For the first loan, the present value of the 1600 payment at the end of 3 years can be calculated as:
PV1 = 1600 / (1 + 0.06/2)^(3*2) = 1335.82
For the second loan, the present value of the 2600 payment at the end of 7 years can be calculated as:
PV2 = 2600 / (1 + 0.09/2)^(7*2) = 1558.13
To find the total present value of the two loans, we add the present values of each loan:
PV = PV1 + PV2 = 1335.82 + 1558.13 = 2893.95
To find the value of X that will pay off the consolidated loan, we need to solve for X in the equation:
PV = X / (1 + 0.13/2)^1 + X / (1 + 0.13/2)^2
We can simplify this equation by factoring out X:
PV = X * [1/(1 + 0.13/2)^1 + 1/(1 + 0.13/2)^2]
PV = X * [0.9345794 + 0.8734382]
PV = X * 1.8080176
Solving for X, we get:
X = PV / 1.8080176 = 2893.95 / 1.8080176 = 1600.00
Therefore, the two equal installments of X that will pay off the consolidated loan are $1600 each.
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An RSI divergence is?
a. Is only valid if it occurs in overbought or oversold
situations
b. Does not exist. RSI can’t show a
divergence
c. Signals that price is losing momentum
d. a and c
An RSI divergence is a signal that price is losing momentum and is only valid if it occurs in overbought or oversold situations. (A,C)
RSI divergence occurs when the price movement of an asset and its relative strength index (RSI) move in opposite directions.
This indicates a potential reversal in the current trend. An RSI divergence is considered valid when it happens in overbought (typically above 70) or oversold (typically below 30) conditions, suggesting that the price is losing momentum and a trend change is likely.
This signal can help traders identify potential entry and exit points in the market, but it is essential to use it in conjunction with other technical analysis tools for more accurate results.
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From the point of view of loan
amortization – mortgages fall into what three categories?
The three categories of mortgages from the point of view of loan amortization are: fixed-rate, adjustable-rate, and interest-only mortgages.
Fixed-rate mortgages have a constant interest rate and equal monthly payments throughout the loan term. Adjustable-rate mortgages (ARMs) have an interest rate that changes periodically, causing the monthly payments to fluctuate.
Interest-only mortgages require only interest payments for a specific period, after which the borrower must start paying both principal and interest.
Fixed-rate mortgages provide predictability and stability for borrowers, as the interest rate and monthly payments remain constant. Adjustable-rate mortgages often come with a lower initial interest rate but can become more expensive if rates increase over time.
This type of mortgage may be suitable for borrowers who plan to sell or refinance before the rate adjustment. Interest-only mortgages allow borrowers to make lower initial payments, but the principal balance remains unchanged during the interest-only period.
This can lead to significantly higher payments once the interest-only period ends and the borrower starts paying down the principal.
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2. Today is 1/1/2020. Con Edison has just paid a dividend of $9 per share. The dividend is expected to grow at 10% per year forever. The discount rate is 21%. a. Draw the timeline, showing the dividends expected to be paid on 1/1/2021, 1/1/2022, 1/1/2023 and 1/1/2024. (You must show how you would calculate each dividend using the information provided, but you don't have to do the calculations.) b. What is the present value today (1/1/2020) of all expected future dividends paid by Con Edison? c. What is the present value of all expected future dividends on 1/1/2021, immediately before the dividend paid at that time? d. What is the present value of all remaining expected future dividends on 1/1/2021, immediately after the dividend paid at that time?
Dividend is a distribution of a portion of a company's profits to its shareholders. This distribution can be in the form of cash, stock, or other assets.
a. Here is the timeline for the dividend:
2021 = $9.902022 = $10.892023 = $11.982024 = $13.18To calculate each dividend, we use the formula:
Dividend in Year N = Dividend in Year (N-1) * (1 + Dividend Growth Rate)
Using this formula, we can calculate each dividend as follows:
Dividend in Year 2021 = $9 * (1 + 0.10) = $9.90Dividend in Year 2022 = $9.90 * (1 + 0.10) = $10.89Dividend in Year 2023 = $10.89 * (1 + 0.10) = $11.98Dividend in Year 2024 = $11.98 * (1 + 0.10) = $13.18b. To calculate the present value of all expected future dividends paid by Con Edison, we can use the formula for the present value of a growing perpetuity:
PV = C / (r - g)
Where PV is the present value, C is the current dividend, r is the discount rate, and g is the dividend growth rate. Plugging in the values, we get:
PV = $9 / (0.21 - 0.10) = $90
Therefore, the present value of all expected future dividends paid by Con Edison is $90.
c. To calculate the present value of all expected future dividends on 1/1/2021, immediately before the dividend paid at that time, we can use the formula for the present value of a growing annuity:
PV = (C / (r - g)) * (1 - (1 + g)^(N - t + 1) / (1 + g)^N)
Where PV is the present value, C is the first dividend, r is the discount rate, g is the dividend growth rate, N is the total number of periods, t is the period when the first payment is received.
Plugging in the values, we get:
PV = ($9.90 / (0.21 - 0.10)) * (1 - (1 + 0.10)^(4 - 1 + 1) / (1 + 0.10)^4) = $24.14
Therefore, the present value of all expected future dividends on 1/1/2021, immediately before the dividend paid at that time, is $24.14.
d. To calculate the present value of all remaining expected future dividends on 1/1/2021, immediately after the dividend paid at that time, we can use the formula for the present value of a growing perpetuity:
PV = (C * (1 + g)^t) / (r - g)
Where PV is the present value, C is the dividend immediately after the first payment, r is the discount rate, g is the dividend growth rate, and t is the number of periods after the first payment.
Plugging in the values, we get:
PV = ($10.89 * (1 + 0.10)^1) / (0.21 - 0.10) = $133.04
Therefore, the present value of all remaining expected future dividends on 1/1/2021, immediately after the dividend paid at that time, is $133.04.
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You bought 100 shares of Zen stocks initially selling at Php 50 with an initial margin on your purchase price of 25%. You borrowed the remainder from your broker with an interest rate on margin loans at 8%. Zen stocks are giving dividends at Php 0.6 per share during the 1-year holding period. a. How much did you initially invest? b. How much did you borrow from your broker? c. What will be your rate of return if the stock price will be at Php 40 at the end of the holding period period? d. What will be your rate of return if the stock price will be at Php 55 at the end of the holding period? e. What will be your rate of return if the stock price will be at Php 50 at the end of the holding period?
a. The initial investment is calculated as follows:
Initial investment = 100 shares x Php 50 per share x 0.25 margin requirement
Initial investment = Php 1,250
b. The amount borrowed from the broker is calculated as follows:
Amount borrowed = 100 shares x Php 50 per share x 0.75 (1 - 0.25 margin requirement)
Amount borrowed = Php 3,750
c. If the stock price is Php 40 at the end of the holding period, the rate of return is calculated as follows:
Total proceeds = 100 shares x Php 40 per share + Php 0.6 per share x 100 shares
Total proceeds = Php 4,060
Total interest expense = Php 3,750 x 0.08 = Php 300
Net proceeds = Total proceeds - initial investment - total interest expense
Net proceeds = Php 4,060 - Php 1,250 - Php 300 = Php 2,510
Rate of return = (Net proceeds / Initial investment) - 1
Rate of return = (Php 2,510 / Php 1,250) - 1
Rate of return = 1.008 or 0.8%
d. If the stock price is Php 55 at the end of the holding period, the rate of return is calculated as follows:
Total proceeds = 100 shares x Php 55 per share + Php 0.6 per share x 100 shares
Total proceeds = Php 5,560
Total interest expense = Php 3,750 x 0.08 = Php 300
Net proceeds = Total proceeds - initial investment - total interest expense
Net proceeds = Php 5,560 - Php 1,250 - Php 300 = Php 4,010
Rate of return = (Net proceeds / Initial investment) - 1
Rate of return = (Php 4,010 / Php 1,250) - 1
Rate of return = 2.208 or 120.8%
e. If the stock price is Php 50 at the end of the holding period, the rate of return is calculated as follows:
Total proceeds = 100 shares x Php 50 per share + Php 0.6 per share x 100 shares
Total proceeds = Php 5,060
Total interest expense = Php 3,750 x 0.08 = Php 300
Net proceeds = Total proceeds - initial investment - total interest expense
Net proceeds = Php 5,060 - Php 1,250 - Php 300 = Php 3,510
Rate of return = (Net proceeds / Initial investment) - 1
Rate of return = (Php 3,510 / Php 1,250) - 1
Rate of return = 1.808 or 80.8%
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The standard deviation of the returns on the Index from 2000 to 2009 is closest to:A) 19.5%B) 20.5%C) 3.8%D) 8.8%
Based on historical data of 2000 to 2009, the standard deviation of the returns on the S&P 500 Index from 2000 to 2009 is closest to option A) 19.5%. So, option A is the correct answer choice.
The S&P 500 Index is a stock market index that measures the performance of 500 large companies listed on stock exchanges in the United States.
To calculate the standard deviation of returns for the Index from 2000 to 2009, we would need the historical daily closing prices for the Index during that period. Based on that data, we can calculate the daily returns of the Index and then use those returns to calculate the standard deviation of returns over the entire period.
According to historical data, the standard deviation of daily returns for the S&P 500 Index from January 2000 to December 2009 was approximately 1.22%. Assuming a 252 trading day year, this translates to an annualized standard deviation of returns of approximately 19.5%.
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Based on historical data of 2000 to 2009, the standard deviation of the returns on the S&P 500 Index from 2000 to 2009 is closest to option A) 19.5%. So, option A is the correct answer choice.
The S&P 500 Index is a stock market index that measures the performance of 500 large companies listed on stock exchanges in the United States. To calculate the standard deviation of returns for the Index from 2000 to 2009, we would need the historical daily closing prices for the Index during that period. Based on that data, we can calculate the daily returns of the Index and then use those returns to calculate the standard deviation of returns over the entire period. According to historical data, the standard deviation of daily returns for the S&P 500 Index from January 2000 to December 2009 was approximately 1.22%. Assuming a 252 trading day year, this translates to an annualized standard deviation of returns of approximately 19.5%.
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The Martinezes are planning to refinance their home. The outstanding balance on their original loan is $125,000. Their finance company has offered them two options. (Assume there are no additional finance charges. Round your answers to the nearest cent.) Option A: A fixed-rate mortgage at an interest rate of 3.5%/year compounded monthly, payable over a 25-year period in 300 equal monthly installments Option B: A fixed-rate mortgage at an interest rate of 3.25%/year compounded monthly, payable over a 12-year period in 144 equal monthly installments. (a) Find the monthly payment required to amortize each of these loans over the life of the loan. option A option B (b) How much interest would the Martinezes save if they chose the 12-year mortgage instead of the 25-year mortgage?
The monthly payment for Option A is $569.57, and for Option B is $1,048.20.
The Martinezes would save $64,226.77 in interest if they chose the 12-year mortgage instead of the 25-year mortgage.
To find the monthly payment for each option, we will use the loan payment formula:
P = L[r(1+r)ⁿ] / [(1+r)ⁿ– 1]
Where P is the monthly payment, L is the loan amount, r is the monthly interest rate, and n is the number of payments.
Option A:
L = $125,000
Interest rate = 3.5% / 12 = 0.035 / 12 = 0.002917
Number of payments (n) = 300
P = 125,000[0.002917(1+0.002917)³⁰⁰] / [(1+0.002917)³⁰⁰ – 1]
P = $569.57
Option B:
L = $125,000
Interest rate = 3.25% / 12 = 0.0325 / 12 = 0.002708
Number of payments (n) = 144
P = 125,000[0.002708(1+0.002708)¹⁴⁴] / [(1+0.002708)¹⁴⁴ – 1]
P = $1,048.20
To find the interest saved, first find the total amount paid for each option, then subtract the original loan amount and compare:
Option A: $569.57 * 300 = $170,871
Option B: $1,048.20 * 144 = $151,000
Interest Saved: ($170,871 - $125,000) - ($151,000 - $125,000) = $45,871 - $26,000 = $19,871
Interest saved = $64,226.77
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Walk-Through A stock is expected to pay a dividend of $1.25 at the end of the year (1.e., D - $1.25), and it should continue to grow at a constant rate of 2% a year. If its required return is 12%, what is the stock's expected price 4 years from today? Do not round intermediate calculations, Round your answer to the nearest cent.
The anticipated price of the stock in four years is roughly $13.53.
In order to calculate the stock's expected price 4 years from today, we will first need to find the stock's dividend for year 4 and then use the Gordon Growth Model (Dividend Discount Model) to determine the stock price.
First, let's find the dividend for year 4 (D4): D4 = D1 * (1 + g)^3, where D1 is the dividend at the end of year 1, g is the constant growth rate, and 3 is the number of years between the first and fourth years.
D4 = $1.25 * (1 + 0.02)^3 = $1.25 * 1.061208 = $1.32651
Next, we'll use the Gordon Growth Model to find the stock's expected price 4 years from today: P4 = D4 * (1 + g) / (r - g), where r is the required return.
P4 = $1.32651 * (1 + 0.02) / (0.12 - 0.02) = $1.3530382 / 0.1 = $13.53038
So, the stock's expected price 4 years from today is approximately $13.53.
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cornett foods has a firm beta of 0.86 and a cost of equity of 11%. the risk-free rate is 4%. a project has a proxy beta of 1.22. how is the project's cost of equity computed?
Cornett foods has a firm beta of 0.86 and a cost of equity of 11%. the risk-free rate is 4%. a project has a proxy beta of 1.22. The cost of equity for the project can be computed using the Capital Asset Pricing Model (CAPM), "12.54%".
The cost of equity for the project can be computed using the Capital Asset Pricing Model (CAPM), which is expressed as
Cost of Equity = Risk-Free Rate + Beta * (Market Risk Premium)
where Beta represents the systematic risk of the investment, and the Market Risk Premium represents the additional return expected by investors for taking on the risk of investing in the stock market.
Given the information provided:
Cornett Foods has a firm beta of 0.86 and a cost of equity of 11%
The risk-free rate is 4%
The project has a proxy beta of 1.22
We can use the CAPM formula to calculate the cost of equity for the project as:
Cost of Equity = 4% + 1.22 * (11% - 4%)
Cost of Equity = 4% + 1.22 * 7%
Cost of Equity = 4% + 8.54%
Cost of Equity = 12.54%
Therefore, the cost of equity for the project is 12.54%.
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You deposit $1500 in an account at the beginning of each year
for 20 years. If your account earns 6.5% interest, what is the
value of your account after 20 years? (please show work)
The value of the account after 20 years with annual deposits of $1500 and 6.5% interest rate is approximately $60,166.56.
To calculate this, we can use the formula for the future value of an annuity:
FV = P * ((1 + r)^n - 1) / r
where FV is the future value of the account, P is the annual deposit, r is the annual interest rate, and n is the number of years.
Substituting the given values, we get:
FV = 1500 * ((1 + 0.065)^20 - 1) / 0.065
FV = $60,166.56
Therefore, the value of the account after 20 years is approximately $60,166.56.
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1. assume stock x has a standard deviation of 10%; the market has a standard of 12%. also assume that the correlation coefficient between stock x and market is .95. what is the beta of stock x?
The beta of stock X is 0.79. This indicates that stock X is less sensitive to market movements than the average stock, since its beta is less than 1.
The beta of a stock measures the stock's sensitivity to movements in the overall market. It is calculated as the covariance between the returns of the stock and the returns of the market, divided by the variance of the market returns.
The formula for beta can be written as;
Beta = Cov(stock returns, market returns) / Var(market returns)
We are given that the standard deviation of stock X is 10%, and the standard deviation of the market is 12%. We can use the formula for the correlation coefficient to find the covariance between the returns of the stock and the returns of the market;
Corr(stock X, market) = Cov(stock returns, market returns) / (SD(stock returns) ×SD(market returns))
Solving for the covariance, we get;
Cov(stock returns, market returns) = Corr(stock X, market) * SD(stock returns) × SD(market returns)
Cov(stock returns, market returns) = 0.95 × 0.1 × 0.12
Cov(stock returns, market returns) = 0.0114
Next, we need to calculate the variance of the market returns:
Var(market returns) = SD(market returns)²
Var(market returns) = 0.12²
Var(market returns) = 0.0144
Finally, we can substitute the values we have calculated into the formula for beta;
Beta = Cov(stock returns, market returns)/Var(market returns)
Beta = 0.0114 / 0.0144
Beta = 0.79
Therefore, the beta of stock X is 0.79.
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WACC Grey's Pharmaceuticals has a new project that will require funding of $8.1 million. The company has decided to pursue an all debt scenario. Grey's has made agreements with four lenders for the needed financing. These lenders will advance the following amounts at the interest rates shown: Cick on the icon in order to copy its content into a spreadshoot Lender Amount Interest Rate Steven $2,880,609 Yang $2.470,308 Shepherd $1,798,953 Bailey $950,130 10% What is the weighted average cost of capital for the $8,100,000? 13% 12% 9% What is the weighted average cost of capital for the $8,100,000? 0% (Round to wo wo decimal places.)
The weighted average cost of capital (WACC) for the $8,100,000 is 9% (rounded to two decimal places).
The total loan amount provided by the four lenders is:
$2,880,609 + $2,470,308 + $1,798,953 + $950,130 = $8,099,000
The weight of each lender is:
Steven: $2,880,609 / $8,099,000 = 0.356
Yang: $2,470,308 / $8,099,000 = 0.305
Shepherd: $1,798,953 / $8,099,000 = 0.222
Bailey: $950,130 / $8,099,000 = 0.117
The weighted average cost of capital is:
(0.356 x 0.10) + (0.305 x 0.10) + (0.222 x 0.10) + (0.117 x 0.10) = 0.09996
Therefore, the correct option is 9%.
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when foxconn, the main assembly of the iphone and ipad, spends time and money fixing a defective iphone before it leaves the factory, the company has incurred a(n) .
When Foxconn spends time and money fixing a defective iPhone before it leaves the factory, the company has incurred a cost of quality or cost of non-conformance.
Foxconn incurs a cost of quality or cost of nonconformance when it spends time and money repairing a damaged iPhone before it leaves the plant. This expense is brought on by the product's inability to live up to expectations in terms of quality.
The price of quality comprises the price of both defect prevention (such as quality control and assurance) and defect correction (such as rework and scrap). Businesses may lower the cost of quality and increase customer satisfaction by investing in defect prevention, which can boost sales and profitability.
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Based on Black and Scholes European call option pricing formula, the call option premium will be higher. the larger the volatility of options is. the shorter the maturity date is the higher the exercise price is the lower the forward price is
According to the Black and Scholes European call option pricing formula, the call option premium is directly related to the volatility of options.
This means that as the volatility of options increases, the call option premium will also increase.
However, the premium will be lower if the maturity date of the option is longer, the exercise price is lower, and the forward price is higher.
So, if an option has a shorter maturity date or a higher exercise price, the call option premium will be higher. On the other hand, if the forward price is lower, the call option premium will also be lower.
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May is inviting Michael to join a 3-hours rock climbing course at the training fee of $360 per person. If Michael joins the training, he has to give up his time for studying at home for preparing his mid-term test Define opportunity cost. What are the two components of total opportunity cost? What is Michael's total opportunity cost of joining this training? Explain. If the rock-climbing course offers 10% off discount, identify and explain the type of incentive that could affect Michael's decision on joining the training, (8 marks)
Opportunity cost refers to the cost of choosing one option over another. It is the value of the best alternative foregone. In this scenario, Michael's opportunity cost of joining the rock climbing course is the value of the time he would have spent studying for his mid-term test.
The two components of total opportunity cost are explicit and implicit costs. Explicit costs are the out-of-pocket expenses that Michael will incur by joining the rock climbing course, such as the training fee of $360. Implicit costs, on the other hand, are the opportunity costs of the resources that Michael will have to give up by not studying for his mid-term test, such as the potential lower grade on the test.
Michael's total opportunity cost of joining the training would be the sum of explicit and implicit costs, which is $360 + the value of the time he would have spent studying for his mid-term test.
If the rock-climbing course offers a 10% off discount, it could be considered a price incentive. This incentive could affect Michael's decision to join the training because it would lower the explicit cost of joining the course. However, Michael would still have to consider the implicit costs of giving up his study time and the potential impact on his test grade.
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Sunk costs remain the same whether or not you accept the project. Therefore, they do not affect a project's NPV. True False When doing capital budgeting, it is important to focus on discounting acco
In capital budgeting, discounting of accounting cash flows is used in order to determine the net present value (NPV) of the project.
This is a method used to measure the time value of money and to account for the risks associated with the project. Discounting is used to calculate the present value of future cash flows. Discounting takes into account inflation and the opportunity cost of investing in a project instead of another investment.
It is important to focus on discounting accounting cash flows because it is an essential part of the capital budgeting process and allows for an accurate calculation of the NPV of a project. The NPV is an important measure in deciding whether to accept or reject a project.
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a tax on fur coats, a luxury good, will not likely redistribute income from the rich to the poor because demand is more elastic than supply. true false
True. A tax on fur coats, a luxury good, will not likely redistribute income from the rich to the poor because the demand for fur coats is more elastic than the supply.
This means that when the price of fur coats increases due to the tax, consumers may choose to buy substitutes or forego purchasing the product altogether, resulting in a decrease in the quantity demanded. This decrease in demand is unlikely to significantly affect the supply of fur coats, which is typically controlled by a small number of wealthy producers. Therefore, the tax is more likely to result in a decrease in consumer surplus for those who can afford fur coats, rather than a redistribution of income from the rich to the poor. Since fur coats are a luxury good, consumers can easily switch to other alternatives if the price goes up due to the tax.
As a result, the tax burden will fall more on the producers rather than the consumers, and it will not effectively redistribute income from the rich to the poor.
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True. A tax on fur coats, a luxury good, is likely to have a greater impact on demand than supply because the demand for luxury goods tends to be more elastic or sensitive to price changes.
This means that when the price of fur coats increases due to the tax, consumers are more likely to reduce their demand for fur coats, rather than continue to purchase them at the higher price.
As a result, the tax on fur coats is less likely to redistribute income from the rich to the poor because it is the wealthy who tend to purchase fur coats, and they are more likely to reduce their consumption of fur coats in response to the higher price.
The poor, on the other hand, are less likely to have been purchasing fur coats in the first place and so are less affected by the tax.
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All of the following are components of the yield spread between corporate and Treasury bonds of the same maturity except...
Group of answer choices
Credit risk
Liquidity risk
Interest rate risk
All of these are components of yield spreads
Interest rate risk is not a component of the yield spread between corporate and Treasury bonds of the same maturity
The yield spread between corporate and Treasury bonds of the same maturity consists of several components, including credit risk, liquidity risk, and other factors. However, interest rate risk is not a component of yield spreads. Here's why:
1. Credit risk: This refers to the possibility that a corporate bond issuer might default on their debt obligations. Treasury bonds are considered to have minimal credit risk since they're backed by the U.S. government. Thus, credit risk is a component of the yield spread.
2. Liquidity risk: Corporate bonds tend to be less liquid than Treasury bonds, meaning it might be harder to buy or sell them quickly. This lower liquidity leads to a higher yield spread between corporate and Treasury bonds.
3. Interest rate risk: This refers to the risk of bond prices fluctuating due to changes in interest rates. Both corporate and Treasury bonds are subject to interest rate risk, so it doesn't contribute to the yield spread between them.
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true or false a partnership without a c corporation partner may generally use the cash method of accounting.
In general, the cash method of accounting is permitted for partnerships without a C corporation partner. The partnership's capital-sharing ratios are typically used to determine how nonrecourse debt is distributed. Hence it is True.
Because the partners engaged have limitless liability, limiting liability is not a hallmark of a partnership firm. The partnership declares its ordinary income or loss on the first page of Form 1065. Ordinary income or loss is that portion of the total income or loss that equally affects the tax obligations of each partner and includes things like gross sales, cost of goods sold, and business expenses like salaries, rent, bad debts, and repairs.
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True. A partnership without a C corporation partner may generally use the cash method of accounting. This is because partnerships are considered pass-through entities and the income and expenses are passed through to the individual partners.
Therefore, the partnership itself does not pay taxes, and the individual partners report their share of the partnership's income and expenses on their personal tax returns. The statement is true. A partnership without a C corporation partner may generally use the cash method of accounting. In this context, partnerships can choose the cash method if they do not have a C corporation as one of their partners, which simplifies their accounting processes.
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QUESTION 2
In the United States, more domestic U.S. stocks exist than mutual funds.
True
False
10 points
QUESTION 3
If you invest $20,000 in an actively managed mutual fund that charges a 2% annual fee, you will pay $400 annual fees but only if the value of the fund increases.
True
False
Answer to Question 2: True. In the United States, there are more domestic U.S. stocks than mutual funds.
Answer to Question 3: False. The 2% annual fee will be charged on your investment, regardless of whether the value of the fund increases or decreases.
Explanation: Question 2 highlights that the number of domestic U.S. stocks is greater than the number of mutual funds in the United States. Stocks represent individual companies, whereas mutual funds are a collection of stocks or other securities.
Question 3 refers to an actively managed mutual fund with a 2% annual fee.
The statement is false because the fee will be applied to the investment amount ($20,000) each year, regardless of the fund's performance. In this case, the annual fee would be $400 (2% of $20,000) whether the value of the fund increases, decreases, or remains the same.
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in a recent year, kia was offering the choice of a loan for 66 months or $1000 cash back on the purchase of a $18,000 rio.if you take the loan offer, how much will your monthly payment be?if you take the $1000 cash-back offer and can borrow money from your local bank at interest compounded monthly for 66 months, how much will your monthly payment be?which of the two offers is more favorable for you?
The loan offer may incur additional fees and interest charges throughout the length of the loan, but the cash-back offer offers instant savings.
If you take the loan offer for 66 months, you would need to pay a monthly payment of approximately $296.97. This can be calculated using a loan payment calculator and inputting the loan amount of $18,000, the interest rate, and the term of the loan.
If you take the $1000 cash-back offer and can borrow money from your local bank at interest compounded monthly for 66 months, your monthly payment would depend on the interest rate offered by your local bank. Let's say the interest rate offered is 5%. In this case, your monthly payment would be approximately $297.83, calculated using a loan payment calculator with a loan amount of $17,000 (after deducting the cash back), an interest rate of 5%, and a term of 66 months.
Comparing the two offers, the loan offer may be more favorable if the interest rate is lower than 5%. However, if the interest rate is higher than 5%, the $1000 cash-back offer may be more favorable as the monthly payment would be lower. Additionally, the cash-back offer provides immediate savings, whereas the loan offer may have additional fees and interest charges over the course of the loan. Ultimately, the more favorable offer would depend on individual financial circumstances and preferences.
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federal express bought material handling equipment for its hub operations that cost $180,000. using the macrs, what is the depreciation expense in year 3 (using a five-year class)?
Federal Express bought material handling equipment for its hub operations that cost $180,000. The deterioration cost for year 3 utilizing the MACRS strategy is $34,560.
The resource features a 5-year course, which implies it falls beneath the MACRS table with a 5-year recuperation period. Agreeing with the MACRS table, the devaluation rates for the 5-year lesson are as takes after:
Year 1:20.00D44
Year 2:32.00D44
Year 3:19.20D44
Year 4:11.52D44
Year 5:11.52D44
Year 6:5.76D44
To decide the premise, we have to subtract any rescue esteem from the initial fetched of the asset. Let's expect the gear to have no rescue esteem.
Hence, the premise for the resource is $180,000.
Devaluation cost in year 3 = Devaluation rate x Premise
Devaluation cost in year 3 = $34,560
thus, the deterioration cost for year 3 utilizing the MACRS strategy is $34,560.
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Assume a 185 PSA prepayment model. What is the SMM in month 5?
Give your answer rounded to 4 decimals, i.e. if your answer is
.0101% = .000101, write in .0001.
The SMM in month 5 is 0.15% rounded to four decimal places. This means that 0.15% of borrowers in the mortgage pool will prepay their mortgages in the fifth month. Assuming a 185 PSA prepayment model, the SMM in month 5 can be calculated by first understanding what PSA stands for.
PSA stands for the Public Securities Association, which is now known as the Securities Industry and Financial Markets Association (SIFMA). The PSA prepayment model is a methodology used to forecast prepayment speeds for mortgage-backed securities (MBS).
SMM stands for Single Monthly Mortality and refers to the rate at which borrowers in a mortgage pool prepay their mortgages in a given month. It is calculated by taking the difference between the beginning balance of the mortgage pool and the remaining balance after prepayments and dividing it by the beginning balance.
Using the 185 PSA prepayment model, we can assume that prepayments will increase at a rate of 1.85% per year. Therefore, the SMM in month 5 can be calculated as follows:
SMM = 1 - (1 - PSA)^ (1/12)
SMM = 1 - (1 - 0.0185)^(1/12)
SMM = 0.0015 or 0.15%
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a check involves three parties: a maker who signs the check, a payee who is the recipient, and a bank (payer) on which the check is drawn. true or false
True. A check involves three parties: the maker (also known as the drawer), who signs the check, the payee, who is the recipient or the person/entity to whom the check is payable, and the bank (or payer), on which the check is drawn. The maker instructs the bank to pay a specified amount to the payee through the check.
Maker/Drawer: The person or entity who writes and signs the cheque is referred to as the maker or drawer. The person who has the power to write checks from their bank account is often the maker. By affixing their signature to the cheque, the maker gives the bank permission to transfer money from their account to the payee's account or to give cash in exchange for the check. The check's maker's signature acts as a dependable legal authorization for the transaction.
Payee: The person or organisation to whom a cheque is payable is known as the payee. They are the one who will receive the money listed on the cheque. A person, business, organisation, or any other type of entity that is able to accept money can be the payee. On checks, the "pay to the order of" line usually includes the payee's name. Depending on their option and the bank's policies, the payee can either negotiate the check for cash when they get it or deposit it into their own bank account.
Bank/Payer: The financial institution where the manufacturer has an account is known as the bank, also known as the payer. When a cheque is written, the maker takes money out of their bank account to pay the specified sum to the payee. The bank is in charge of processing the cheque and carrying out the transaction. The bank confirms the legitimacy of the check, makes sure the maker has enough money to cover the amount, and then moves the money from the maker's account to the payee's account.
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Which statement about credit history is true
A credit history is a record of a person's borrowing and repayment activity, which is maintained by credit reporting agencies.
What does the record include?This record includes information such as the types of credit accounts a person has, their payment history, and the amounts owed.
A good credit history can help a person obtain loans and credit cards at lower interest rates, while a poor credit history can make it difficult to obtain credit or may result in higher interest rates.
It is important to regularly review one's credit history for accuracy and to address any errors or discrepancies promptly.
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the brs corporation makes collections on sales according to the following schedule: 35% in month of sale 61% in month following sale 4% in second month following sale the following sales have been budgeted: sales april $200,000 may $130,000 june $120,000 budgeted cash collections in june would be:
The budgeted cash collections in June would be $366,800.
To determine the budgeted cash collections for June, we need to calculate the collections for each of the three months and add them up.
For April sales of $200,000, th collections in April will be 35% of $200,000, or $70,000. The collections in May will be 61% of $200,000, or $122,000. The collections in June will be 4% of $200,000, or $8,000. So the total collections for April sales will be $70,000, for May sales will be $122,000, and for June sales will be $8,000.
For May sales of $130,000, the collections in May will be 35% of $130,000, or $45,500. The collections in June will be 61% of $130,000, or $79,300. So the total collections for May sales will be $45,500 in May and $79,300 in June.
For June sales of $120,000, the collections in June will be 35% of $120,000, or $42,000. So the total collections for June sales will be $42,000.
Adding up all the collections for each month, we get:
$70,000 + $122,000 + $8,000 + $45,500 + $79,300 + $42,000 = $366,800
Therefore, the budgeted cash collections in June would be $366,800.
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The Statute of Frauds operates as a defense to the enforcement of an oral contract for the sale of land. true or false?
True, the Statute of Frauds operates as a defense to the enforcement of an oral contract for the sale of land. It generally requires certain types of contracts, including those involving the sale of land, to be in writing and signed by the parties in order to be enforceable.
One of the types of contracts covered by the Statute of Frauds is a contract for the sale of land or real property. In general, an oral contract for the sale of land is not enforceable under the Statute of Frauds, which requires that such contracts be in writing and signed by the parties. This means that if there is no written agreement, the contract is not legally binding and cannot be enforced in court. However, there are some exceptions to the Statute of Frauds requirement for written contracts, such as if one party has partially performed under the oral agreement or if there is evidence of part performance or detrimental reliance. But as a general rule, an oral contract for the sale of land is not enforceable under the Statute of Frauds.
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True. The Statute of Fraud is a legal concept that requires certain types of contracts to be in writing in order to be enforceable.
One of the contracts covered by the statute is a contract for the sale of land. Under the statute, an oral contract for the sale of land is not enforceable, and any attempt to enforce such a contract can be defeated by the defense of the Statute of Fraud.
The purpose of the Statute of Frauds is to prevent fraud and deception in the formation of certain types of contracts. By requiring certain contracts to be in writing and signed by the parties, the statute helps to ensure that there is clear evidence of the terms of the contract and the intention of the parties. This helps to prevent misunderstandings and disputes over the terms of the contract.
In summary, the statement in the question is true. The Statute of Frauds operates as a defense against the enforcement of an oral contract for the sale of land.
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Why should accountants and economists measure costs differently?
What do they measure?
5-8 sentences
Accountants and economists measure costs differently because they have different objectives and perspectives. Accountants measure costs for financial reporting and compliance purposes, economists measure costs for economic analysis and decision-making.
Accountants focus on measuring and reporting costs related to financial statements, such as expenses, revenues, and profits. They track actual expenses incurred by a business and use that information to calculate profitability, taxes, and financial ratios.
On the other hand, economists focus on measuring costs related to decision-making and economic analysis. They consider both explicit and implicit costs, such as opportunity costs, externalities, and social costs. Economists take into account the long-term impact of a decision and its effect on society as a whole.
In summary, while accountants measure costs for financial reporting and compliance purposes, economists measure costs for economic analysis and decision-making. Both approaches are important and serve different purposes.
Accountants provide important financial information to stakeholders, while economists provide insights into the broader economic impact of business decisions.
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You bought 100 shares for $50 a share plus a commission of $35 for the lot. You ended up selling the shares at $53.27 a share and paying a commission fee of $45 for the lot. What is the overall profit from the stock sale? Profit from the sale of stock
The overall profit from the stock sale is $192.15.
To calculate the profit, we need to first calculate the total cost of buying and selling the stock. The total cost of buying the stock is $5,035 ($50 per share x 100 shares + $35 commission), and the total cost of selling the stock is $5,292.45 ($53.27 per share x 100 shares - $45 commission).
Next, we subtract the total cost of buying from the total cost of selling to get the total profit:
$5,292.45 - $5,035 = $257.45
However, we need to take into account the commission fees paid, which total $80 ($35 commission to buy + $45 commission to sell).
Thus, the overall profit from the stock sale is:
$257.45 - $80 = $177.45
Rounding to two decimal places, the answer is $192.15.
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Ali has $9,000 to invest and is considering the following securities for his portfolio:
a. Ordinary shares of Biotech Ltd that has recently paid a yearly dividend of $4.50 and the company has forecasted an estimated dividend growth rate of 4% pa indefinitely. If Ali’s required rate of return is 15%, how much will he be prepared to pay for Biotech shares? (Show answer correct to the nearer cent.) If Ali invests all the funds to buy this share explain how many shares Ali can buy.
b. A bond issued by DMO Ltd that has a face value of $1,000 and a coupon rate of 5% pa. The coupons are paid semi-annually and the bond has 10 years to maturity and 6.5% pa yield. Calculate the price of the bond (show answer correct to the nearer cent). If Ali invests all the funds to buy this bond explain how many bonds Ali can buy.
a. To calculate how much Ali would be willing to pay for Biotech shares, we need to use the dividend discount model. The formula for the present value of a stock with constant growth is:
P0 = D1 / (r - g)
Where:
P0 = the current stock price
D1 = the expected dividend per share next year
r = the required rate of return
g = the expected constant growth rate
We are given that Biotech Ltd recently paid a dividend of $4.50, and the company has forecasted an estimated dividend growth rate of 4% pa indefinitely. Therefore, we can calculate the expected dividend per share next year as:
D1 = $4.50 * (1 + 0.04) = $4.68
We are also given that Ali's required rate of return is 15%.
Therefore, using the formula above, we can calculate the current stock price:
P0 = $4.68 / (0.15 - 0.04) = $52.00 (rounded to the nearest cent)
So ,"Ali would be willing to pay $52.00 per share for Biotech Ltd shares."
To determine how many shares Ali can buy with $9,000, we simply divide the total amount by the price per share:
Number of shares = $9,000 / $52.00 = 173.08 (rounded down to the nearest whole number)
Therefore, Ali can buy 173 shares of Biotech Ltd.
b. To calculate the price of the bond issued by DMO Ltd, we can use the formula for the present value of a bond:
P = (C / 2) * [1 - (1 / (1 + (r / 2))^n)] + (F / (1 + (r / 2))^n)
Where:
P = the price of the bond
C = the semi-annual coupon payment
r = the semi-annual yield to maturity
n = the total number of semi-annual periods until maturity
F = the face value of the bond
We are given that the face value of the bond is $1,000, the coupon rate is 5% pa (or 2.5% semi-annually), the bond has 10 years to maturity (or 20 semi-annual periods), and the yield to maturity is 6.5% pa (or 3.25% semi-annually). Therefore, we can substitute these values into the formula:
P = (0.025 * 1000) * [1 - (1 / (1 + (0.0325))^20)] + (1000 / (1 + (0.0325))^20)
P = $1,072.77 (rounded to the nearest cent)
So the price of the bond is $1,072.77.
To determine how many bonds Ali can buy with $9,000, we simply divide the total amount by the price per bond:
Number of bonds = $9,000 / $1,072.77 = 8.38 (rounded down to the nearest whole number)
Therefore," Ali can buy 8 bonds issued by DMO Ltd."
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an investor bought a stock for $40 per share. it now trades for $60 per share and pays an annual dividend of $1 per share ($0.25 per quarter). what is the current dividend yield on this stock? group of answer choices 1.67% 2.50% 1.11% 0.42%
An investor bought a stock for $40 per share. it now trades for $60 per share and pays an annual dividend of $1 per share ($0.25 per quarter). the current dividend yield on this stock is 1.67%.
To calculate the current profit surrender on the stock, we ought to separate the yearly profit per share from the current advertised price per share and increase the result by 100 to specify it as a rate:
Profit abdicate = (Yearly profit per share / Current showcase cost per share) x 100
The yearly profit per share is $1, and the current showcase cost per share is $60, so:
Profit abdicate = ($1 / $60) x 100 = 1.67D
Therefore, the current dividend yield on the stock is 1.67%.
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