 22 years. his family has a history of living well into their 90s. therefore, he estimates that he will live to age 97. he currently has a salary of $100,000 and expects that he will need about 85% of that amount annually if he were retired. he can earn 9 percent in his portfolio and expects inflation to be 3 percent. jordan currently has $125,000 invested for his retirement. his social security retirement benefit in today's dollars is $30,000 per year at normal age retirement of age 67. how much does he need to save at the end of each year to meet his retirement goals?
Jordan needs to save approximately $4,169,569.76 at the end of each year to meet his retirement goals.
To calculate how much Jordan needs to save at the end of each year to meet his retirement goals, we can follow these steps:
Estimate Jordan's annual retirement expenses
Jordan expects that he will need about 85% of his current salary annually when he is retired. Given that his current salary is $100,000, his estimated annual retirement expenses will be 85% of $100,000, which is $85,000.
Calculate Jordan's retirement period
Jordan wants to retire in 22 years and expects to live until age 97. So, his retirement period will be 97 - 22 = 75 years.
Adjust retirement expenses for inflation
Jordan expects an inflation rate of 3%. To account for inflation, we need to adjust his estimated annual retirement expenses for each year of his retirement period. We can use the formula:
Adjusted Retirement Expenses = Retirement Expenses * (1 + Inflation Rate)^Number of Years
For the first year of his retirement, the adjusted retirement expenses will be $85,000 * (1 + 0.03)^1 = $87,550.
For the second year, it will be $85,000 * (1 + 0.03)^2 = $90,226.5.
We repeat this calculation for each year of Jordan's retirement period.
Calculate Jordan's total retirement savings needed
Next, we need to calculate the total retirement savings Jordan will need at the end of his retirement period. We can use the formula:
Total Retirement Savings = Adjusted Retirement Expenses * ((1 - (1 + Annual Rate of Return)^-Number of Years) / Annual Rate of Return)
Given that Jordan can earn 9% in his portfolio, his annual rate of return will be 0.09.
Using this formula, we can calculate Jordan's total retirement savings needed:
Total Retirement Savings = $87,550 * ((1 - (1 + 0.09)^-75) / 0.09) = $4,324,569.76 (rounded to the nearest cent).
Deduct Jordan's current retirement savings and social security benefit
Finally, we need to deduct Jordan's current retirement savings and social security retirement benefit from the total retirement savings needed to determine how much he needs to save at the end of each year.
Total Retirement Savings Needed - Current Retirement Savings - Social Security Benefit = Annual Savings Needed
Given that Jordan currently has $125,000 invested for his retirement and his social security retirement benefit is $30,000 per year, we can calculate his annual savings needed:
$4,324,569.76 - $125,000 - $30,000 = $4,169,569.76 (rounded to the nearest cent).
So, Jordan needs to save approximately $4,169,569.76 at the end of each year to meet his retirement goals.
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he trial balance will include a.only the credits of each account. b.only balance sheet accounts. c.the ending balance of each account. d.only the debits of each account.
The trial balance includes the ending balance of each account and serves as a tool to ensure that the accounting records are accurate.The correct answer to your question is c.
The trial balance will include the ending balance of each account. A trial balance is a summary of all the account balances in the general ledger at the end of a particular accounting period. It is used to ensure that the total debits and total credits are equal and that the accounting records are accurate. When preparing a trial balance, both the debit and credit balances of each account are listed separately.
The trial balance includes all accounts in the general ledger, including both balance sheet accounts (such as assets, liabilities, and equity) and income statement accounts (such as revenues and expenses). The purpose of the trial balance is to identify any errors in the accounting records.
If the total debits and credits are not equal, there is an error that needs to be corrected. The trial balance helps to ensure that the financial statements accurately reflect the company's financial position and performance. The correct answer to your question is c.
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a policyowner provides a check to the producer for her initial premium. how soon from receiving the check must the producer remit it to the insurer?
When a policyowner provides a check to the producer for the initial premium, it is the producer's responsibility to remit the payment to the insurer in a timely manner. Generally, the producer should remit the payment as soon as possible after receiving it from the policyowner.
This ensures that the policy is put into effect without any delays or interruptions. It is important to note that the producer is acting as an agent for the insurer in this transaction and is responsible for properly handling the funds.
If there is a delay in remitting the payment, it could potentially cause issues with the policy and could result in cancellation or other complications. Therefore, it is important for both the policyowner and producer to ensure that the payment is processed in a timely manner to avoid any potential issues with the policy.
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You are in charge of planning a concert for Beyoncé at NRGstadium. You need to pay Beyoncé $2 million for the show, $50,000for the technical crew, $50,000 to the back up dancers, and$200,000 to r ent the stadium. You know you can sell tickets for $200 each. What is the breakeven number of tickets you must sell?A) 10,000B) 11,500C) 12,500D) 13,000
The corrrect answer is B) 11,500. The breakeven number of tickets that need to be sold for the Beyoncé concert at NRG stadium is 11,500.
To calculate the breakeven number of tickets that need to be sold, we need to determine the total cost of the concert and divide it by the price per ticket.
The total cost of the concert is the sum of Beyoncé's fee, the technical crew and backup dancers' fees, and the stadium rental cost, which is $2 million + $50,000 + $50,000 + $200,000 = $2,300,000.
To break even, the total revenue generated from ticket sales needs to equal the total cost of the concert, which is $2,300,000. Therefore, we can set up an equation:
$200 x = $2,300,000
where x is the number of tickets that need to be sold.
Solving for x, we get:
x = $2,300,000 ÷ $200
x = 11,500
Therefore, the breakeven number of tickets that need to be sold for the Beyoncé concert at NRG stadium is 11,500.
Answer: B) 11,500
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An analyst claims, ‘‘It is not worth my time to develop detailed forecasts of sales growth, profit margins, etcetera, to make earnings projections. I can be almost as accurate, at virtually no cost, using the random walk model to forecast earnings.’’ What is the random walk model? Do you agree or disagree with the analyst’s forecast strategy? Why or why not?
The random walk model is a financial theory that assumes that stock price movements are unpredictable and follow a random pattern. According to this model, the best predictor of future stock prices is the current price, as there is no correlation between past and future price movements.
As for the analyst's forecast strategy, I respectfully disagree with their claim. While the random walk model may offer a low-cost and easy way to forecast earnings, it is not the most accurate method.
Developing detailed forecasts of sales growth, profit margins, and other financial factors can provide more reliable and accurate predictions, as these factors are often closely related to a company's future earnings.
In conclusion, the random walk model is a financial theory that assumes stock price movements are unpredictable and follow a random pattern.
However, relying solely on this model to forecast earnings may not be the most accurate approach. Instead, a more comprehensive analysis that includes sales growth, profit margins, and other factors should be considered for a more accurate forecast.
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What type of credit is a monthly telephone bill? a) single -payment credit b) installment credit c) revolving credit.
A monthly telephone bill is an example of revolving credit i.e. option C. This type of credit allows a borrower to continuously use and repay the credit line as long as they make at least the minimum payments required each month.
With revolving credit, the amount of credit available to the borrower can change depending on how much they have used and paid back. In contrast, single-payment credit requires the borrower to repay the entire amount borrowed in one lump sum, while installment credit involves fixed payments over a set period of time. Monthly telephone bills typically have a minimum payment due each month, and the balance can carry over to the next billing cycle if not paid in full. Therefore, it falls under the category of revolving credit.
Thus, the right option is C.
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The type of credit that a monthly telephone bill falls under is revolving credit.
This is because the amount owed on the bill can fluctuate from month to month based on usage and is paid off in varying amounts each month rather than a set single or installment payment. A monthly telephone bill is an example of a single-payment credit (option a). This is because you receive the service for a specific period and then pay the entire amount due in a single payment at the end of that period.
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1. short discussion on the marketing strategies, demand andprojected sales of smart dc stand fan.2. short description on production requirements, quality controlproduction cost of smart dc stand fa
When it comes to marketing strategies for the smart DC stand fan, it's important to first identify the target market.
This type of fan would likely appeal to those who prioritize energy efficiency and technology in their home appliances. One strategy could be to promote the fan's energy-saving capabilities and convenient features (such as remote control and programmable settings) through social media and targeted online ads. Another strategy could be to partner with sustainable living organizations or influencers to promote the fan as a green option for cooling.
In terms of demand and projected sales, it would depend on factors such as pricing, competition, and overall consumer interest. Market research and testing would be necessary to determine the potential success of the product. In terms of production requirements, the smart DC stand fan would require materials for the fan blades, motor, housing, and electronics (such as the remote control). Quality control would be important to ensure the fan meets safety and performance standards, as well as customer expectations.
Production costs would depend on factors such as the cost of materials, labor, and overhead expenses. Implementing efficient production processes and minimizing waste would also be important for reducing costs.
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bookmark question for later clearwater electronics is revising its strategic hr plan and comparing employment needs to the level of sales. the company has recently seen a 30 percent increase in sales, and the salespeople say that they anticipate an increase soon of 70 percent. however, the hr director, who oversees the hr planning process, does not believe the company will need to hire 70 percent more employees to meet the projected sales numbers. how can a simple linear regression, as part of the hr planning process, help the hr director make a more accurate determination of projected staffing needs?
The HR director can use a simple linear regression analysis to predict the future employment needs of Clearwater Electronics based on the level of sales. This statistical tool will enable the HR director to identify any correlations between sales and staffing needs by analyzing historical data on sales and employment levels. By examining this data, the HR director can identify trends and patterns in staffing needs that correspond with different levels of sales.
Using the results of the regression analysis, the HR director can create a more accurate projection of future staffing needs. By incorporating this information into the HR planning process, the company can better allocate resources and ensure that they have the necessary staff to meet the anticipated demand.
In summary, a simple linear regression analysis can help the HR director at Clearwater Electronics to make more informed decisions regarding staffing needs based on projected sales numbers. By taking a data-driven approach to HR planning, the company can ensure that they are prepared to meet the anticipated demand and achieve their strategic objectives.
Therefore, it is essential to bookmark this question for later and ensure that the HR director uses regression analysis as part of the HR planning process.
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if a stock consistently goes down (up) by 1.55% when the market
portfolio goes down (up) by 1.04%, then its beta equals?
The beta of the stock is 143.5.
To calculate the beta of the stock, we use the formula:
Beta = (covariance of stock returns with market returns) / (variance of market returns)
In this case, we know that the stock consistently goes down (up) by 1.55% when the market portfolio goes down (up) by 1.04%. This means that the covariance of the stock returns with market returns is:
covariance = -1.55 / -1.04 = 1.4904
We also know that the variance of the market returns is given as 1.04%, which is equivalent to 0.0104 (since variance is usually expressed in decimal form).
Therefore, the beta of the stock can be calculated as:
Beta = 1.4904 / 0.0104 = 143.5
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