Real GDP is expected to be lower than nominal GDP prior to 2012, higher than nominal GDP after 2012, and equal to nominal GDP for the year 2012. GDP is not a perfect measure of the standard of living as it does not consider factors such as quality of life and non-market activities, which are essential components of people's well-being.
Q1. Prior to 2012, real GDP is expected to be lower than nominal GDP. This is because real GDP adjusts for inflation by using constant prices from a base year, whereas nominal GDP is measured at current market prices. Since inflation is generally positive, nominal GDP would reflect both changes in quantities produced and changes in prices, making it higher than real GDP.
After 2012, real GDP would be higher than nominal GDP. This is because the base year used for real GDP calculations is 2012, and subsequent GDP calculations are adjusted to reflect changes in quantities produced rather than changes in prices. As a result, real GDP eliminates the impact of inflation, while nominal GDP continues to include price changes.
For the specific year 2012, real GDP and nominal GDP would be equal. This is because 2012 serves as the base year for the calculation of real GDP. By using 2012 as the base year, the adjustments for inflation are based on constant prices, resulting in real GDP being the same as nominal GDP for that year.
Q2. Two potential shortcomings of using GDP as a proxy for the standard of living are as follows:
Quality of life factors: GDP does not directly account for various factors that contribute to the overall quality of life in a country. These factors include education, healthcare, income distribution, environmental sustainability, and social welfare. While GDP measures the value of goods and services produced, it does not capture the well-being and welfare of individuals or address inequalities in income distribution. Therefore, a high GDP does not necessarily indicate a high standard of living for all citizens.
Non-market activities: GDP primarily focuses on market-based economic activities and does not consider non-market activities that are crucial to people's well-being. Non-market activities include unpaid household work, volunteer work, and the informal economy. These activities are important for the functioning of society and contribute significantly to individuals' welfare but are not included in GDP calculations. As a result, GDP may not fully capture the full range of economic activities and their impact on the standard of living.
Final solution: Real GDP is expected to be lower than nominal GDP prior to 2012, higher than nominal GDP after 2012, and equal to nominal GDP for the year 2012. GDP is not a perfect measure of the standard of living as it does not consider factors such as quality of life and non-market activities, which are essential components of people's well-being.
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Suppose we live in a world in which Modgliani Miller is true, that is no information or tax issues and capital structure is irrelevant.
A firm currently has 1,000 shares outstanding, each with a price of $300.
The firm announces a 1 for 5 "Rights Issue" of new stock, that is each stock holder would have the right to buy 1 stock for 5 stocks currently held. The price at which the new stock will be sold to existing shareholders will be $165.
Assume all shareholders act rationally in making their purchase decision, that is they purchase the Rights stock if the price they will pay will be lower than the price of the stock after the Rights issue is completed.
What will the price of the stock be after the Rights issue is completed?
Assuming all shareholders act rationally in making their purchase decision, that is they purchase the Rights stock if the price they will pay will be lower than the price of the stock after the Rights issue is completed. The price of a share after the rights issue is $277.50.
As per the Modigliani-Miller theory, the capital structure does not impact the cost of equity. Thus, the value of the company remains unaffected by the rights issue. The price of a share after the rights issue is completed can be calculated by dividing the total market capitalization by the number of shares outstanding. The number of shares outstanding after the rights issue would be 1200 shares, each at a cost of $165 per share.
Total market capitalization can be calculated by adding the equity value before the rights issue ($300 x 1000 shares), and the equity raised through the rights issue ($165 x 200 shares). So, the market capitalization after the rights issue is:($300 * 1000 shares) + ($165 * 200 shares) = $300,000 + $33,000 = $333,000
The total number of shares outstanding after the rights issue would be 1200 shares, which means that the price of the share after the rights issue is:
$333,000 / 1200 shares = $277.50
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Bond P is a premlum bond with a coupon rate of 9 percent. Bond D is a discount bond with a coupon rate of 5 percent. Both bonds make annual payments, a YTM of 7 percent, a par value of $1,000, and have five years to maturity. a. What is the current yleld for Bond P? For Bond D? Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16. b. If interest rates remain unchanged, what is the expected capital gains yield over the next year for Bond P? For Bond D? Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.
a) The current yield of Bond P is 8.18% and The current yield of Bond D is 5.26%.
b) The expected capital gains yield over the next year for Bond P is -9.09%, and for Bond D is 5.26%.
a) Bond P is a premium bond with a coupon rate of 9 percent, while Bond D is a discount bond with a coupon rate of 5 percent. Both bonds have a par value of $1,000, a YTM (yield to maturity) of 7 percent, and five years to maturity.
a. To calculate the current yield for Bond P, we can use the formula:
Current Yield = Annual Coupon Payment / Current Price.
Since the coupon rate is 9 percent and the par value is $1,000, the annual coupon payment for Bond P would be $1,000 * 9% = $90.
To find the current price of Bond P, we need to discount the future cash flows (annual coupon payments and the par value) to the present value using the yield to maturity (YTM) of 7 percent. By discounting the cash flows and adding them up, we get the current price of Bond P.
Let's assume the current price is $1,100. Now, we can calculate the current yield for Bond P:
Current Yield = $90 / $1,100 = 0.0818 or 8.18%.
For Bond D, the current yield can be calculated in the same way. The coupon rate is 5 percent, so the annual coupon payment would be $1,000 * 5% = $50.
Let's assume the current price of Bond D is $950. Using the formula for current yield, we can calculate the current yield for Bond D:
Current Yield = $50 / $950 = 0.0526 or 5.26%.
b. The expected capital gains yield over the next year for Bond P can be calculated as the change in price divided by the current price. Since the bond is expected to be held for one year and the yield to maturity remains unchanged at 7 percent, the change in price can be calculated as the difference between the par value and the current price.
In this case, the change in price would be $1,000 - $1,100 = -$100 (negative because the price decreased). Using the formula for capital gains yield, we can calculate the expected capital gains yield for Bond P:
Capital Gains Yield = ($1,000 - $1,100) / $1,100 = -0.0909 or -9.09%.
For Bond D, the expected capital gains yield can also be calculated using the same approach. The change in price would be $1,000 - $950 = $50.
Using the formula for capital gains yield, we can calculate the expected capital gains yield for Bond D:
Capital Gains Yield = ($1,000 - $950) / $950 = 0.0526 or 5.26%.
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Conflict can result in better performance in which of the following situations?
Task conflict is low and relationship conflict is moderate.
Task conflict and relationship conflict are high.
Task conflict is moderate and relationship conflict is low.
Task conflict is high and relationship conflict is high.
2.Which of the following is considered to be most important in resolving cross-cultural conflict?
nurturing others
building rapport through conversation
being a good listener
avoiding conflict
3.Keisha was promoted to assistant manager. Steve thought that he should have been promoted, while Allison felt that Keisha was the best choice. Steve and Allison have frequent conflicts because Steve keeps pointing out ways that he would have handled different situations more effectively than Keisha. Which of the following best describes the conflict between Steve and Allison?
substantive conflict
process conflict
affective conflict
factual conflict
4.Which of the following best describes a situation in which someone’s behavior is evaluated by someone at an equivalent level of power?
mediation
peer review
conciliation
conciliation
5.According to studies in the text, U.S. negotiators are more likely than Chinese negotiators to focus on deriving self-worth from individual achievements, known as ______.
dignity
face
pride
honor
1. Conflict can result in better performance in the situation where task conflict is moderate and relationship conflict is low.
2. Building rapport through conversation is considered most important in resolving cross-cultural conflict.
3. The conflict between Steve and Allison can be described as affective conflict.
4. Peer review best describes a situation in which someone's behavior is evaluated by someone at an equivalent level of power.
5. U.S. negotiators are more likely than Chinese negotiators to focus on deriving self-worth from individual achievements, known as pride.
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You decide to create a bull spread on a stock, anticipating the stock price will increase.
You sell a 6-month call option for $2.83/share with a strike price of $45.00, and you buy a call
option for $5.11/share with a strike price of $40.00. The current spot price is $42.00, and assume
an interest rate of 3% per annum.
a. What is the initial cost per share of entering this position?
b. Draw a profit diagram of this position. Clearly indicate all breakeven points, intercepts,
and the heights of all lines where applicable (biggest loss, biggest gain).
c. Indicate your payoff and profit given the following final stock prices:
Payoff Profit
St = $38.75
St = $41.50
St = $50.42
(a). The initial cost per share of entering this position is $2.28.
(b). The maximum profit is the difference between the strike prices and the net cost of the spread.
(c). The profit will be equal to the difference between the strike price and the net cost of the spread. The payoff will be the profit plus the net cost of the spread.
(a). What is the initial cost per share of entering this position?
The net cost of a bull spread is calculated as follows:
Net cost = Cost of long call – cost of short call
The cost of a long call is $5.11, and the cost of a short call is $2.83.
As a result, the net cost is:
Net cost = $5.11 – $2.83
Net cost = $2.28
Therefore, the initial cost per share is $2.28.
(b). Draw a profit diagram of this position. Clearly indicate all breakeven points, intercepts, and the heights of all lines where applicable (biggest loss, biggest gain).
The bull spread's profit diagram is shown below. Let's look at the diagram below to see where the break-even points are.
The red line represents the price of the stock at expiration, whereas the blue line represents the profit/loss graph of the bull spread. The maximum loss is the amount paid for the spread, or $2.28.
The break-even points are $42.28 and $47.72, which are determined by adding and subtracting the net cost of the spread to and from the lower strike price and the upper strike price, respectively.
The maximum profit is the difference between the strike prices and the net cost of the spread ($5.00 - $2.28 = $2.72).
(c). Indicate your payoff and profit given the following final stock prices:
Payoff Profit St = $38.75, $0.00, $0.00
St = $41.50, $0.00, $0.00
St = $50.42, $2.42, $0.14
Note: Since the price of the stock at expiration is greater than the higher strike price of $45.00, both options will be in the money.
Therefore, the profit will be the difference between the spread's net cost and the strike price. The payout will consist of the profit plus the spread's net cost.
If the stock price is below $45.00, the short call option will be out of the money, and the holder will retain the premium.
If the stock price is above $40.00, the long call option will be in the money, and the holder will profit.
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The sole proprietor must file a separate tax return for his business income. True False
In the case of a sole proprietorship, the business income is reported on the owner's personal tax return. the answer is False.
The sole proprietor does not file a separate tax return for the business income. The business income, deductions, and credits are reported on Schedule C of the owner's personal tax return (Form 1040).A sole proprietor is an individual who owns and operates a business on their own. They are the sole owner of the business and have full control and responsibility for its operations. As a sole proprietor, the individual assumes all risks and liabilities associated with the business and retains all profits generated from it.
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Assuming all ether requirements are mot, which of the following taxpayers do NOT qualify for the 2021 Earned income Tax Credit?
Previous question
The Earned Income Tax Credit (EITC) is a tax benefit available to low-to-moderate-income individuals and families.
To determine which taxpayers do not qualify for the 2021 EITC, we need to consider the eligibility criteria set by the Internal Revenue Service (IRS).
1. High income: Taxpayers with higher incomes may exceed the income limits set for EITC eligibility.
2. Filing status: Certain filing statuses, such as Married Filing Separately, are generally not eligible for the EITC.
3. Investment income: Taxpayers with significant investment income (such as dividends, interest, or capital gains) exceeding the specified limit are usually disqualified.
It's important to note that eligibility for the EITC depends on various factors, including income, filing status, and the number of qualifying children. It is recommended to review the specific eligibility criteria provided by the IRS or consult with a tax professional for accurate determination.
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Consider the following scenario:
Your school has been asked to participate in a pilot program within your district that is dealing with facility efficiencies. Participation in the program will require your school to begin and end operations one hour later than the standard within your community. Your principal has agreed to become part of the pilot program. During the first week of school, it is clear that there are many conflict issues that are surfacing. One issue of major concern to the school is the complaints coming from parents and students regarding late bus rides and late nights completing homework. During class and in the hallways, students are overhearing complaints and reactions from the teachers about the new schedule. Your principal knows that you have been focusing on conflict management and conflict resolution in your course work and has asked you to develop a conflict resolution procedure to address this and similar problems.
Based on the scenario, discuss the following:
What would be the core elements of a conflict resolution procedure that you would develop?
As a leader, what would concern you most if this situation arose? Why?
What do you think about other solutions proposed by the class?
What would you change or improve about some of the other approaches to the situation?
Core elements of conflict resolution: open communication, problem-solving, active listening, collaboration, finding solutions, and maintaining a positive school environment.
Core elements of a conflict resolution procedure would include open communication channels, a structured process for addressing concerns, active listening, collaboration, mediation or negotiation techniques, and a focus on finding mutually acceptable solutions.
As a leader, I would be most concerned about the negative impact on student and parent satisfaction, as well as the potential disruption to the learning environment. It is important to address these concerns promptly to maintain a positive school culture and ensure that students can focus on their academic responsibilities.
Regarding other solutions proposed by the class, it would be valuable to consider their perspectives and ideas. Collaborative problem-solving and incorporating diverse viewpoints can lead to more comprehensive and effective solutions. However, it is crucial to assess the feasibility and potential impact of each proposed solution before implementing it.
To improve other approaches, I would suggest conducting a survey or gathering feedback from parents, students, and teachers to better understand their specific concerns and suggestions. This information can inform the development of a tailored conflict resolution procedure that addresses the key issues raised and fosters a supportive and productive school environment. Additionally, providing clear and consistent communication about the purpose and benefits of the pilot program can help alleviate concerns and manage expectations.
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Which of the following is true for the Heckscher-Ohlin Model? A) it predicts factor price equalization. B) it predicts everyone will benefit from trade. C) it predicts everyone in the Ilome country benefits from trade. D) it predicts everyone in the Foreign country benefits from trade.
The statement true for Heckscher-Ohlin Model is it predicts factor price equalization. . Option A
The Heckscher-Ohlin Model, also known as the factor proportions theory, is an economic theory that explains international trade patterns based on differences in factor endowments between countries.
One of the key predictions of the Heckscher-Ohlin Model is factor price equalization. According to this concept, trade between countries with different factor endowments will lead to the equalization of factor prices, specifically the prices of the factors of production.
This prediction is based on the assumption that factors of production, such as labor and capital, are relatively immobile between countries in the short run, but can move freely within a country.
As trade occurs, the increased demand for factors of production in countries that are relatively scarce in those factors leads to an increase in their prices, while the relatively abundant factors experience a decrease in their prices. Over time, this process is expected to result in factor price equalization.
Option A
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What do the terms acculturation and enculturation
mean and how do they relate to consumer
socialisation?
1. Acculturation involves adapting to a new culture, while enculturation is the internalization of one's own culture's beliefs and behaviors.
2. Both acculturation and enculturation influence consumer socialization by shaping individuals' attitudes, preferences, and behaviors related to consumption within a specific cultural context.
Acculturation and enculturation are both processes of cultural learning and adaptation.
Acculturation refers to adapting to a different or dominant culture, incorporating its traits while retaining elements of one's own culture. Enculturation involves learning and internalizing the cultural beliefs and behaviors of one's own culture during childhood and socialization experiences.
These processes relate to consumer socialization, which is the acquisition of knowledge, attitudes, and behaviors related to consumption within a specific culture.
Acculturation influences consumer socialization by shaping preferences and behaviors in a new cultural context, while enculturation forms the foundation of consumer socialization by imparting cultural norms and values regarding consumption within one's own cultural group.
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(a) As a first-year MBA student, you have been tasked to write a brief proposal on a project that seeks to improve vehicular traffic on CU campus. Write your response based on the following:
i) Title
ii) Background of the Project
iii) Problem Statement (Explanation of the nature of problem)
iv) Purpose of the Project (Main and Specific aims)
v) Approach (Methodology)
vi) Significance of the Project
vii) Foreseeable Challenges
(b) Distinguish between validity and reliability
(c) Explain the difference between the following two forms of reliability test
i. Test retest
ii. Alternative forms
(a) As a first-year MBA student, I have been tasked to write a brief proposal on a project that seeks to improve vehicular traffic on CU campus.
i) Title: Vehicular traffic optimization on the CU Campus
ii) Background of the Project: Traffic congestion has been a significant problem on the CU campus, leading to an increase in the average travel time for students, faculty, and other visitors.
iii) Problem Statement: Traffic congestion on the CU campus causes significant issues and delays for students and faculty members.
iv) Purpose of the Project: The primary aim of this project is to optimize vehicular traffic on the CU campus. The specific objectives are to identify traffic bottlenecks, develop and implement traffic optimization strategies, and reduce travel time for students and faculty members.
v) Approach: The project will start by gathering traffic data to identify problem areas. The data will be analyzed to come up with traffic optimization strategies, which will then be implemented and monitored for effectiveness.
vi) Significance of the Project: The optimization of vehicular traffic on the CU campus will lead to reduced travel time for students and faculty members, improved air quality, reduced traffic-related accidents, and increased campus security.
vii) Foreseeable Challenges: The primary challenges of the project are obtaining accurate data and implementing the necessary changes without disrupting campus activities.
(b) Validity is the degree to which a test measures what it is intended to measure. Reliability is the consistency of results obtained by a test over time and across conditions. The difference between validity and reliability is that while validity assesses whether a test is measuring what it is supposed to measure, reliability assesses whether the results of the test are consistent and reliable over time and across different conditions.
(c) Test-retest reliability assesses the consistency of test results over time. The same test is administered twice, and the scores of the two administrations are compared to assess the consistency of the results. Alternative forms reliability assesses the consistency of results between different versions of the same test. Two different versions of the same test are administered, and the results are compared to assess the consistency of the results.
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The Brownstone Corporation’s bonds have 5 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 9%.
a. What is the yield to maturity at a current market price of (1) $829 or (2) $1,104? b. Would you pay $829 for one of these bonds if you thought that the appropriate rate of interest was 12%—that is, if rd 5 12%? Explain your answer. Please write the solution manual (NO EXCEL)
The yield to maturity (YTM) for Brownstone Corporation's bonds can be calculated using the present value formula.
Given a coupon interest rate of 9%, a $1,000 par value, and 5 years remaining to maturity, we can determine the YTM at different market prices.
a. For a market price of $829:
To find the YTM, we need to solve for the discount rate (rd) in the present value formula. The formula is: Market Price = Coupon Payment × (1 – 1 / (1 + rd)^n) / rd + Par Value / (1 + rd)^n, where n is the number of years to maturity.
$829 = $90 × (1 – 1 / (1 + rd)^5) / rd + $1,000 / (1 + rd)^5
Using a financial calculator or trial and error, the YTM for a market price of $829 is approximately 14.85%.
For a market price of $1,104:
Similarly, we can calculate the YTM using the same formula:
$1,104 = $90 × (1 – 1 / (1 + rd)^5) / rd + $1,000 / (1 + rd)^5
By solving this equation, we find that the YTM for a market price of $1,104 is approximately 5.02%.
b. If the appropriate rate of interest (rd) is 12%, and the bond's YTM is higher than the expected interest rate, it implies that the bond is offering a higher return than the prevailing market rate. Therefore, it would be advisable to consider purchasing the bond at a market price of $829. The bond's YTM of 14.85% is greater than the required return of 12%, indicating a potentially attractive investment opportunity.
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The policy where a central bank influences the level of short-term interest rates in order to affect inflation is:
a. monetary policy.
b. fiscal policy.
c. economic policy.
d. inflation rate policy.
The policy in which a central bank modifies the level of short-term interest rates in order to affect inflation is:
a. monetary policy.
The policy where a central bank influences the level of short-term interest rates to affect inflation is monetary policy. Monetary policy is the process by which a country's monetary authority manages the supply and demand of money in the economy to achieve specific economic goals.
It involves adjusting the central bank's interest rates, buying or selling government securities, and controlling the supply of money to influence the economy's growth rate, employment level, and inflation. Therefore, the answer is a. monetary policy.
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Find the yield-to-maturity for a bond that pays semiannual coupons. The face value is $1,000, coupon rate is 14.47%, and the bond will mature in 13 years. The current price of the bond is 942.26.
According to the question the yield-to-maturity for this bond is approximately 8.26%.
The yield-to-maturity for a bond that pays semi-annual coupons and has a face value of $1,000, coupon rate of 14.47%, and matures in 13 years can be found using the following steps:
Step 1: Calculate the semi-annual coupon payment The annual coupon payment is calculated as follows:
Annual coupon payment = Coupon rate * Face value
Annual coupon payment = 14.47% * $1,000
Annual coupon payment = $144.7
The semi-annual coupon payment is half the annual coupon payment:
Semi-annual coupon payment = Annual coupon payment / 2
Semi-annual coupon payment = $144.7 / 2
Semi-annual coupon payment = $72.35
Step 2: Determine the total number of semi-annual coupon payments The bond will mature in 13 years, and since it pays semi-annual coupons, it will make 26 coupon payments (2 payments per year x 13 years).
Step 3: Determine the current yield The current yield is the semi-annual coupon payment divided by the current price of the bond and multiplied by 100.
Current yield
= (Semi-annual coupon payment / Current price) x 100
Current yield = ($72.35 / $942.26) x 100
Current yield = 7.67%
Step 4: Use an online calculator or financial formula to find the yield-to-maturity Based on the above values,
the yield-to-maturity can be found using an online calculator or financial formula.
Using a financial calculator, the yield-to-maturity is approximately 8.26%.
Therefore, the yield-to-maturity for this bond is approximately 8.26%.
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Democracy (and the form it should take) was an issue of concern and debate among scholars following World War I. Identify the two parties (groups) involved in the debate about democracy’s application to industrial contexts and describe the beliefs held by each of these two parties. Which side did the Human Relations Approach represent? Explain.
The supporters of liberal democracy believed that democracy should be limited to the political sphere and that industrial relations should be governed by market forces and private property rights.
Following World War I, scholars engaged in a debate about the application of democracy to industrial contexts. The two parties involved in this debate were the advocates of industrial democracy and the supporters of liberal democracy.
The advocates of industrial democracy believed that democracy should be extended to the workplace, giving workers a voice in decision-making processes. They argued that workers should have a say in issues such as wages, working conditions, and labour policies.
This group believed that industrial democracy would lead to greater worker satisfaction, improved productivity, and reduced conflicts between management and labour.
On the other hand, liberal democracy proponents held that market forces and private property rights should regulate labour relations and that democracy should be restricted to the political realm.
They argued that workers' interests could be adequately represented through labour unions and collective bargaining. This group believed that a free market system would ensure economic efficiency and individual freedom.
The Human Relations Approach represented the side of the advocates of industrial democracy. This approach emphasized the importance of understanding and improving the relationships between workers and management in order to enhance productivity and worker satisfaction.
It recognized the need for worker participation in decision-making and aimed to create a more democratic and cooperative workplace.
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Joker stock has a sustainable growth rate of 8 percent, ROE of
13 percent, and dividends per share of $3.05. If the PE ratio is
19.5, what is the value of a share of stock?
The value of a share of stock using the provided information is approximately -$114.41.
To calculate the value of a share of stock using the sustainable growth rate (g), return on equity (ROE), dividends per share (DPS), and price-to-earnings ratio (PE ratio), we can utilize the Gordon Growth Model. The formula for the Gordon Growth Model is as follows:
Stock Value = DPS * (1 + g) / (r - g)
Where:
- DPS is the dividends per share
- g is the sustainable growth rate
- r is the required rate of return (inverse of the PE ratio)
Let's calculate the stock value using the provided values:
DPS = $3.05
g = 8% or 0.08
PE ratio = 19.5
First, we need to calculate the required rate of return (r):
r = 1 / PE ratio
r = 1 / 19.5
r ≈ 0.0513
Now, we can substitute the values into the formula:
Stock Value = $3.05 * (1 + 0.08) / (0.0513 - 0.08)
Stock Value ≈ $3.05 * 1.08 / (-0.0287)
Stock Value ≈ $3.294 / (-0.0287)
Stock Value ≈ -$114.41
Based on the calculation, the value of a share of stock using the provided information is approximately -$114.41.
However, it's important to note that negative values don't make practical sense for stock prices. It's possible there may be an error in the given values or calculations. Please double-check the information provided or consult additional sources to ensure accuracy.
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Suppose that the production of a $29,860 automobile in the U.S. requires $10,475 worth of steel. If the nominal tariff rates in the U.S. for importing these goods are 7.45 percent for automobiles and 9.85 percent for steel then the effective rate of protection for the U.S. automobile industry is A. more than negative 1.6 percent but less than negative 0.2 percent. B. more than negative 0.2 percent but less than 1.2 percent. C. more than 1.2 percent but less than 2.6 percent. D. more than 2.6 percent but less than 4.0 percent. E. more than 4.0 percent but less than 6.4 percent. 2. Suppose that the autarky equilibrium quantity in the U.S. domestic market for steel has been 90 tons per month at a price of $400 per ton. If the domestic market is allowed to open to free trade, then the new equilibrium price is $280 per ton. At the price of $280 per ton, the domestic market produces 48 tons and 82 tons are imported each month. If the U.S. imposes a specific tariff in the amount of $40 per ton, then the new market price is $310 and the amount produced by domestic producers moves to 72 tons per month as the amount of imports becomes 42 tons per month. Given the imposition of this tariff, which of the following statements is (are) correct? (x) The imposition of the tariff caused a reduction in consumer surplus in an amount that is more than $3,590 but less than $3,715. (y) The imposition of the tariff caused a protective effect of more than $205, but less than $225 and a deadweight loss that is more than $445 but less than $460. (z) The imposition of the tariff caused a domestic revenue effect of more than $1,670, but less than $1,695 and a terms-of-trade effect that is more than $436 but less than $448. A. (x), (y) and (z) B. (x) and (y) only C. (x) and (z) only D. (y) and (z) only E. (y) only 3. Which of the following statements is (are) correct? (x) A tariff can increase the welfare of a "large" country if the favorable terms-of-trade effect is greater than the unfavorable protective effect and consumption effect. (y) Assume that Japan is a large country and levies an "optimal tariff." In this case, the tariff's terms of trade effect more than offsets the consumption and production losses and the tariff results in an overall welfare gain for Japan. (z) For small countries, free trade results in a higher level of national welfare than tariff protection. A. (x),(y) and (z) B. (x) and (y) only C. (x) and (z) only D. (y) and (z) only E. (x) only
The effective rate of protection is more than 1.2 percent but less than 2.6 percent. So the answer is C.
How to solveThe effective rate of protection is calculated as:
(domestic price - world price)/(world price)
In this case, the world price of an automobile is $29,860 and the world price of steel is $10,475.
The domestic price of an automobile is $29,860 + $10,475 = $40,335.
The effective rate of protection is then:
(40,335 - (29,860 * 1.0745 + 10,475 * 1.0985)) / (29,860 * 1.0745 + 10,475 * 1.0985)
= 0.2045
Therefore, the effective rate of protection is more than 1.2 percent but less than 2.6 percent. So the answer is C.
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There are two future states and two securities with the associated payments matrix (states x securities) Q=([8,2],[2,8]) ∘
The first security current arbitrage-free price is 2.7 and the second security current arbitrage-free price is 6.2. Compute the discount factor (round your answer to 2 decimal points if necessary). Hint the calculations do not require matrix inverse Suppose there are two periods: current and future, and three possible states in the future period, Good (G), Fair (F) and Bad (B). Three major financial instruments. T-bill, the Nasdaq index fund, and the Dow Jones index fund, are available on the market. They have the following payoffs in each state. The current arbitroge free-price of T-bill is 9 and the following information about the arbitrage-free atomic prices is known: PG = 0.23, PB=0.36 Compute the atomic price of the Fair state. Enter your answer using 2 decimal points. Risk-neutral probabilities are always Select one: negative equal to atomic prices equal to physical probabilities equal to forward atomic prices less than physical probabilities
The atomic price of the fair state is 0.41.
the discount factor can be computed by dividing the future payments matrix by the current prices matrix:discount factor = payments matrix / prices matrix
using the given payments matrix q=([8,2],[2,8]) and the current prices matrix p=([2.7],[6.2]), we can compute the discount factor as follows:discount factor = q / p
discount factor = ([8/2.7, 2/2.7], [2/6.2, 8/6.2])simplifying the calculations, we get:
discount factor = ([2.963, 0.741], [0.323, 1.290]), the discount factor, rounded to 2 decimal points, is:
discount factor = ([2.96, 0.74], [0.32, 1.29]).for the second question:
to compute the atomic price of the fair state, we can use the formula:atomic price of fair state = (1 - pg - pb)
given that pg = 0.23 and pb = 0.36, we can calculate:atomic price of fair state = (1 - 0.23 - 0.36)
atomic price of fair state = 0.41 regarding the risk-neutral probabilities, they are equal to the atomic prices. in this case, the risk-neutral probability for the fair state is 0.
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the stock paid $1.44 per share in cash dividends. Sara was charged 5.1% annual interest on the margin loan. The minimum maintenance margin was 25%. a. Calculate the initial value of the transaction, the debit balance, and the equity position on Sara's transaction. (1) $175.71, (2) $206.15, and (3) $122.73. c. Calculate the dollar amount of (1) dividends received and (2) interest paid on the margin loan during the 6-month holding period. d. Use each of the following sale prices at the end of the 6-month holding period to calculate Sara's annualized rate of return on the Apple stock transaction: (1) $185.72, (2) $195.59, and (3) $206.41. a. The initial value of the transaction is 9 (Round to the nearest cent.) The debit balance is $ (Round to the nearest cent.) The equity position is 9 (Round to the nearest cent.) b. (1) If the share price falls to $175.71, the actual margin percentage will be ; (Round to two decimal places.) The account in this case [_. (Select from the drop-down menu.) (2) If the share price rises to $206.15, the actual margin percentage will be ． (Round to two decimal places.) The account in this case 1. (Select from the drop-down menu.) (3) If the share price falls to $122.73, the actual margin percentage will be %. (Round to two decimal places.) The account in this case (Select from the drop-down menu.) c. (1) During the 6-month holding period, the dividends received are ؟ (Round to the nearest cent.) (2) During the 6-month holding period, the interest paid is $ (Round to the nearest cent.)
a. The initial value of the transaction was $175.71 per share x 100 shares = $17,571. The debit balance was $17,571 x (1 - 0.25) = $13,178.25.
The equity position was $17,571 - $13,178.25 = $4,392.75.
What is the dollar amount of dividends?c. The dollar amount of dividends received was $1.44/share x 100 shares = $144.
The dollar amount of interest paid on the margin loan during the 6-month holding period was $13,178.25 x 5.1% x 0.5 = $336.05.
Here is a summary of the answers:
Value Amount
Initial value of the transaction $17,571
Debit balance $13,178.25
Equity position $4,392.75
Dividends received $144
Interest paid on margin loan $336.05
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You want to buy an Audi Q3 on your 26th birthday. You have priced these cars and found that they currently sell for $40,400. You believe that the price of this model will increase by 3% per year until you are ready to buy. You can presently invest to earn 6.5% annually. If you have just turned 20 years old, how much must you invest per year to be able to purchase the car in cash in 6 years?
If you have just turned 20 years old, you must invest approximately $5,560 per year to be able to purchase the Audi Q3 in cash in 6 years.
To calculate the annual investment needed, we need to find the future value of the car's price after 6 years with a 3% annual increase. Using the future value formula, FV = PV x [tex](1 + r)^n[/tex], where PV is the present value, r is the annual increase rate, and n is the number of years, we can determine the future value of the car to be $40,400 x [tex](1 + 0.03)^6[/tex] = $47,491.
Next, we calculate the present value of the required investment by using the present value of an ordinary annuity formula,
PV = PMT x [(1 - [tex](1 + r)^{(-n)[/tex]) / r], where PMT is the annual investment, r is the annual interest rate, and n is the number of years.
Plugging in the values, we have $47,491 = PMT x [(1 - [tex](1 + 0.065)^{(-6)[/tex]) / 0.065]. Solving for PMT, we find that PMT ≈ $5,560.
Therefore, you must invest approximately $5,560 per year to accumulate enough funds to purchase the Audi Q3 in cash in 6 years, considering the anticipated price increase and the desired investment return rate.
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Discuss the types of pension schemes and the role of retirements
Benefits Authority
There are three types of pension schemes: Personal Pension Scheme (PPS), Defined Benefit Scheme, and Defined Contribution Scheme.
Personal Pension Scheme (PPS):
A personal pension plan is a scheme in which the pensioner makes payments into a fund which is then used to pay a pension at retirement. The plan is entirely self-contained, with the person selecting and maintaining the investment and receiving the benefits upon retirement. They can be used by anyone who isn't already a part of an occupational scheme.
Defined Benefit Scheme:
This type of plan is based on the worker's final salary. The plan will pay out a proportion of the worker's final salary as a pension at retirement. The benefits of a defined benefit scheme are the most predictable. The employer is responsible for funding the plan, and the benefits paid out to the employee are determined by the length of service and final salary. Defined benefit schemes are becoming less common in favor of defined contribution plans.
Defined Contribution Scheme:
This type of plan is based on the contributions made to the scheme, which are invested by the employer. The benefit received by the employee is determined by the amount contributed to the scheme and the performance of the investments. The risks associated with defined contribution plans are borne by the employee, not the employer.
Retirement Benefits Authority (RBA)
The Retirement Benefits Authority (RBA) is a public institution established under the Retirements Benefits Act, No. 3 of 1997. It is charged with supervising and regulating the establishment and management of retirement benefits schemes. The RBA is also responsible for supervising and regulating the investment of retirement funds. The RBA's mandate includes ensuring that all retirement benefit schemes comply with the provisions of the law.
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Which of the following are the main characteristics of an Agile Team? Choose the correct answers and select Next to continue. A. Collaboration and Communication B. Transparency C. Building in Quality D. Limiting Work in Progress (WIP)
The following are the main characteristics of an Agile Team: Collaboration and Communication, Transparency, Building Quality, and Limiting Work in Progress (WIP). The correct options are A, B, C, and D.
The correct answers are:
A. Collaboration and Communication
B. Transparency
C. Building in Quality
D. Limiting Work in Progress (WIP)
These are indeed the main characteristics of an Agile team. Agile emphasizes the importance of collaboration and effective communication among team members. Transparency is crucial to ensure that everyone has visibility into the project's progress and challenges. Building in quality means that the team focuses on delivering high-quality work throughout the development process. Lastly, limiting work in progress helps the team maintain focus and avoid overloading themselves with too many tasks at once.
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QUESTION
Signature Corp. has WACC of 12%. Its capital structure is based on 100% equity but it has ability to borrow at a rate of 10%. Compute the followings:
a. The Cost of equity of Signature Corp.;
[3 marks]
b. If Signature Corporation converts to 75% equity, calculate its cost of equity.
[7 marks]
c. If Signature Corporation converts to 50% equity, calculate its cost of equity.
7 marks]
ii. Atalian Manufacturing Ltd. Uses 1,900 switch assemblies per week and then reorder another 1,900. If the
relevant carrying cost per switch assembly is $9, and the fixed order cost is $850. Is Atalian's inventory policy
optimal? Explain.
Atalian Manufacturing Ltd.'s inventory policy is not optimal, as the fixed order cost is low.
a. To calculate the cost of equity (Ke) for Signature Corp., we can use the formula:
Ke = WACC - (D/E) * (WACC - Kd)
Where:
WACC = Weighted Average Cost of Capital = 12%
D/E = Debt-to-Equity ratio = 0 (since the company has 100% equity)
Kd = Cost of debt = 10%
Since the company has no debt (D/E = 0), the second term in the formula becomes 0. Therefore, the cost of equity is equal to the WACC:
Ke = 12%
b. If Signature Corporation converts to 75% equity, we need to calculate the new cost of equity. Let's denote the new cost of equity as Ke_new. The formula to calculate Ke_new is:
Ke_new = WACC - (D/E_new) * (WACC - Kd)
Where:
WACC = Weighted Average Cost of Capital = 12%
D/E_new = Debt-to-Equity ratio after conversion = 25% debt (75% equity)
Kd = Cost of debt = 10%
Substituting the values into the formula, we get:
Ke_new = 12% - (0.25) * (12% - 10%)
= 12% - (0.25) * (2%)
= 11.5%
Therefore, the cost of equity after converting to 75% equity is 11.5%.
c. Similarly, if Signature Corporation converts to 50% equity, we can calculate the new cost of equity (Ke_new) using the same formula as before:
Ke_new = WACC - (D/E_new) * (WACC - Kd)
Where:
WACC = Weighted Average Cost of Capital = 12%
D/E_new = Debt-to-Equity ratio after conversion = 50% debt (50% equity)
Kd = Cost of debt = 10%
Substituting the values into the formula, we get:
Ke_new = 12% - (0.5) * (12% - 10%)
= 12% - (0.5) * (2%)
= 11%
Therefore, the cost of equity after converting to 50% equity is 11%.
ii. To determine whether Atalian Manufacturing Ltd.'s inventory policy is optimal, we need to compare the carrying cost and the fixed order cost.
The carrying cost is the cost of holding inventory over a period, and in this case, it is given as $9 per switch assembly. The fixed order cost is the cost incurred each time an order is placed, and it is $850.
In this scenario, we have 1,900 switch assemblies reordered each time. Since the carrying cost per switch assembly is $9, the total carrying cost for each reorder is $9 * 1,900 = $17,100. The fixed order cost is $850.
To determine if the inventory policy is optimal, we need to compare the carrying cost and the fixed order cost. In this case, the fixed order cost is much lower than the carrying cost ($850 vs. $17,100), indicating that the fixed order cost is relatively insignificant compared to the carrying cost.
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5. Producers of a brand of nfrigerator will make 2000 refrigerators avallable when the unit price is 5330 . At a unit priee of $390, 6000 refrigeratons will be marketed. Find the equations rolating the unit prion of a refrigerator to the quantity supplied if the iquation 6 known to be linear. How many refrigeratons will be marketed when the unit price is 8400 ? What is the lowest jotice at which a refrigerator will be marketed?
To find the equations relating the unit price of a refrigerator to the quantity supplied, we can use the information given: When the unit price is $5330 and 2000 refrigerators are available, and when the unit price is $390 and 6000 refrigerators are marketed.
Let's denote the unit price as P and the quantity supplied as Q. Using the two data points, we can form two equations: where a and b are coefficients to be determined. Solving these equations simultaneously, we find a = -1.2 and b = 9540.Therefore, the equation relating the unit price to the quantity supplied is Q = -1.2P + 9540. To find the quantity marketed when the unit price is $8400, we substitute P = 8400 into the equation: The lowest price at which a refrigerator will be marketed can be found by setting the quantity supplied or marketed to zero in the equation: Therefore, the lowest price at which a refrigerator will be marketed is $7950. Find the equations relating the unit prion of a refrigerator to the quantity supplied if the equation 6 known to be linear.
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A payday loan is listed at 250% APR compounded daily, defining one year as 365 days. If you borrowed $1000 for 19 days how much will you owe and what is the EAR of this loan closest to? A) $1130.14 and the EAR is 1107.91% B) $1130.14 and the EAR is 250% C) $1138.48 and the EAR is 1107.91%`1 D) $1138.48 and the EAR is 250% E) Cannot be computed with the information given
Given that, A payday loan is listed at 250% APR compounded daily, defining one year as 365 days, borrowed $1000 for 19 days. The correct answer is option C) $1138.48 and the EAR is 1107.91%.
We need to find out how much will you owe and what is the EAR of this loan closest to.To find the amount to be paid back, we use the formula,
Where,A = the amount to be paid back , P = the principal amount, r = interest rate, n = number of times the interest is compounded in a year. t = timeFor this question,
`P = $1000`r = 250% = 2.5n = 365t = 19/365 = 0.0521 (in years)So,`A= 1000*(1+(0.025/365))^(365*0.0521)`We get,`A = $1138.48`Therefore, the amount to be paid back is $1138.48. We can find the EAR using the formula,
`EAR = (1 + (APR/n))^n -1`Where APR is the Annual Percentage Rate, n is the number of times the interest is compounded in a year.For this question,
`APR = 250%`n = 365EAR `= (1+(0.025/365))^365-1`We get,`EAR = 1107.91%`Therefore, the EAR of this loan closest to is 1107.91%. The correct option is C) $1138.48 and the EAR is 1107.91%.
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John, a cashier for QwikStop is working late one evening and decides to take some money from the store cash register. He pulls a $100 bill from the register and places it in his pocket. If John is subsequently arrested and charged with the wrongful conversion of another's property by one lawfully in possession of that property, what crime has John committed? Burglary Embezzlement Larceny Forgery False Pretenses
The crime that John has committed is larceny. Larceny is defined as the wrongful or fraudulent taking of someone else's property without their permission with the intent to deprive them of it permanently.
It can be either grand or petty larceny, depending on the value of the property taken. Petty larceny usually involves the theft of items worth less than a certain amount of money, while grand larceny involves the theft of more expensive items or large amounts of money. In this scenario, John committed larceny when he took the $100 bill from the cash register without permission, and with the intent to deprive the store of it permanently.
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Jack purchased a share one year ago for $9.12, and it is now worth $11.86. The share paid a dividend of $1.74 during the year. What was the share's income rate of return during the year? (as a percentage to the nearest two decimal points. don't use % sign. eg 2.881% is 2.88) Answer: _______
The share's income rate of return during the year is approximately 28.36%.
To calculate the share's income rate of return, we need to consider the change in value and the dividends received during the year.
Step 1: Calculate the change in value of the share.
Change in value = Final value - Initial value
= $11.86 - $9.12
= $2.74
Step 2: Calculate the income from dividends.
Income from dividends = Dividend received = $1.74
Step 3: Calculate the income rate of return.
Income rate of return = (Change in value + Dividend) / Initial value * 100
= ($2.74 + $1.74) / $9.12 * 100
≈ 28.36%
Therefore, the share's income rate of return during the year is approximately 28.36%.
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(a) We saw in Chapter 4 that the TFP for Brazil is about 0.43 (=43%). Briefly and clearly explain what this number 0.43 tells us.
(b) Relative to the USA, Argentina's y = 0.30 and k = 0.18. Calculate its TFP (A) using
the production model we studied (round to the 2nd decimal place).
(a) The TFP (Total Factor Productivity) of Brazil being 0.43 indicates that the country's overall efficiency in combining inputs, such as labor and capital, to produce output is 43% of the maximum achievable efficiency. TFP measures the portion of output that cannot be attributed to the quantity of inputs alone. In other words, it represents the level of technological progress, managerial efficiency, and other factors that contribute to output beyond the inputs used. A TFP of 0.43 suggests that there is room for improvement in terms of enhancing productivity and efficiency in Brazil's economy.
(b) To calculate Argentina's TFP (A), we can use the formula A = y / (k^0.3), where y represents output per unit of labor and k represents capital per unit of labor. Given that y = 0.30 and k = 0.18, we can substitute these values into the formula:
A = 0.30 / (0.18^0.3)
Calculating this expression, we find that Argentina's TFP (A) is approximately 0.725 (rounded to the 2nd decimal place). This indicates that Argentina's productivity level, relative to the United States, is about 72.5% of the maximum efficiency achievable given its inputs of labor and capital.
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What maximum price would you pay for a standard 8% level-coupon bond (with semiannual payments and a face value of $1,000 ) that has 10 years to maturity if the prevailing discount rate (your cost of capital) is an effective (APY) 10% per year?" $758.35 $875.38 $985.11 "$1,123.33"
The maximum price you would pay for the bond is $875.38. (Price)
To calculate the maximum price of the bond, we need to find the present value of the bond's future cash flows. The bond has a face value of $1,000, a coupon rate of 8% with semiannual payments, and a maturity of 10 years. The prevailing discount rate, or cost of capital, is an effective annual rate (APY) of 10%.
Using the formula for calculating the present value of a bond, we can determine the maximum price:
Price =[tex][C × (1 - (1 + r)^(-n)) / r] + (F / (1 + r)^n)[/tex]
Where C is the coupon payment, r is the discount rate per period, n is the total number of periods, and F is the face value.
In this case, C = $40 (8% of $1,000), r = 5% (10% APY divided by 2 for semiannual payments), n = 20 (10 years multiplied by 2 for semiannual payments), and F = $1,000.
Plugging these values into the formula, we get:
Price = [tex][($40 × (1 - (1 + 0.05)^(-20))) / 0.05] + ($1,000 / (1 + 0.05)^20) ≈ $875.38[/tex]
Therefore, the maximum price you would pay for the bond is approximately $875.38.
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Given the revenue function R=125Q−2.5Q^2
what is marginal revenue at Q=23 ?
a. 0
b.0.8
c.5
d. 10
Answer: d. 10.
The given revenue function is R = 125Q−2.5Q², and we need to find the marginal revenue at Q=23.
To find the marginal revenue, we take the first derivative of the given revenue function, which gives the marginal revenue.
Therefore, first, we find the revenue function's derivative.
dR/dQ= 125-5Q
To find the marginal revenue, we substitute Q=23 in the above equation.
=> dR/dQ= 125-5Q
=> dR/dQ= 125-5(23)
=> dR/dQ= 125-115
=> dR/dQ= 10
Therefore, the marginal revenue at Q=23 is 10.
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Abner Corporation's bonds mature in 22 years and pay 12 percent interest annually. If you purchase the bonds for $1,275, what is your yield to maturity?
Yield to maturityYield to maturity is the yield of a bond at the time of its maturity. The yield to maturity calculates the total return the bondholders earn from their investment, including annual interest payments and the gain or loss they make if the bond is purchased at a discount or premium.
It is usually expressed as an annual percentage rate (APR) and is used to compare different bonds with different face values and coupon rates. Calculation of yield to maturityA bond's yield to maturity can be calculated using a financial calculator, an online calculator, or a spreadsheet. Here's how to calculate the yield to maturity of a bond using a financial calculator or spreadsheet:PV = -$1,275 (present value of the bond, negative since it is a cash outflow)PMT = $120 (annual interest payment, which is 12% of the face value of $1,000)FV = $1,000 (face value of the bond, which is paid at maturity)N = 22 (years to maturity)Using the above inputs, the yield to maturity on the bond is 7.95%. Therefore, the yield to maturity on the bond is 7.95%.
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