There were 40,000 shares of common stock that were still outstanding. This figure represents the number of outstanding shares of common stock that are currently held by outside investors.
Option C is the appropriate response.
Shares that a business has issued and subsequently purchased back from the market are referred to as treasury stock. Since the firm itself holds these shares rather than outside investors, they are not regarded as outstanding shares. We must deduct the number of treasury shares from the total number of issued shares in order to arrive at the number of outstanding shares of common stock. In this instance, the business issued 50,000 shares of stock and then purchased 10,000 shares of treasury stock.
Therefore, the number of outstanding shares of common stock would be:
Outstanding shares = Issued shares - Treasury shares
Outstanding shares = 50,000 - 10,000
Outstanding shares = 40,000
The correct answer is option c 40,000.
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sasha developed a new technology for cordless charging of mobile devices, but she misled her investors about the cost of producing the new chargers and the number of units she could supply. what type of failure is sasha exhibiting?
Sasha is exhibiting ethical failure or more specifically, fraudulent behavior. She deliberately misled her investors by providing false information about the cost of producing the new chargers and the number of units she could supply.
This behavior is unethical and dishonest as it misrepresents the true situation of her business and misleads investors into making decisions based on false information. Sasha's actions can harm her investors financially and damage their trust in her and her company. Furthermore, such fraudulent behavior can have legal and regulatory consequences, as it is illegal to mislead investors in this way.
It is important for individuals and businesses to maintain high ethical standards and act with integrity when dealing with investors, customers, and other stakeholders. Failing to do so can not only harm the reputation of the company and its leaders but also result in financial and legal consequences.
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The value of a stock depends on the ability of the company to generate dividends and the expected price of the stock when the stockholder sells her shares.a. Trueb. False
The statement "The value of a stock depends on the ability of the company to generate dividends and the expected price of the stock when the stockholder sells her shares" is True.
The value of a stock is influenced by two main factors: the company's ability to generate dividends and the expected future stock price.
Dividends are periodic payments made by a company to its shareholders, usually from its earnings.
The expected future stock price is crucial as well, as investors purchase stocks with the expectation that the stock price will increase over time, allowing them to sell their shares at a higher price and make a profit.
This expected price growth is often based on factors such as the company's financial health, industry trends, and market demand for the company's products or services.
In summary, the value of a stock is largely dependent on a company's ability to generate dividends and the expected price appreciation when the stockholder sells her shares.
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If Numberto's Hats is expected to pay a dividend of 1.5 dollars in one years time and if the diviend paid is expected to increase by 1.3% per year and if the this company has a required rate of return of 13%, what is the current share price? (Please use at least 5 decimal places and do not use $ symbol in the answer)
If Numberto's Hats is expected to pay a dividend of 1.5 dollars in one years time and if the diviend paid is expected to increase by 1.3% per year and if the this company has a required rate of return of 13%, Current share price is 12.8205128.
A share price is the cost of one equity share among many sellable shares of a corporation. The stock price, put simply, is the highest price someone is prepared to pay for the stock or the lowest price at which it can be purchased.
If Numberto's Hats is expected to pay a dividend of 1.5 dollars in one years time and if the divined paid is expected to increase by 1.3% per year and if the this company has a required rate of return of 13%,
Share price = Dividend next year / (Required rate - Growth Rate
= 1.50 / (0.13 - 0.013)
= 1.50 / 0.117
= 12.8205128
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you are thinking of investing in nikki t's, inc. you have only the following information on the firm at year-end 2021: net income is $190,000, total debt is $2.50 million, and debt ratio is 60 percent. what is nikki t's roe for 2021?
Nikki T's return on equity for 2021 was 11.4% to the given information of the firm at year-end 2021.
Net income = $190,000
Total debt = $2.50 million
Debt ratio = 60%
To calculate the return on equity, we need to use the formula:
ROE = Net Income of firm/ Shareholder Equity
Debt Ratio = Total Debt / Total Assets
Total Assets of firm= Total Debt / Debt Ratio
Now, we can calculate the total assets as:
Total Assets = $2.50 million / 0.60
Total Assets = $4.1667 million
Shareholders' Equity = Total Assets - Total Debt
Shareholders' Equity = $4.1667 million - $2.50 million
Shareholders' Equity = $1.6667 million
We can calculate the ROE:
ROE = Net Income / Shareholders' Equity
ROE = $190,000 / $1.6667 million x 100
ROE = 11.4%
Therefore, we can conclude that Nikki T's return on equity for 2021 was 11.4%.
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Company A is an AAA-rated firm desiring to issue five-year FRNs. It finds that it can issue FRNs at six-month LIBOR +.225 percent or at three-month LIBOR + 225 percent. Given its asset structure, three-month LIBOR is the preferred index. Company B is an A-rated firm that also desires to issue five-year FRNs. It finds it can issue at six-month LIBOR +1.0 percent or at three-month LIBOR +.725 percent. Given its asset structure, six-month LIBOR is the preferred index. Assume a notional principal of $15,000,000. Determine the quality spread differential (QSD). (Do not round intermediate calculations. Enter your answer as a percent rounded to 3 decimal places.) Quality spread differential_____ percent
The quality spread differential (QSD) for the given information is 0.245%.
To calculate the QSD, we use the formula:
QSD = (Rate on A-rated FRNs - Rate on AAA-rated FRNs) / (1 - Recovery rate)
Since the recovery rate is not given in the question, we assume it to be 40%.
For Company A, the rate on AAA-rated FRNs is three-month LIBOR + 0.225% = 3M LIBOR + 0.00225.
For Company B, the rate on A-rated FRNs is six-month LIBOR + 1.0% = 6M LIBOR + 0.01.
So, the QSD for Company B is:
QSD = (6M LIBOR + 0.01 - 3M LIBOR - 0.00225) / (1 - 0.4) = 0.00485 / 0.6 = 0.008083
And, the QSD as a percentage is:
QSD = 0.008083 * 100% = 0.8083%
Rounding to three decimal places, the QSD is 0.245%.
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The four dimensions of product quality include all of the following EXCEPT A. quality of design. B. quality function deployment. C. conformance quality.
The four dimensions of product quality include all of the following EXCEPT B. quality function deployment. The other dimensions are A. quality of design, C. conformance quality, and performance quality.
The four dimensions of product quality are:
Performance quality: Refers to the basic operating characteristics of a product, such as its reliability, durability, speed, accuracy, and effectiveness.Features: Refers to the additional attributes or functionalities of a product beyond its basic performance, such as its design, style, customization options, and convenience.Conformance quality: Refers to the degree to which a product conforms to its design specifications and meets the required standards of quality and safety.Reliability: Refers to the consistency and dependability of a product's performance over time and under different conditions.Quality function deployment (QFD) is a structured approach to design and development that involves translating customer needs and expectations into specific product design and engineering requirements. While QFD is an important tool for ensuring that a product meets customer needs and expectations, it is not considered one of the four dimensions of product quality.
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a shift in cultural values away from accumulating material possessions to spending time with family and friends benefit those who market:
A shift in cultural values away from accumulating material possessions to spending time with family and friends can significantly benefit marketers in various industries.
What's the effects of shift in cultural valuesBy understanding this change in priorities, businesses can tailor their offerings to cater to consumers' desire for experiences, relationships, and emotional connections.
For instance, marketers in the travel and tourism sector can promote packages that encourage bonding with loved ones, such as family vacations or group retreats. Likewise, event planners can capitalize on this trend by organizing activities focused on building connections, such as workshops or team-building events.
In the retail industry, companies can shift their focus from selling products to providing personalized services, such as offering curated gift boxes that emphasize thoughtfulness and sentimental value.
Additionally, marketers in the food and beverage sector can emphasize the social aspect of dining, promoting shared meals and spaces that encourage conversation and quality time spent together.
Overall, this cultural shift offers new opportunities for marketers to create meaningful, experience-driven campaigns that resonate with consumers and foster long-term brand loyalty.
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straight-line depreciation a refrigerator used by a wholesale warehouse has a cost of $80,700, an estimated residual value of $5,300, and an estimated useful life of 8 years. what is the amount of the annual depreciation computed by the straight-line method?
The total amount of the annual depreciation calculated using the straight-line method is $9,425.
The given formula for calculating straight-line depreciation concerning the current question is
Depreciation = ( cost of asset - salvage value)/useful life of asset
Hence, using the given values
Depreciation per year = ( 80,700 - 5,300)/8
Depreciation per year = 75,400/8
Depreciation per year = $9,425
The total amount of the annual depreciation calculated using the straight-line method is $9,425.
A straight-line depreciation refers to the method which allows companies to allocate the cost of a particular asset based on its depreciated value over its time.
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issuers typically pledge 105 percent to 120 percent in mortgage collateral in excess of par value of the securities issued, in order to overcollateralize mbbs. group startstrue or false
"Issuers typically pledge 105 percent to 120 percent in mortgage collateral in excess of par value of the securities issued, in order to overcollateralize MBBs."The statement is false.
Assets such as cash, stocks, bonds, and other equities or securities may be pledged by a lender to secure a debt or loan. A pledged asset is security that a lender holds as payment for a loan. Pledged assets can lower both the down payment and interest rate that is generally required for a loan.
Although the borrower will give the lender the pledged asset, the borrower will continue to be the owner of the priceless item. The lender has the right to legally seize possession of the pledged asset in the event of a default by the borrower.
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A host government would have less incentives for foreign direct investment (FDI) if the foreign firm's FDI _________.
A. would compete with local firms of the host country
B. would produce a good and export it to other countries
C. would like to partner with the firms of the host country
D. would produce a good not currently available in the host country
A host government would have less incentives for foreign direct investment (FDI) if the foreign firm's FDI "would compete with local firms of the host country" (option a).
A host government may view foreign firms' FDI as a threat to local firms' survival, resulting in less incentive for FDI. In this scenario, the host government may adopt protectionist policies, such as imposing tariffs or other barriers to entry, to promote the development of local firms. Therefore, if the foreign firm's FDI would compete with local firms of the host country, it would have less incentive for FDI.
Option a is answer.
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on september 1, sky mountain company borrowed $66,000 on a 6%, 9-month note payable to coast national bank. sky mountain's adjusting entry four months later at december 31 would include a:
The adjusting entry for Sky Mountain Company at December 31 would include accrued interest expense of $1,980 ($66,000 x 6% x 4/12) and a corresponding increase in interest payable to Coast National Bank.
This is because four months have passed since the loan was taken out, and interest has been accruing during that time.The note payable was borrowed on September 1 and it has a term of 9 months. Therefore, the maturity date of the note is May 31 of the following year. As of December 31, only 4 months have passed since the note was borrowed and the company still has 5 months remaining until the maturity date.
At December 31, Sky Mountain Company needs to make an adjusting entry to recognize the interest expense incurred during the four months from September 1 to December 31, which is the end of the accounting period. The adjusting entry will include the following:
Interest Expense: $66,000 x 6% x 4/12 = $1,980
Interest Payable: $66,000 x 6% x 5/12 = $1,650
The interest expense of $1,980 represents the cost of borrowing the money for four months, calculated as the product of the principal amount borrowed, the interest rate, and the time period (in months) during which the money was borrowed.
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the ________ method of estimating allowance for doubtful accounts is based on the idea that a given percent of a company's credit sales for the period are uncollectible.
The percentage of sales method of estimating allowance for doubtful accounts is based on the idea that a given percent of a company's credit sales for the period are uncollectible.
A forecasting methodology that bases financial projections on sales is the percentage of sales method. Accounts receivable and cost of goods sold are two financial statement elements that are expressed as a proportion of sales. Following that, businesses evaluate their financial future using this data.
The percentage of sales approach connects sales information to a company's revenue and balance sheets. It's among the most effective ways a company may come up with a thorough financial forecast statement.
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The percentage of sales method is used to estimate the allowance for doubtful accounts based on a given percent of a company's credit sales.
The percentage of sales method is a popular approach used by companies to estimate their allowance for doubtful accounts. This method is based on the idea that a certain percentage of a company's credit sales for the period will not be collected. To calculate the allowance for doubtful accounts using this method, a company typically reviews its historical collection patterns and determines an appropriate percentage of credit sales that are likely to be uncollectible. This percentage is then applied to the total credit sales for the period to arrive at an estimated amount of uncollectible accounts. The estimated amount is recorded as an expense on the income statement and as a contra-asset on the balance sheet, which is known as the allowance for doubtful accounts. This method provides a straightforward and simple way to estimate the allowance for doubtful accounts and is widely used by companies of all sizes.
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Suppose that the value of the market is currently 4.3 billion. The market is expected to pay dividends of 21.3 million at the end of the year. Dividends are expected to grow at a rate of 2.6% per year. Use the fundamental approach to estimate the expected market return. 3.10% 3.22% 3.34% 2.85% 02.97%
Using the fundamental approach, the expected market return is 3.10%.
To estimate the expected market return using the fundamental approach, you need to consider the current value of the market, expected dividends, and the expected growth rate of dividends. Here's a step-by-step explanation:
1. Note the current market value: 4.3 billion.
2. Note the expected dividends at the end of the year: 21.3 million.
3. Note the expected growth rate of dividends: 2.6% per year.
Next, you will use the Gordon Growth Model formula:
Expected Market Return = (Dividends / Market Value) + Growth Rate
4. Convert the expected dividends to the same unit as the market value (billion): 21.3 million = 0.0213 billion.
5. Plug in the numbers into the formula:
Expected Market Return = (0.0213 / 4.3) + 0.026
6. Calculate the result:
Expected Market Return = 0.004965 + 0.026 = 0.030965, or approximately 3.10%.
Therefore, using the fundamental approach, the expected market return is 3.10%.
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The anticipated market return, when applied to fundamental approach or analysis, is 3.10%. Option 1 is Correct.
The present market value, anticipated dividends, and the projected growth rate of dividends must all be taken into account when estimating the predicted market return utilising the fundamental approach. Here is a detailed explanation:
1. Take note of the market worth right now: $4.3 billion.
2. Take note of the 21.3 million in anticipated dividends for the year.
3. Take note of the dividend growth rate anticipated: 2.6% annually.
The Gordon Growth Model formula is then used:
Expected Market Return = (Dividends / Market Value) + Growth Rate
Convert the expected dividends to the same unit as the market value (billion): 21.3 million = 0.0213 billion.
Plug in the numbers into the formula:
Expected Market Return = (0.0213 / 4.3) + 0.026
6. Calculate the result:
Expected Market Return = 0.004965 + 0.026 = 0.030965, or approximately 3.10%.
Therefore, using the fundamental approach, the expected market return is 3.10%. Option 1 is Correct.
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Correct Question:
Suppose that the value of the market is currently 4.3 billion. The market is expected to pay dividends of 21.3 million at the end of the year. Dividends are expected to grow at a rate of 2.6% per year. Use the fundamental approach to estimate the expected market return.
1. 3.10%
2. 3.22%
3. 3.34%
4. 2.85%
5. 2.97%
Time Trends integrated time clock and payroll system sells for $313,533. At this price, the annual cost savings that the system will generate for Building Keepers, a facilities management company, over its 7-year life will yield an internal rate of return of 12%. Building Keepers requires that all projects achieve a minimum return of 14%. Click here to view the factor table. What price does Building Keepers need to negotiate with Time Trends so that the system will achieve that return? (For calculation purposes, use 4 decimal places as displayed in the factor table provided. Round "Annual cost saving" to 0 decimal place, e.g. 58,975 and final answer to 2 decimal places, e.g. 58,971.25.) Negotiation price $
Building Keepers needs to negotiate the price with Time Trends to $276,771.74 to achieve a 14% return. To determine the negotiation price for Building Keepers to achieve a 14% return, follow these steps:
1. Identify the Present Value of the Annuity factor for 14% and 7 years from the factor table. The factor is 4.9927.
2. Calculate the annual cost savings needed for a 14% return by dividing the original price ($313,533) by the 12% factor (5.6502). Annual cost savings = $313,533 / 5.6502 = $55,448 (rounded to 0 decimal places).
3. Multiply the annual cost savings needed for a 14% return ($55,448) by the 14% factor (4.9927) to find the negotiation price. Negotiation price = $55,448 * 4.9927 = $276,771.74 (rounded to 2 decimal places).
Therefore, Building Keepers needs to negotiate the price to $276,771.74 to achieve a 14% return.
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Consider the following bonds Bond Coupon Rate (annual payments) А 0.0% B 0.0% С 4.0% 8.0% Maturity (years) 15 10 15 10 D Which of the bonds A to Dis most sensitive to a 1% drop in interest rates from 6.0% to 5,0%? Which bond is feast sensitive? Bond is most sensitive (Select from the drop-down menu.) is the least sensitive. (Select from the drop-down menu.) Bond
When interest rates decrease, bond prices with longer durations tend to increase more than those with shorter durations. Therefore, Bond A is most sensitive to a 1% drop in interest rates from 6.0% to 5.0%, while Bond B is least sensitive. This is because Bond A has the longest duration, and Bond B has the shortest duration among the given bonds.
To determine the sensitivity of the bonds to interest rate changes, we need to look at their durations. Duration is a measure of how long, on average, the bondholder must wait before receiving cash payments. The higher the duration, the more sensitive a bond is to interest rate changes.
Bond A has a 0% coupon rate and 15-year maturity. Since it has no coupon payments, its duration is equal to its maturity, 15 years.
Bond B has a 0% coupon rate and 10-year maturity. Its duration is also equal to its maturity, 10 years.
Bond C has a 4% coupon rate and 15-year maturity. Since it has coupon payments, its duration will be less than its maturity, but still longer than Bond B.
Bond D has an 8% coupon rate and 10-year maturity. Its duration will be less than its maturity and shorter than Bond C due to the higher coupon rate.
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revenues from dining services and athletic programs are examples of auxiliary enterprises revenues for a college or university. group of answer choices true false
Revenues from dining services and athletic programs are examples of auxiliary enterprises revenues for a college or university. The correct answer choice is true.
Auxiliary enterprises are self-supporting entities within a college or university that provide non-instructional services to students, faculty, and staff. These services are typically not directly related to the institution's core educational mission but are essential to support the functioning of the campus community.
Examples of auxiliary enterprises revenues include revenues from dining services, athletic programs, parking facilities, bookstore sales, and student housing. These sources of revenue help to fund the operation and maintenance of the auxiliary services, ensuring that they continue to meet the needs of the campus community.
In summary, auxiliary enterprises revenues for a college or university, such as revenues from dining services and athletic programs, are essential in supporting the non-instructional services that enhance campus life and contribute to the overall experience for students, faculty, and staff.
This statement is true, as these revenues play a crucial role in sustaining the campus infrastructure and providing valuable resources and services to the community.
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Stock A has a risk premium of 16%, a correlation of 0.56 with the market, and a beta of 0.9. Stock B has a risk premium of 9.1% and a correlation of 0.23 with the market. The returns of Stock A and Stock B are uncorrelated. The volatility of the market portfolio is 14%. A portfolio is created by investing equally in Stock A and Stock B. Find the volatility of this portfolio. O 20.95% O 19.22% O 20.08% O 21.81% O 18.35%
The volatility of the portfolio created by investing equally in Stock A and Stock B is 20.95%.
What is the volatility of a portfolio?To find the volatility of the portfolio created by investing equally in Stock A and Stock B, we first need to calculate the portfolio's beta. The beta of the portfolio can be calculated as follows:
Beta of Portfolio = (0.5 x Beta of Stock A) + (0.5 x Beta of Stock B)
Beta of Portfolio = (0.5 x 0.9) + (0.5 x 0)
Beta of Portfolio = 0.45
Next, we can calculate the volatility of the portfolio using the following formula:
Volatility of Portfolio = Sqrt[(0.5² x Volatility of Stock A^2) + (0.5² x Volatility of Stock B² ) + (2 x 0.5 x 0.5 x Correlation x Volatility of Stock A x Volatility of Stock B)]
Using the given values, we can plug them into the formula to obtain:
Volatility of Portfolio = Sqrt[(0.5² x (14% x 0.9)² ) + (0.5² x (14% x 0.091)² ) + (2 x 0.5 x 0.5 x 0 x (14% x 0.9) x (14% x 0.091))]
Volatility of Portfolio = 0.2008 or 20.08%
Therefore, the volatility of the portfolio created by investing equally in Stock A and Stock B is 20.08%.
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The Terranian Kwacha (TEK) is pegged to the dollar at the rate of 2.000 Kwacha per dollar. USDTEK 3-month forward points are +100. If the expected jump (depreciation) should the Kwacha break its dollar peg is 10% what is the implied probability of this event occuring over the next 3 months (approximately)?
The implied probability of the Terranian Kwacha breaking its dollar peg and experiencing a 10% jump (depreciation) over the next 3 months is approximately 49.9%
Using the information provided, we know that the current spot rate is 2.000 Kwacha per dollar. Therefore, the 3-month forward rate can be calculated as follows: Forward rate = Spot rate x (1 + forward points / 10,000) = 2.000 x (1 + 100 / 10,000) = 2.020 Kwacha per dollar
Next, we need to calculate the implied probability of a 10% jump (depreciation) in the Kwacha should it break its dollar peg over the next 3 months. We can use the following formula to do so: [tex](1 - e^(-rT)) x 100[/tex]
Where r is the interest rate and T is the time period in years. In this case, T is 0.25 (3 months is one-quarter of a year) and r can be assumed to be the risk-free rate. Assuming the risk-free rate is 2%, we can calculate the implied probability as follows: [tex](1 - e^(-0.02 x 0.25)) x 100 = (1 - e^-0.005) x 100[/tex] = 0.499 or 49.9%
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traditional store retailers were used to shipping from manufacturers to warehouses to the retail store, except for large purchases such as furniture. they have had to:
Traditional store retailers were used to shipping from manufacturers to warehouses to the retail store, except for large purchases such as furniture. They have had to:
1. Adapt to changing consumer preferences: With the rise of e-commerce, consumer preferences have shifted towards online shopping. Retailers have had to adjust their strategies by offering online platforms, improving their digital presence, and providing seamless omnichannel experiences.
2. Enhance their supply chain efficiency: Retailers have had to invest in technology and logistics infrastructure to minimize lead times and costs associated with shipping large items like furniture. This includes direct-to-consumer shipping and using advanced tracking systems to monitor shipments.
3. Offer flexible delivery options: To compete with online retailers, traditional retailers have had to provide flexible delivery options for large purchases such as furniture, including in-home delivery, assembly services, and convenient pickup points.
4. Focus on showrooming and experiential retail: Retailers have had to emphasize the in-store experience by providing showroom-style spaces where customers can interact with large items like furniture before purchasing. This helps create a memorable shopping experience and can increase customer loyalty.
5. Improve customer service and after-sales support: To differentiate themselves from online retailers, traditional retailers have had to prioritize exceptional customer service and after-sales support, such as offering warranties, easy returns, and product maintenance.
In summary, traditional store retailers who were used to shipping from manufacturers to warehouses to the retail store have had to adapt to the changing retail landscape by improving supply chain efficiency, offering flexible delivery options, focusing on showrooming and experiential retail, and enhancing customer service and after-sales support.
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Your broker charges $0.0016 per share per trade. The exchange charges $0.0095 per share per trade for removing liquidity and credits $0.0077 per share per trade for adding liquidity. The current best BID price for stock XYZ is $68.33 per share, while the current best ASK price is $68.34 per share. You post an order to buy XYZ at the current best BID price and wait. Shortly after, the best BID and ASK prices move lower (down) by one cent each. Your buy order is executed. Immediately, you post an order to sell XYZ at the new best ASK price and wait. Shortly after, the best BID and ASK prices move higher (up) by one cent each. Your sell order is executed. What will be your net profit per share to buy and sell XYZ after considering the commissions and any exchange fees or credits?
The net profit per share to buy and sell XYZ after considering the commissions and exchange fees/credits is -$0.0151 per share, or a loss of $0.0151 per share.
What will be your net profit per share and to determine the total cost to buy and sell a share of XYZ ?To calculate the net profit per share, we need to determine the total cost to buy and sell a share of XYZ, and then subtract that from the selling price.
Buying cost:
Best BID price = $68.33 per share
Broker commission = $0.0016 per share
Exchange fee for removing liquidity = $0.0095 per share
Total buying cost = $68.33 + $0.0016 + $0.0095 = $68.3411 per share
Selling price:
Best ASK price = $68.32 per share
Broker commission = $0.0016 per share
Exchange fee for adding liquidity = $0.0077 per share
Total selling price = $68.32 - $0.0016 + $0.0077 = $68.325 per share
Net profit per share:
Selling price - buying cost = $68.325 - $68.3411 = -$0.0151 per share
Therefore, the net profit per share to buy and sell XYZ after considering the commissions and exchange fees/credits is -$0.0151 per share, or a loss of $0.0151 per share.
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HW HELP pls!
As an importer of grain into Japan from the United States, you have agreed to pay $377,287 in 90 days after you receive your grain. You face the following exchange rates and interest rates: spot rate, 106.35JPY/USD; 90-day forward rate, 106.02JPY/USD; 90- day USD interest rate, 3.25% p.a.; and 90-day JPY interest rate, 1.9375% p.a.
a. Describe the nature and extent of your transaction foreign exchange risk.
b. Explain two ways to hedge the risk.
c. Which of the alternatives in part b is superior?
To determine which alternative is superior: you should compare the costs associated with each hedge. The forward contract has a known cost (the forward rate), while the money market hedge requires calculating the net cost of borrowing and investing.
As an importer of grain into Japan from the United States, you have agreed to pay $377,287 in 90 days after you receive your grain.
a. The foreign exchange risk you face is related to the fluctuation in the exchange rates between the US dollar (USD) and Japanese yen (JPY) during the 90-day period. The spot rate is currently 106.35 JPY/USD, and the 90-day forward rate is 106.02 JPY/USD. The 90-day USD interest rate is 3.25% p.a., and the 90-day JPY interest rate is 1.9375% p.a.
b. To hedge the foreign exchange risk, you can consider the following two alternatives:
1. Forward contract: You can enter into a forward contract to buy USD at the 90-day forward rate of 106.02 JPY/USD. This will lock in the exchange rate and eliminate the risk of exchange rate fluctuations.
2. Money market hedge: You can borrow JPY, convert it into USD at the spot rate, and invest the USD at the 90-day interest rate. After 90 days, you will repay the JPY loan along with the interest. This way, you are hedging the foreign exchange risk by taking advantage of interest rate differentials.
c. To determine which alternative is superior, you should compare the costs associated with each hedge. The forward contract has a known cost (the forward rate), while the money market hedge requires calculating the net cost of borrowing and investing.
If the cost of the forward contract is lower, it would be the superior option, and vice versa. In practice, you would also need to consider factors such as transaction costs, counterparty risk, and liquidity before making a decision.
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Joe is shopping for a new computer. A computer can be delivered to joe's home for $1,200. Alternatively, you can pick up the same computer at the warehouse for $1,000. How should joe buy the computer
Joe should pick up the computer from the warehouse for $1,000.
By choosing to pick up the computer from the warehouse, Joe would save $200 compared to having it delivered to his home. This $200 saving could be used for other purchases or saved for future use. However, it is important to note that if Joe does not have the means to transport the computer from the warehouse to his home, then the delivery option may be more convenient for him.
In that case, he should consider the additional $200 cost as a convenience fee. When making purchasing decisions, it's important to weigh the costs and benefits of each option and consider personal preferences and circumstances.
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An auction-house recently sold a NFT that is a digital art piece to a collector. The new owner of a NFT ______ .
A. will receive a physical print of the artwork and a paper certificate of authentication.
B. has a digital record that they are the owner of the digit art and the art piece is no longer able to be downloaded by others.
C. has a digital record that they are the owner of the digit art and although copies of the art can still be downloaded by others.
D. None of the above is correct
B. The new owner of a NFT has a digital record that they are the owner of the digit art and the art piece is no longer able to be downloaded by others.
A NFT, or non-fungible token, is a type of digital asset that is stored on a blockchain and is unique, meaning it cannot be duplicated or counterfeited.
The new owner of a NFT has exclusive ownership of the digital asset, and can even prove their ownership through the blockchain ledger. As the owner of the NFT, no one else can download or possess the artwork, as it is now exclusively owned by the new owner.
Additionally, the new owner can use the NFT to trade or resell the artwork, or might even be able to receive royalties from the artwork if it becomes popular. The new owner of a NFT is granted a digital record that they are the sole owner of the artwork, and no one else can download or possess it.
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Country A has a 90/10 ratio of 15.7(1990) and 12.42(2000) and a
50/10 ratio of 6.43(1990) and 5.09(2000)
Explain.
Based on the information provided, it seems like we have two different ratios for Country A in the years 1990 and 2000. Let's break down the data for a clearer understanding:
1. 90/10 Ratio:
- 1990: 15.7
- 2000: 12.42
2. 50/10 Ratio:
- 1990: 6.43
- 2000: 5.09
Now let's explain the data:
For the 90/10 ratio, in 1990, Country A had a value of 15.7, which means that for every 90 units of a certain factor (e.g. income, resources, etc.), there were 10 units of another factor. By 2000, this ratio decreased to 12.42, indicating that there was a reduction in the disparity between the two factors represented by the ratio.
For the 50/10 ratio, in 1990, Country A had a value of 6.43, which means that for every 50 units of a certain factor, there were 10 units of another factor. By 2000, this ratio decreased to 5.09, again showing a reduction in the disparity between the two factors represented by the ratio.
In conclusion, both the 90/10 and 50/10 ratios show a decrease from 1990 to 2000, indicating a reduction in the disparity between the factors represented by these ratios in Country A.
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according to hazlitt, what happens when the government tries to save a particular industry by giving it a direct subsidy?
Wealth is moved from one industry to the one that is being subsidised. Labor and capital are drawn away from profitable industries and toward unprofitable ones.
Wealth production decreases. According to Hazlitt. Producers' revenues rise as a result of subsidies. Low-income consumers can afford necessities thanks to subsidies. Consumers who purchase a good at a reduced Labor benefit from subsidies. A producer will be able to manufacture more goods thanks to a subsidy, which leads to increased consumption. In terms of economics, a subsidy creates a wedge by increasing the price producers earn while decreasing the price consumers pay, incurring a cost for the industries government.
a director of a commercial fitness center who is motivated primarily by the bottom line is likely to adhere to principles of mechanical, market-driven professionalism. true false
True. A director of a commercial fitness centre who prioritizes profits is likely to focus on market-driven professionalism, rather than a more holistic approach.
Profit-focused leadership is more likely to take precedence for a commercial fitness centre director than market-driven professionalism. This implies that instead of adopting a more comprehensive strategy that takes into account the well-being of customers and employees, they may concentrate more on the mechanical parts of operating the business, such as maximising revenue, limiting expenses, and fulfilling sales objectives.
While any organisation must be profitable, a single-minded emphasis on the bottom line can result in a culture where profit comes before people.
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True. a director of a commercial fitness center who is motivated primarily by the bottom line is likely to adhere to principles of mechanical, market-driven professionalism.
A commercial fitness center director who is primarily focused on the bottom line is more likely to uphold mechanical, market-driven professionalism. This indicates that the director is likely to be concerned with increasing profits and may consider fitness to be a good that should be marketed to customers. The tenets of mechanical, market-driven professionalism place a premium on standardization, efficiency, and the application of marketing and sales strategies to win and keep clients. Although this strategy can be profitable, it might not always put the health and welfare of the clientele first. Fitness center managers must therefore strike a compromise between their corporate objectives, moral principles, and dedication to offering secure and efficient fitness programs.
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A British firm has $100 million in assets in the Unites States that they need to repatriate in 6 months. They could hedge the exchange rate risk by More than one answers is correct) a. buying dollars forward. b. borrowing dollars. c. selling pounds forward d. none of the above e. Selling dollars forward
British firm could hedge the exchange rate risk by buying dollars forward (option a) and selling pounds forward (option c).
To hedge the exchange rate risk for the British firm with $100 million in assets in the United States, they can consider the following options:
a. Buying dollars forward: The firm can enter into a forward contract to buy USD at a predetermined exchange rate, to be delivered in 6 months. This locks in the exchange rate and eliminates the risk of fluctuations.
c. Selling pounds forward: The firm can enter into a forward contract to sell GBP at a predetermined exchange rate, to be delivered in 6 months. This is essentially the same as option (a) but in reverse, as it also locks in the exchange rate and eliminates the risk of fluctuations.
Therefore, options (a) and (c) are the correct methods to hedge the exchange rate risk for the British firm.
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Suppose a five-year $1000 bond with annual coupons has a price of $900 and a yield to maturity of 6%. What is the Bonds coupon rate?
Answer:
We can use the present value formula to solve for the coupon rate of the bond:
PV = C / (1 + r)^1 + C / (1 + r)^2 + ... + C / (1 + r)^5 + FV / (1 + r)^5
where PV is the current price of the bond, C is the annual coupon payment, r is the yield to maturity, and FV is the face value of the bond.
Plugging in the given values:
PV = $900
C = ?
FV = $1,000
r = 6%
n = 5
Solving for C, we get:
PV = C / (1 + r)^1 + C / (1 + r)^2 + ... + C / (1 + r)^5 + FV / (1 + r)^5
$900 = C / (1 + 0.06)^1 + C / (1 + 0.06)^2 + C / (1 + 0.06)^3 + C / (1 + 0.06)^4 + C / (1 + 0.06)^5 + $1,000 / (1 + 0.06)^5
$900 = $60 / (1 + 0.06)^1 + $60 / (1 + 0.06)^2 + $60 / (1 + 0.06)^3 + $60 / (1 + 0.06)^4 + $60 / (1 + 0.06)^5 + $1,000 / (1 + 0.06)^5
$900 = $56.60 + $53.40 + $50.37 + $47.59 + $45.03 + $747.26
$900 = $1,000.25C / (1 + 0.06)^5
$900 x (1 + 0.06)^5 / $1,000.25 = C
$900 x 1.33823 / $1,000.25 = C
C = $1.20
Therefore, the coupon rate of the bond is $1.20 / $1000 = 0.12 or 12%.
A loan is to be repaid by annual payments continuing forever, the first one due one year after the loan is made. Find the amount of the loan if the payments are 1, 2, 3, 1, 2, 3, ... assuming an annual effective interest rate of 10%.
This problem can be solved using the formula for the present value of a perpetuity, which is a series of equal payments made at regular intervals continuing forever. The formula is:
PV = PMT / i
Where,
PV is the present value of the perpetuity,
PMT is the amount of each payment, and
i is the interest rate per payment period.
In this case, we have an annual perpetuity, so i is the annual effective interest rate.
We are given that the payments are 1, 2, 3, 1, 2, 3, and so on, with a period of three years.
Therefore, the payment per period is the average of 1, 2, and 3, which is 2. We can use this payment amount and the interest rate of 10% to find the present value of the perpetuity.
PV = 2 / 0.1 = 20
Therefore, the amount of the loan is $20. This means that the borrower will make annual payments of $2, and the lender will earn 10% interest on the outstanding balance each year.
After the first payment of $2, the outstanding balance will be $18, and the interest on this amount will be $1.80.
Therefore, the second payment will be $2 + $1.80 = $3.80, and the outstanding balance will be $14.20.
The third payment will be $2 + $1.42 = $3.42, and so on, continuing forever.
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"Please explain from a fundamental of finance perspective. Please
give as much detail as possible. Thank you!
Net present value - Math problems similar to homework and examples done in class Framework for calculating NPV Key advantages and key disadvantages of the NPV technique _Payback period - definition Payback period - Math problems similar to homework and examples done in class Key advantages and key disadvantages of the payback period
The Net Present Value (NPV) is a financial tool used to determine the current value of future cash flows.
The framework for calculating NPV involves discounting future cash flows back to their present value using a discount rate.
The key advantages of using NPV include considering the time value of money and the ability to compare investments with different time horizons. The key disadvantages include the need to estimate future cash flows and the sensitivity of NPV to the discount rate used.
The Payback Period is the length of time it takes for an investment to recoup its initial cost. The formula for calculating the Payback Period involves dividing the initial investment by the expected annual cash inflows.
The key advantage of using the Payback Period is its simplicity in calculating and interpreting the results. The key disadvantage is that it doesn't consider the time value of money or the cash flows beyond the payback period.
In summary, NPV is a more comprehensive tool than the Payback Period, as it considers the time value of money and future cash flows beyond the payback period. However, the Payback Period can be useful in quickly identifying investments that recoup their initial costs in a shorter time frame.
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