The Efficient Market Hypothesis (EMH) is a theory that suggests that financial markets reflect all information, making it impossible for investors to beat the market consistently. The following are the weakest forms of the Efficient Market Hypothesis (EMH) that the given statements violate:
a) You are investigating the historical performance of actively managed funds. When regressing the funds’ after-fee returns on the market return, you find that each fund has a statistically significant alpha coefficient different from zero. However, the statement above shows that investors can use historical data to predict future market movements.
b) There is clear evidence that stocks that delivered lower returns than the market in the past continue to do so in the future.This statement violates the Semi-strong EMH. This type of EMH says that all publicly available information is reflected in asset prices. The statement above shows that past performance of stocks is not always indicative of future returns.
c) Managers make superior profits when they purchase their own company’s stock.This statement violates the Strong EMH. This type of EMH says that all information is reflected in asset prices, including insider information. The statement above shows that insider information can provide superior returns, which is not consistent with the Strong EMH.
d) Stocks of companies with unexpectedly low earnings earn low risk-adjusted returns compared to the market for several months after the earnings announcement. This statement violates the Semi-strong EMH. This type of EMH says that all publicly available information is reflected in asset prices.
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Barolong Holdings (Pty) Ltd, is a big manufacturing company that has been in existence for over three decades. The firm has grown to such a level that it operates in more than five countries. Over the years, the Board has ensured that they attract the best talent from around the world. As other managers went on retirement, the leadership started to realise that they lose talent, which affected production and its profits in other countries. Over and above, the Board became aware that in other firms, individual and organisational performance, were a serious challenge. For example, their annual profit, globally, went down from five billion dollars per annum, to just under three billion dollars. This exacerbated the need to look into the processes in the company, moreover, in the human resource department. Three years ago, Johane Medupe was appointed as the Chief Human Resource Officer (CHRO) for the 2 African countries, where the firm operates. During his tenure, the Board started to see the profit margins going up. When asked by the Board what was he doing right, he indicated that he ensured that best recruitment and selection processes and policies were followed. He emphasised the point that failure to do so, might lead to wrong people placed in wrong positions, which can have dire consequences in the organisation, may cause low employee morale, and low productivity, which might have a negative impact on the organisation and its profits. His response, affirms the critical role of HRM, which is to define and guide managers in the hiring practice. As the HR practitioner, advice managers in the three other countries on selection of staff, and its policies and practices
Barolong Holdings (Pty) Ltd is a significant manufacturing company that has been in operation for over three decades, and the firm has grown to operate in more than five countries.
In other firms, individual and organizational performance was a serious challenge, which affected the annual profit, globally. This led to the need to investigate the processes in the company, including the human resource department.
Three years ago, Johane Medupe was appointed as the Chief Human Resource Officer (CHRO) for the two African countries where the company operates, and under his leadership, the Board saw the profit margins going up. Johane indicated that he ensured that best recruitment and selection processes and policies were followed, emphasizing that failure to do so might lead to wrong people placed in wrong positions, which can have dire consequences in the organization.
The response of Johane affirms the critical role of HRM, which is to define and guide managers in the hiring practice. As the HR practitioner, he is responsible for advising managers in the three other countries on the selection of staff, and its policies and practices. Therefore, companies must ensure that they have effective recruitment and selection processes to attract the best talent and maintain a competitive advantage in the market.
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What is the EOQ? ____ units (round your response to two decimal places)
b) What is the average inventory if the EOQ is used? _____ units (round your response to two decimal places)
EOQ stands for Economic Order Quantity. It refers to the amount of inventory that a business should order from its suppliers to minimize costs while meeting consumer demand.
The formula for calculating EOQ is based on a few variables such as the annual demand, ordering costs, holding costs, and the quantity per order. The formula is EOQ = sqrt((2 * Demand * Setup cost) / Holding cost)EOQ in units can be calculated using the formulaEOQ = sqrt((2*15000*25)/2)
EOQ = 150 units (rounded to two decimal places)Using the EOQ formula above, the answer is 150 units.The formula to find the average inventory when the EOQ is used is Q/2, where Q is the order quantity. The formula is, therefore, as follows:Average inventory = Q / 2Substitute the value of Q, which is 150 units
Average inventory = 150/2
Average inventory = 75 units (rounded to two decimal places)Thus, the average inventory is 75 units when the EOQ is used.
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Purchases supplies on 1/1/16 for $800. upon a count of the supplies, cainas determines there are $250 of supplies on hand at 1/31. what adjusting entry does she need to make?
This entry will reduce the supplies expense by $550 and increase the supplies on hand by the same amount.
The adjusting entry for the supplies on hand, we need to determine the value of supplies used during the month.
the supplies purchased on 1/1/16 were worth $800 and there were $250 of supplies on hand at 1/31, we can calculate the supplies used during the month.
Supplies used = Supplies purchased - Supplies on hand
Supplies used = $800 - $250
Supplies used = $550
Now, to make the adjusting entry, we need to decrease the supplies expense and increase the supplies on hand.
The adjusting entry would be as follows:
Debit supplies Expense $550
Credit Supplies on Hand $550
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(3P) Attention!!! Only if all answers are correct you get 3 points. In case four answers are correct, you get 2 points and in case three answers are correct, you get 1 point. Else, 0 points. Choose for each of the following definitions whether it matches the type of the auction (choose correct) or not (choose wrong) ---- bitte auswählen ---- 1. A Dutch auction is a descending bid auction that ends dramatically with the first bid 2. In an English auction, the auctioneer starts the bidding at the highest price 3. In an English auction, potential buyers are encouraged to bid more than the previous highest bidder 4. In a sealed-bid auction the price the winner pays depends on whether it is a first-price auction or a second-price auction --- bitte auswählen ---- 5. In a Dutch auction, the auctioneer starts the bidding at the lowest price that is acceptable to the seller bitte auswählen
1. Correct - A Dutch auction is a descending bid auction where the price starts high and gradually decreases until a bidder accepts the price.
- In an English auction, also known as an ascending bid auction, the auctioneer starts with a low opening bid and increases the price until no one is willing to bid higher.
Correct - In an English auction, potential buyers are encouraged to outbid the previous highest bidder by placing higher bids.
Correct - In a sealed-bid auction, the price the winner pays depends on whether it is a first-price auction (pays the amount they bid) or a second-price auction (pays the amount bid by the second-highest bidder).
Wrong - In a Dutch auction, the auctioneer starts with a high price and gradually lowers it until a bidder accepts the price, so the statement that the auctioneer starts at the lowest acceptable price to the seller is in.
Based on the given choices, three s are (1, 3, and 4), so the score would be 1 point.
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Use a simple break-even analysis model incorporating average
price, number of subscribers, churn rates, and expected fixed and
marginal costs for netflix in india.
Netflix's break-even analysis in India can be determined by considering the average price, number of subscribers, churn rates, and expected fixed and marginal costs.
The break-even point is reached when the revenue from subscribers covers the total costs.
Break-even analysis helps determine the point at which a company's revenue equals its costs, resulting in neither profit nor loss. In the case of Netflix in India, several factors need to be taken into account.
1. Average Price: The average monthly subscription fee charged to Netflix subscribers in India.
2. Number of Subscribers: The total number of subscribers Netflix has in India.3. Churn Rates: The rate at which subscribers cancel their Netflix subscriptions over a given period.
4. Expected Fixed Costs: These are the expenses that do not vary with the number of subscribers, such as licensing fees, content production costs, and infrastructure expenses.5. Expected Marginal Costs: These costs increase as the number of subscribers grows, including customer acquisition costs, streaming costs, and customer support expenses.
To calculate the break-even point, you need to compare the total revenue from subscribers to the total costs incurred. The revenue is determined by multiplying the average price by the number of subscribers. The total costs include both fixed and marginal costs.
If the revenue is greater than or equal to the total costs, Netflix will reach the break-even point. If the revenue is less than the total costs, Netflix will incur a loss. By analyzing these factors, Netflix can make informed decisions regarding pricing strategies, subscriber growth targets, and cost management to achieve profitability in India.
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The introduction of an informal technical report should include
all but which one of the following:
Group of answer choices
A clear explanation of the topic of the report
The purpose of the report
A list of appendices for the report
Background information that will help the reader understand the topic
The introduction of an informal technical report should include a clear explanation of the topic, the purpose of the report, and relevant background information. However, it generally does not contain a list of appendices for the report.
An introduction sets the stage for the rest of the report. It provides an overview of the report's topic, defines the purpose or aim of the study or investigation, and offers essential background information to help readers understand the context. However, a list of appendices is typically not included in the introduction. Appendices, which provide supplementary information or data supporting the main text, are usually referenced in the body of the report and listed towards the end, after the conclusion and before any references.
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Organizational Behaviour is an area of study concerning
activities and social interactions of individuals at the workplace,
Critically examine people's behavior that;
Are shaped by organizational forc
Organizational behavior is undoubtedly shaped by various organizational forces. These forces include organizational culture, leadership styles, structure, policies and procedures, and reward systems.
Organizational culture sets the tone for behavior within the organization. A positive and inclusive culture encourages teamwork, cooperation, and open communication. It promotes behaviors such as collaboration, support, and innovation. Conversely, a toxic culture characterized by negative attitudes, lack of transparency, and high levels of stress can lead to counterproductive behaviors like conflict, resistance, and disengagement.
Leadership styles also significantly impact behavior. Leaders who adopt a participative and empowering approach tend to foster a climate of trust and openness. They encourage employee involvement, motivate individuals to take initiative, and create a sense of ownership. On the other hand, autocratic or dictatorial leadership styles can stifle creativity, suppress employee voice, and generate a culture of fear and compliance.
Organizational structure influences behavior by defining reporting relationships, authority, and decision-making processes. A centralized structure with rigid hierarchies may limit employee autonomy and hinder innovation. In contrast, a decentralized structure empowers employees, encourages collaboration across departments, and promotes independent thinking and problem-solving.
Policies and procedures act as guidelines for behavior within an organization. Well-defined and communicated policies promote consistency and fairness. They provide clarity on acceptable behavior, ethical standards, and performance expectations. Conversely, ambiguous or inconsistent policies can create confusion, breed distrust, and result in undesirable behaviors.
Reward systems play a crucial role in shaping behavior. When employees are rewarded and recognized for their performance, they are motivated to exhibit positive behaviors and achieve organizational goals. Well-designed reward systems that link performance to meaningful incentives, such as bonuses or career advancement opportunities, reinforce desired behaviors and foster a high-performance culture.
In conclusion, organizational forces have a significant impact on people's behavior in the workplace. By cultivating a positive culture, adopting effective leadership styles, establishing a supportive structure, implementing clear policies and procedures, and designing motivating reward systems, organizations can shape behaviors that align with their goals and values, leading to improved productivity, engagement, and overall success.
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Motor Homes Inc. (MHI) is presently enjoying abnormally high growth because of a surge in the demand for motor homes. The company expects earnings and dividends to grow at a rate of 20% for the next 4 years, after which there will be no growth (g 0) in earnings and dividends. The company's last dividend, D0, was $1.50. MHI's beta is 1.5, the market risk premium is 6%, and the risk-free rate is 4%. What is the current price of the common stock?
The current price of the common stock is approximately $13.85.
To calculate the current price of the common stock, we can use the dividend discount model (DDM) and the formula: Current Stock Price = D1 / (r - g)
Where: D1 = Dividend expected in the next year
r = Required rate of return
g = Growth rate of dividends
Given: Dividend growth rate (g) = 20%
Last dividend (D0) = $1.50
Beta (β) = 1.5
Market risk premium = 6%
Risk-free rate = 4%
First, we need to calculate the required rate of return (r) using the Capital Asset Pricing Model (CAPM):
r = Risk-free rate + Beta * Market risk premium
= 4% + 1.5 * 6%
= 4% + 9%
= 13%
Next, we calculate the dividend expected in the next year (D1) using the growth rate:
D1 = D0 * (1 + g)
= $1.50 * (1 + 20%)
= $1.50 * 1.20
= $1.80
Now, we can calculate the current stock price:
Current Stock Price = $1.80 / (0.13 - 0)
= $1.80 / 0.13
= $13.85 (rounded to 2 decimal places)
Therefore, the current price of the common stock is approximately $13.85.
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Let's say that the interest rate on a 2-year Treasury bond is 4%. The interest rate on a 1-year Treasury bond is 3%, and the expected interest rate on a 1-year Treasury bond next year is 3.5%. What is the term premium?
The term premium would be 0.5%.
The term premium is the difference between the interest rate on a longer-term bond and the expected interest rate on a shorter-term bond in the future.
In this case, the term premium can be calculated by subtracting the expected interest rate on a 1-year Treasury bond next year (3.5%) from the interest rate on a 2-year Treasury bond (4%).
Therefore, the term premium would be 0.5%.
The premium is the sum that the insured pays on a regular basis to the insurer to cover his risk.
The risk is transferred from the insured to the insurer under an insurance arrangement. The insurer levies a fee known as the premium in exchange for taking on this risk. The premium depends on a variety of factors, including age, work type, medical issues, etc. The task of determining the proper premium for an insured is given to the actuaries. The frequency of premium payments may vary. It can be paid in a single premium or on a monthly, quarterly, semiannual, or annual basis.
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Derry Corporation is expected to have an EBIT of $2.1 million next year. Depreciation, the increase in net working capital, and capital spending are expected to be $165,000, $80,000, and $120,000, respectively. All are expected to grow at 18 percent per year for four years. The company currently has $10.4 million in debt and 750,000 shares outstanding. The company's WACC is 8.5 percent and the tax rate is 21 percent. You decide to calculate the terminal value of the company with the price-sales ratio. You believe that Year 5 sales will be $23.7 million and the appropriate price-sales ratio is 2.9. What is your estimate of the current share price?
Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.
Share price_____
We need to calculate the present value of the cash flows for the next four years and the terminal value at Year 5 is $198,044.64.
To estimate the current share price of Derry Corporation, we need to calculate the present value of the cash flows for the next four years and the terminal value at Year 5.
First, let's calculate the present value of the cash flows for the next four years using the EBIT, depreciation, net working capital, and capital spending growth rates:
Year 1: EBIT = $2.1 million,
Depreciation = $165,000,
Net Working Capital = $80,000,
Capital Spending = $120,000
Year 2: EBIT = $2.1 million * (1 + 0.18) = $2.478 million,
Depreciation = $165,000 * (1 + 0.18) = $195,300,
Net Working Capital = $80,000 * (1 + 0.18) = $94,400,
Capital Spending = $120,000 * (1 + 0.18) = $141,600
Year 3: EBIT = $2.478 million * (1 + 0.18) = $2.92364 million,
Depreciation = $195,300 * (1 + 0.18) = $230,994,
Net Working Capital = $94,400 * (1 + 0.18) = $111,392,
Capital Spending = $141,600 * (1 + 0.18) = $167,688
Year 4: EBIT = $2.92364 million * (1 + 0.18) = $3.44871 million,
Depreciation = $230,994 * (1 + 0.18) = $272,453.72,
Net Working Capital = $111,392 * (1 + 0.18) = $131,478.56,
Capital Spending = $167,688 * (1 + 0.18) = $198,044.64
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What connection can you see between REI being a purpose-driven organization and employee motivation?
Do you believe that Yay-Day and #optoutside are practices other retailers can and should embrace? Why or why not?
In your view, what are the motivational advantages and disadvantages of tying employee compensation to company profitability and departmental performance?
In your view, are all employees interested in finding meaning at work? How can organizations ensure that employees get a sense of meaning if the organization is not "purpose driven"?
What is the role of giving employees voice in employee motivation?
REI's purpose-driven nature strongly drives employee motivation, enhancing commitment and productivity.
"Yay-Day" and "#optoutside" initiatives have the potential to be embraced by other retailers but depend on company culture. Compensation tied to profitability could both motivate and demotivate, depending on the context. Not all employees seek meaning at work, but organizations can create it by engaging, rewarding, and empowering employees. Employee voice plays a crucial role in motivation by fostering a sense of belonging and value. REI’s purpose-driven approach provides a clear mission that employees can connect with, resulting in increased motivation and engagement. REI's initiatives like "Yay-Day" and "#optoutside" could be emulated by other retailers, as they help foster a healthy work-life balance and align with the values of today's conscious consumer. However, the successful adoption of such initiatives is contingent on compatibility with the retailer's existing culture and business model. Tying compensation to company profitability and departmental performance can incentivize employees to perform better. However, if profitability is low or out of the employee's control, it may demotivate them.
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Suppose you make equal deposits of $800 starting year 3 and finishing in year 12 (see cash flow below). What is the equivalent of this series in period 5 , considering an 8% interest rate?
The equivalent of the series of equal deposits of $800, starting in year 3 and finishing in year 12, in period 5 at an 8% interest rate is approximately $5,307.63.
To determine the equivalent of the given series in period 5, we need to calculate the future value of each deposit and then sum them up. Since the deposits start in year 3 and finish in year 12, we have a total of 10 deposits.
Using the future value of an ordinary annuity formula, which takes into account the interest rate, time period, and deposit amount, we can calculate the value of each deposit. The future value of each deposit is given by:
FV = [tex]P * ((1 + r)^n - 1) / r[/tex]
Where:
FV is the future value,
P is the deposit amount ($800),
r is the interest rate (8% or 0.08),
n is the number of periods (time from deposit to period 5).
Calculating the future value of each deposit from year 3 to year 12, we find the following amounts:
Year 3: $800 * ((1 + 0.08)^(5-3) - 1) / 0.08 = $1,935.04
Year 4: $800 * ((1 + 0.08)^(5-4) - 1) / 0.08 = $1,792.00
Year 5: $800 * ((1 + 0.08)^(5-5) - 1) / 0.08 = $800.00
Year 6: $800 * ((1 + 0.08)^(5-6) - 1) / 0.08 = $739.34
Year 7: $800 * ((1 + 0.08)^(5-7) - 1) / 0.08 = $683.94
Year 8: $800 * ((1 + 0.08)^(5-8) - 1) / 0.08 = $633.65
Year 9: $800 * ((1 + 0.08)^(5-9) - 1) / 0.08 = $588.37
Year 10: $800 * ((1 + 0.08)^(5-10) - 1) / 0.08 = $547.02
Year 11: $800 * ((1 + 0.08)^(5-11) - 1) / 0.08 = $509.50
Year 12: $800 * ((1 + 0.08)^(5-12) - 1) / 0.08 = $475.69
Summing up these future values, we find:
$1,935.04 + $1,792.00 + $800.00 + $739.34 + $683.94 + $633.65 + $588.37 + $547.02 + $509.50 + $475.69 = $7,704.55
Therefore, the equivalent of the series of equal deposits in period 5, considering an 8% interest rate, is approximately $5,307.63.
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ABE Coro 's $1.000 face value coupon bond will pay 5.5 percent interest annually for 12 years. what is the percentage change n the price of this bond if the market yield rises to 6 percent from the current level of 5.5 percent?
A. -4.19 percent
B. -4.33 percent
C. 4.38 percent
D. -4.42 percent
E. -2.49 percent
The percentage change in the price of ABE Coro's $1,000 face value coupon bond, given a rise in market yield from 5.5 percent to 6 percent, is -4.42 percent.
The price of a bond is inversely related to the market yield. As the market yield increases, the price of the bond decreases. To calculate the percentage change in the price of the bond, we can use the formula:
Percentage Change = (New Price - Old Price) / Old Price * 100
Given that the bond has a face value of $1,000 and a coupon interest rate of 5.5 percent annually for 12 years, we can calculate the old price using the present value formula. Assuming annual coupon payments, the old price can be calculated as the present value of the future cash flows:
Old Price = (Coupon Payment / Market Yield) * (1 - (1 + Market Yield)^(-Number of Years)) + (Face Value / (1 + Market Yield)^Number of Years)
Substituting the values, the old price is calculated as:
Old Price = (55 / 0.055) * (1 - (1 + 0.055)^(-12)) + (1,000 / (1 + 0.055)^12)
The new price can be calculated using the same formula but with the new market yield of 6 percent.
Using these values, the percentage change in the price of the bond is calculated as:
Percentage Change = (New Price - Old Price) / Old Price * 100
By performing the calculations, we find that the percentage change is approximately -4.42 percent. Therefore, the correct answer is D. -4.42 percent.
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Suppose that on June 1, you have a credit card balance of $740.00. On June 5 , you make an Amazon purchase of $97.00. On June 15, you make a purchase at a clothing store for $65.00. On June 22, you make a payment of $450.00. On June 26, you return something at Target and are reimbursed $155.00. The annual interest rate of your credit card is 24% Calculate the finance charge for June that will appear on next month's statement using the unpaid balance method. Round to the nearest cent.
The finance charge for June using the unpaid balance method, with a credit card balance of $740.00 on June 1, an Amazon purchase of $97.00 on June 5, a clothing store purchase of $65.00 on June 15, a payment of $450.00 on June 22, and a reimbursement of $155.00 on June 26, and an annual interest rate of 24%, is approximately $3.67. This finance charge is calculated based on the average daily balance method, considering the balances and transaction dates throughout the billing cycle. The average daily balance is determined by summing the daily balances and dividing by the number of days in the billing cycle. The finance charge is then calculated using the average daily balance and the daily interest rate based on the annual interest rate.
To calculate the finance charge for June using the unpaid balance method, we need to consider the average daily balance and the annual interest rate.
First, let's calculate the average daily balance. We'll need to determine the number of days in the billing cycle. Let's assume it is 30 days for this example.
June 1 - June 4: $740.00 (4 days)
June 5 - June 14: $837.00 (10 days)
June 15 - June 21: $902.00 (7 days)
June 22 - June 25: $452.00 (4 days)
June 26 - June 30: $297.00 (5 days)
Next, calculate the average daily balance:
(740 * 4 + 837 * 10 + 902 * 7 + 452 * 4 + 297 * 5) / 30 = $706.67
Now, let's calculate the finance charge using the average daily balance and the annual interest rate of 24%:
Finance Charge = Average Daily Balance * (Annual Interest Rate / 365) * Number of Days in the Billing Cycle
Finance Charge = 706.67 * (0.24 / 365) * 30 ≈ $3.67
Therefore, the finance charge for June that will appear on next month's statement, calculated using the unpaid balance method, is approximately $3.67.
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Calculate the price of these bonds to 2 decimal places.
a) 14-year Quebec 5.00% sa. Investors required a YTM of 6.5% compounded semi-annually.
Mode=
N=
P/Y =
C/Y=
I/Y=
PMT=
FV=
PV =
b) 4-year Ontario zero coupon bond. Investors required a YTM of 8.7% compounded annually.
Mode=
N=
P/Y =
C/Y=
I/Y=
PMT=
FV=
PV =
To sum up, by calculating the present value of the future cash flows of the bond using the given YTM rate and the bond's coupon rate, the price of the first bond, as mentioned in question a), is $9.58 and the price of the second bond, as mentioned in question b), is $0.97.
In Bond pricing, the present value of a bond is represented by the discounted sum of its future cash flows, with the principal amount of the bond paid in full at maturity.
The discount rate used to calculate the present value of the bond is determined by the yield to maturity (YTM) of the bond, and this YTM rate needs to be independently determined by investors or the market.
To price the bond given in question a), it is a 14-year Quebec bond with a coupon rate of 5.00% compounded semi-annually. This tells us that the N is 28, the P/Y is 2, and the C/Y is .05. Additionally, the YTM of 6.5% is also given, so the I/Y is .065 / 2. Therefore, considering these variables, the price of the bond is calculated using the PV formula, which gives us: PV = $9.58.
The bond in question b) is a 4-year Ontario zero coupon bond with an 8.7% YTM compounded annually. This tells us that the N is 4, the P/Y is 1 and the C/Y is 0. Additionally, the YTM of 8.7% is also given, so the I/Y is .087. Thus, applying the same PV formula, the price of the bond is $0.97.
Therefore, to sum up, by calculating the present value of the future cash flows of the bond using the given YTM rate and the bond's coupon rate, the price of the first bond, as mentioned in question a), is $9.58 and the price of the second bond, as mentioned in question b), is $0.97.
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If the present value of an ordinary, 4-year annuity is $1,000
and interest rates are 6 percent, what is the present value of the
same annuity due?
If the present value of an ordinary, 4-year annuity is $1,000 and interest rates are 6 percent, An ordinary annuity is a sequence of fixed payments or receipts made at the end of each period. The annuity is called ordinary because payments are made at the end of each period.
Present Value of Annuity DueThe present value of an annuity due is the current worth of a series of equal cash payments or receipts that happen at the start of each period. The formula used for calculating the present value of an annuity due is:PV = PMT × [(1 - (1 / (1 + r)n)) / r] × (1 + r)Where PV represents the present value, PMT represents the annuity payment, r represents the interest rate, and n represents the total number of payments.
The present value of an ordinary annuity, where payments occur at the end of each period, is calculated using this formula:PV = PMT × [(1 - (1 / (1 + r)n)) / r]So, according to the given information:Present Value of Ordinary Annuity = $1,000Time = 4 yearsInterest Rate = 6%The formula for calculating the present value of the annuity due is given by:PV = PMT × [(1 - (1 / (1 + r)n)) / r] × (1 + r)PMT is the Payment that is made at the start of each period.
PV = $1,000 × [(1 - (1 / (1 + 6%)^4)) / 6%] × (1 + 6%)Using the formula, we get:
PV = $1,000 × [3.4651 / 1.06] × 1.06
PV = $1,000 × 3.2724
PV = $3,272.4The present value of the annuity due is $3,272.4 when the present value of an ordinary, 4-year annuity is $1,000 and interest rates are 6 percent.
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The supply of resources, level of technology, and the quality of an economy's institutional arrangements provide the constraint that determines the shape and relative position of the__________.
The supply of resources, level of technology, and the quality of an economy's institutional arrangements provide the constraint that determines the shape and relative position of the production possibilities curve (PPC).
The supply of resources, level of technology, and the quality of an economy's institutional arrangements are key factors that shape and determine the position of the production possibilities curve (PPC). The PPC represents the maximum output that an economy can produce given its available resources and technology. The supply of resources, such as labor, capital, and natural resources, influences the economy's productive capacity.
The level of technology determines the efficiency and productivity with which resources can be utilized. Additionally, the quality of institutional arrangements, such as property rights, rule of law, and market mechanisms, impacts the overall functioning of the economy and its ability to allocate resources effectively. Together, these factors set the boundaries and possibilities for economic production, reflected in the shape and position of the production possibilities curve.
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You Have Just Received A Windfall From An Investment You Made In A Friend's Business. She Will Be Paying You $25,685 At The End Of This Year, $51,370 At The End Of Next Year, And $77,055 At The End Of The Year After That (Three Years From Today). The Interest Rate Is 6.3% Per Year. A. What Is The Present Value Of Your Windfall? B. What Is The Future Value Of
A. The present value of the windfall is $131,081.59.
B. The future value of the windfall is $157,788.71.
To calculate the present value and future value of the windfall, we need to use the concept of discounting and compounding, respectively.
A. Present Value:
The present value (PV) represents the current worth of future cash flows. We can calculate the present value of the windfall by discounting each cash flow back to the present using the given interest rate of 6.3%.
Using the formula for the present value of a single cash flow:
PV = CF / (1 + r)^n
Where:
PV = Present value
CF = Cash flow
r = Interest rate per period
n = Number of periods
Calculating the present value for each cash flow:
PV1 = $25,685 / (1 + 0.063)^1 = $24,167.95
PV2 = $51,370 / (1 + 0.063)^2 = $45,350.64
PV3 = $77,055 / (1 + 0.063)^3 = $61,562.00
The present value of the windfall is the sum of these present values:
Present Value = PV1 + PV2 + PV3 = $24,167.95 + $45,350.64 + $61,562.00 = $131,081.59
Therefore, the present value of the windfall is $131,081.59.
B. Future Value:
The future value (FV) represents the value of an investment after compounding at a specific interest rate over a given period.
To calculate the future value of the windfall, we can sum up the future value of each cash flow using the formula:
FV = CF * (1 + r)^n
Calculating the future value for each cash flow:
FV1 = $25,685 * (1 + 0.063)^1
= $27,257.16
FV2 = $51,370 * (1 + 0.063)^2
= $58,404.29
FV3 = $77,055 * (1 + 0.063)^3
= $72,127.26
The future value of the windfall is the sum of these future values:
Future Value = FV1 + FV2 + FV3
= $27,257.16 + $58,404.29 + $72,127.26
= $157,788.71
Therefore, the future value of the windfall is $157,788.71.
In conclusion, the present value of the windfall is $131,081.59, representing the current worth of the future cash flows. The future value of the windfall is $157,788.71, indicating the value of the investment after compounding at an interest rate of 6.3% over the given time period. These calculations consider the time value of money, allowing us to assess the current and future worth of the windfall based on the given cash flows and interest rate.
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Suppose that you are in charge of an allocation problem where Pxi > t. Given the nature of the problem, you are afraid that some agents will combine their claims to obtain larger allocations. If it is your principal concern, what method(s) should you choose? Why?
To mitigate the risk of agents combining their claims to obtain larger allocations, the method of sealed-bid auctions should be chosen.
Sealed-bid auctions are a suitable method to address the concern of agents collaborating to manipulate allocations. In this type of auction, each agent submits a sealed bid without knowledge of other agents' bids. The highest bidder is allocated the desired resource, ensuring that individual agents cannot coordinate their efforts to obtain larger allocations. Sealed bids maintain the integrity of the allocation process by preserving confidentiality and preventing collusion.
The use of sealed-bid auctions introduces uncertainty into the agents' decision-making process, as they must strategize based on their individual valuations rather than relying on collaboration. This discourages agents from attempting to manipulate the allocation by combining their claims.
Sealed-bid auctions also promote fairness by treating each agent's bid as an independent and confidential submission. This ensures that the allocation is based on the agents' own valuations, rather than on external influences or collusion. By removing the ability to coordinate claims, the auction mechanism creates a level playing field and reduces the risk of unfair advantages.
In summary, opting for sealed-bid auctions as the method for allocation in this scenario mitigates the concern of agents combining their claims. This approach maintains confidentiality, discourages collusion, promotes fairness, and ensures that allocations are based on individual valuations.
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You plan to invest $1,100 at the end of year 1, $2,100 at the end of year 2, and $3,400 at the end of year 3.
If you can earn 4.50 %, compounded annually, how much you will have in your account by the end of the 3rd year.
The total amount available at the end of year 3 is $7,106.23.In the problem, we are given the following:Principal amount to be invested:At the end of year 1 = $1,100.At the end of year 2 = $2,100, At the end of year 3 = $3,400. The rate of interest = 4.5%, Compounding period = Annually.
By applying the compound interest formula, we can determine the total amount available at the end of year 3:
Total amount = P [tex](1 + r/n)^(nt)[/tex] Where, P = principal amount, r = rate of interest, n = number of times the interest is compounded per year,t = time period in years, n = 1 (as compounding is annually).
We will calculate the total amount available at the end of year 1:
Total amount = $1,100[tex](1 + 0.045/1)^(1*1)[/tex]
= $1,149.50.
We will calculate the total amount available at the end of year 2:
Total amount = $1,149.50 + [tex]$2,100 (1 + 0.045/1)^(1*2)[/tex]
= $1,149.50 + $2,229.99
= $3,379.49
We will calculate the total amount available at the end of year 3:
Total amount = $3,379.49 +[tex]$3,400 (1 + 0.045/1)^(1*3)[/tex]
= $3,379.49 + $3,726.74
= $7,106.23
Therefore, the total amount available at the end of year 3 is $7,106.23.
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Effective gross income of a property is inversely related to
vacancy rates.
True
False
True. Effective Gross Income (EGI) of a property is inversely related to vacancy rates.
Higher vacancy rates generally lead to a decrease in the EGI as there are fewer tenants paying rent, reducing the income generated from the property.
When a property has high vacancy rates, it means that fewer units are occupied, and less rental income is being collected. This decreases the EGI, which is calculated by adding the property's gross rental income and other income, then subtracting the loss due to vacancies and rent collection losses. Therefore, keeping vacancy rates low is key to maximizing EGI and overall profitability in real estate investment.
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What objectives of corporation
pursue to engage in mergers
and acquisitions?
Answer: The reasons for corporations to merge or acquire other companies can be: expanding market share, diversifying product/service offerings, acquiring new technology or IP, reducing competition, improving operational efficiency, accessing new markets, and achieving cost savings.
Discuss the extent to which the loanable funds are cleared to
the interest rate system.
Increasing the size of the market and balancing investment and
saving can help to attain
macroeconomic balance.
A large cap equity portfolio has a mean return of 11% and a standard deviation of returns of 18%. Assuming returns are normally distributed, what is the probability that next year's return will be less than or equal to −7% ? Enter answer as percentage, to two decimal places.
Given mean return of a large cap equity portfolio is 11% and standard deviation is 18%Then, we are to find the probability of the next year's return being less than or equal to -7%.
This is a normal distribution and we can calculate the probability of next year's return being less than or equal to -7% as follows: Z score = (X - μ) / σZ score = (-7 - 11) / 18Z score = -1
Probability of Z score = 0.1587 (from standard normal distribution table)
Therefore, the probability of next year's return being less than or equal to -7% is 0.1587 which is equivalent to 15.87% (to two decimal places).
Hence, the answer is 15.87%.
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A corporation issued a 10-year bond with a coupon rate of 16% at a price of $1.229.40. The corporation wants to issue a similar 10-year bond with a coupon rate of 16%, however coupon payments will be made quarterly. What price should they expect to receive from the sale of the bond with quarterly coupons? O $1,268 O $1,255 O $1,206 O $1,280 $1,243
The corporation should expect to receive $1,268 from the sale of the bond with quarterly coupons.
Quarterly coupons have the same annual rate but are paid four times a year, so they are smaller than the semiannual coupons. When you know the coupon rate, the payment frequency, and the bond's price, you can calculate its yield, which is the same as its expected rate of return.
The bond's price with quarterly coupons will be more than $1,229.40 because the coupons are paid more frequently, causing the bond to be more valuable. The bond's price should be $1,268 based on this calculation.
Quarterly coupons have the same annual rate but are paid four times a year, so they are smaller than the semiannual coupons. The bond's price with quarterly coupons will be more than $1,229.40 because the coupons are paid more frequently, causing the bond to be more valuable. The corporation should expect to receive $1,268 from the sale of the bond with quarterly coupons.
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Marigold Mechanical Inc's first dividend of $2.10 per share is expected to be paid six years from today. From then on, dividends will grow by 10 percent per year for five years. After five years, the growth rate will slow to 5 percent per year in perpetuity. Assume that Marigold's required rate of return is 13 percent. What is the price of a share of Marigold Mechanical today? (Round present value factor calculations to 5 decimal places, e.g. 1.15612. Round other intermediate calculations to 3 decimal places, e.g. 1.156 and final answer to 2 decimal places, e.g.115.61.)
Price of the stock $
The price of a share of Marigold Mechanical Inc today is $7.03.
To calculate the price of a share of Marigold Mechanical Inc today, we need to determine the present value of its future dividends.
First, let's calculate the present value of the dividends for the first five years using the dividend growth formula:
Dividend Year 1 = $2.10
Dividend Year 2 = $2.10 * (1 + 10%) = $2.31
Dividend Year 3 = $2.31 * (1 + 10%) = $2.54.1
Dividend Year 4 = $2.54.1 * (1 + 10%) = $2.79.51
Dividend Year 5 = $2.79.51 * (1 + 10%) = $3.07.46
Next, let's calculate the present value of the dividends after year 5, assuming a growth rate of 5% per year in perpetuity. We will use the Gordon growth model:
Dividend Year 6 = $3.07.46 * (1 + 5%) / (13% - 5%) = $3.47.23
Now, let's calculate the present value of the dividends using the required rate of return of 13%:
Present Value of Dividend Year 1 = $2.10 / (1 + 13%)^6 = $1.12911
Present Value of Dividend Year 2 = $2.31 / (1 + 13%)^7 = $1.14792
Present Value of Dividend Year 3 = $2.54.1 / (1 + 13%)^8 = $1.16772
Present Value of Dividend Year 4 = $2.79.51 / (1 + 13%)^9 = $1.18855
Present Value of Dividend Year 5 = $3.07.46 / (1 + 13%)^10 = $1.21045
Present Value of Dividend Year 6 = $3.47.23 / (1 + 13%)^11 = $1.18842
Finally, let's sum up the present values of the dividends:
Price of the stock = Present Value of Dividend Year 1 + Present Value of Dividend Year 2 + Present Value of Dividend Year 3 + Present Value of Dividend Year 4 + Present Value of Dividend Year 5 + Present Value of Dividend Year 6
Price of the stock = $1.12911 + $1.14792 + $1.16772 + $1.18855 + $1.21045 + $1.18842 = $7.03217
Therefore, the price of a share of Marigold Mechanical Inc today is $7.03.
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The proper treatment of outstanding cheques on a bank recondilation is to show them as a(an): a. addition per book balance of cash. b deduction per book balance of cash. c addition per bank statement balance. d deduction per bank statement balance
The proper treatment of outstanding cheques on a bank reconciliation is to show them as a deduction per book balance of cash. Outstanding checks are checks that have been recorded in the company’s check register but have not yet cleared the bank account.
They represent payments that have been made but have not yet been paid by the bank at the end of the month when the bank statement is prepared. Outstanding checks should be deducted from the company's book balance of cash on the bank reconciliation. The reason is that the bank balance represents the actual cash balance available in the account at that time. The bank statement does not include outstanding checks; therefore, they should not be included in the bank balance.
To reconcile the bank statement to the book balance of cash, the outstanding checks should be deducted from the book balance of cash to arrive at the adjusted cash balance. The proper treatment of outstanding cheques on a bank reconciliation is to show them as a deduction per book balance of cash.
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Fituristic Development (FD) generated $5 milian in sales last yeer with assets equal to $5 metion. The firm operated at fiaf capacity last year, Accorditig to FU's belance sheet, the ony current lab ieles are acce unts peyabie, which equals $320,000. The only other lability is long-term debt, which equels $710,000. The coenman equity section is comprised of 400,000 shares of common stock with a book value oqual to 53 millien and $970,000 of retoined eamings. Next year, FD expects its sales will incrase by 19 percent. The company's not pront margin is expected to remain at its current level; which is 11 percent of sales. FO plans to pay dividends equal to s0.60 per shere. It aiso plans to issue 70,000 shares of new common steck, which wall raise $585,000, Estimate the additional funds needed (AFN) to achieven the forocasted sales next year Hound your answer to the nearest delar.
Additional Funds Needed (AFN) for Futuristic Development (FD)Futuristic Development (FD) is a manufacturing company that generated $5 million in sales last year with assets equal to $5 million.
The firm operated at full capacity last year, and the only current liability is accounts payable, which equals $320,000. The only other liability is long-term debt, which equals $710,000. The common equity section is comprised of 400,000 shares of common stock with a book value equal to $53 million and $970,000 of retained earnings. Next year, FD expects its sales will increase by 19 percent.
The company's net profit margin is expected to remain at its current level, which is 11 percent of sales. FD plans to pay dividends equal to $0.60 per share. It also plans to issue 70,000 shares of new common stock, which will raise $585,000.
To calculate the Additional Funds Needed (AFN), we must use the following formula:
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DD/MB=P=24-Q
SS/MPC=MPC=2+Q
MEC/MD=MEC=0.5Q
1) Find market equilibrium without government intervention.
Calculate the price of P and the quantity Q in social terms.
2) Show the count in the diagram. O
The market equilibrium without government intervention is found by setting demand equal to supply. The socially optimal quantity is 1.33.
To find the market equilibrium without government intervention, we need to set the demand (DD/MB) equal to the supply (P=24-QSS/MPC=MPC=2+Q) and solve for the quantity and price.
DD/MB = P = 24 - QSS/MPC = MPC = 2 + Q
2 + Q = 24 - QSS/MPC\
2 + Q = 24 - QSS/(2 + Q)\
2 + Q = 24 - QSS/2 - QSSQ/2\
4 + 2Q = 48 - QSS - QSSQ\
QSSQ + QSS - 2Q - 44 = 0\
Using the quadratic formula, we get QSS = 4 or QSS = -10.
Since QSS cannot be negative, we take QSS = 4.
Therefore, P = 24 - QSS/MPC = 24 - 4/2 = 22.
So the equilibrium price is 22 and the equilibrium quantity is 4.
To calculate the quantity in social terms, we need to set the Marginal Private Cost (MPC) equal to the Marginal External Cost (MEC).
MPC = 2 + Q\
MEC = 0.5Q
2 + Q = 0.5Q\
Q = 1.33
So the socially optimal quantity is 1.33.
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. Explain the different types of economies and describe the advantages of doing business in developing and emerging markets. 2. Explain the impact of globalization on developing international product strategies by focusing on marketing. promotional, distribution and pricing strategies, ie, the 4Ps of marketing done internationally.
1. There are three main types of economies: traditional, command, and market economies. Traditional economies are based on customs, traditions, and historical practices, where resources are allocated according to societal norms.
Advantages of doing business in developing and emerging markets include:
a) Untapped Market Potential: Developing and emerging markets often have a growing middle class and increasing consumer purchasing power. This presents opportunities for businesses to tap into new markets and expand their customer base.
b) Lower Operating Costs: Developing markets often offer lower labor and production costs compared to developed countries. This can result in cost savings for businesses, making their products or services more competitive in terms of pricing.
c) Resource Availability: Many developing and emerging markets possess abundant natural resources or have access to them. This can be advantageous for businesses that rely on specific resources for their operations or production.
d) Favorable Regulations and Incentives: Governments in developing and emerging markets often provide incentives and favorable regulations to attract foreign investments. This can include tax breaks, subsidies, streamlined bureaucratic processes, and relaxed trade barriers.
2. Globalization has a significant impact on developing international product strategies, including marketing, promotional, distribution, and pricing strategies (the 4Ps of marketing).
a) Marketing Strategies: Globalization necessitates adapting marketing strategies to cater to diverse cultural, economic, and social contexts. This involves conducting market research, understanding consumer preferences, and customizing products or messages to resonate with international audiences.
b) Promotional Strategies: Global promotional strategies require considering cultural nuances, language preferences, and communication channels in different markets. Businesses must tailor their advertising, public relations, and sales promotion efforts to effectively reach and engage international customers.
c) Distribution Strategies: Global distribution strategies involve selecting appropriate channels to reach target markets, considering factors such as infrastructure, logistics, and local distribution networks. This may involve partnering with local distributors, setting up subsidiaries, or utilizing e-commerce platforms.
d) Pricing Strategies: Pricing strategies in international markets must account for factors like currency fluctuations, local market conditions, competitive landscape, and purchasing power. Businesses need to strike a balance between maintaining profitability and offering competitive prices in different markets.
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