the portfolio manager should invest $783,313.99 in the zero-coupon bond and $216,686.01 in the perpetuity.
The zero-coupon bond, in contrast to a traditional bond, pays no interest during its life but instead pays out a lump sum at maturity. The duration of a zero-coupon bond is generally equal to its maturity, which means that the longer the maturity, the greater the bond's duration. The perpetuity, also known as an infinite annuity, is a series of payments of a fixed amount that continues indefinitely, much like an annuity.In general, the duration of an asset portfolio reflects the length of time it takes for its cash flows to be earned. It calculates the average maturity of all of the portfolio's cash flows, weighted by the amount of money invested in each of them. A portfolio with a long duration is more sensitive to interest rate changes and is considered riskier. The duration of the zero-coupon bond is 6 years, whereas the perpetuity has an infinite maturity. Assume that the current yield on both bonds is 2%. In order to achieve the 24-year target duration of the portfolio, the portfolio manager should determine the appropriate proportion of each bond.The zero-coupon bond has a duration of 6 years, and its price is calculated as follows:P0 = FV/(1+r)n where r = yield, n = maturity, FV = Face valueP0 = $1000000/(1+0.02)6 = $810930.20The price of the perpetuity is calculated as follows:P0 = (CF)/(r-g) where CF = cash flow, r = yield, and g = growth rate.P0 = $1000000(0.02) = $50000.00The proportion of each bond to be held is calculated using the following formula :Proportion of bond = (duration of bond/total portfolio duration)*100% = (PV of bond/total portfolio value)*100%Zero-coupon bond duration = 6 years Proportion of zero-coupon bond = (6/24)*100% = 25%Perpetuity proportion = 75 percentLet X be the amount invested in the zero-coupon bond, and Y be the amount invested in the perpetuity.P0 = $810930.20X + $50000.00Y = $1000000.00Using linear equations, the following can be derived :X = (1000000 - 50000Y)/810930.20The total portfolio value is X + Y, and the respective proportions of each bond should be 25% and 75%.$810930.20X + $50000.00Y = $1000000.00X + Y = Portfolio value Substituting in X:($810930.20(1000000-50000Y)/810930.20) + Y = Portfolio value0.875Y =
$189630.52Y = $216686.01X = $783313.99Thus, the portfolio manager should invest $783,313.99 in the zero-coupon bond and $216,686.01 in the perpetuity.
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Stock in Daenerys Industries has a beta of 1.2. The market risk premium is 9 percent, and T-bills are currently yielding 4.6 percent. The company's most recent dividend was $1.80 per share, and dividends are expected to grow at an annual rate of 8 percent indefinitely. If the stock sells for $36 per share, what is your best estimate of the company's cost of equity? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Cost of equity %
If the stock sells for $36 per share then the best estimate of the company's cost of equity is 15.4%
How to find?The beta of the stock = 1.2Market risk premium = 9%, Risk-free rate = 4.6%Price of the stock = $36, Dividend per share = $1.80Dividend growth rate = 8%We are supposed to calculate the cost of equity of the company.Step 1: Calculate the expected return on the market.
Expected return on market = Risk-free rate + Market risk premium, Expected return on market = 4.6% + 9% = 13.6%Step 2: Calculate the cost of equity using the Capital Asset Pricing Model CAPM = Rf + beta(Rm - Rf), where,Rf = Risk-free rateRm = Expected return on marketBeta = beta of the stock.
CAPM = 4.6% + 1.2(13.6% - 4.6%)CAPM = 4.6% + 1.2(9%)CAPM = 4.6% + 10.8%CAPM = 15.4%.
Therefore, the best estimate of the company's cost of equity is 15.4%.
Thus, the required solution is: Cost of equity = 15.4% (rounded to two decimal places).
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Valley Company’s adjusted account balances from its general ledger on August 31, its fiscal year-end, follows. It categorizes the following accounts as selling expenses: sales salaries expense, rent expense—selling space, store supplies expense, and advertising expense. It categorizes the remaining expenses as general and administrative.
Adjusted Account Balances Debit Credit
Merchandise inventory (ending) $ 41,000
Other (non-inventory) assets 130,400
Total liabilities $ 25,000
K. Valley, Capital 104,550
K. Valley, Withdrawals 8,000
Sales 225,600
Sales discounts 2,250
Sales returns and allowances 12,000
Cost of goods sold 74,500
Sales salaries expense 32,000
Rent expense—Selling space 8,000
Store supplies expense 1,500
Advertising expense 13,000
Office salaries expense 28,500
Rent expense—Office space 3,600
Office supplies expense 400
Totals $ 355,150 $ 355,150
Beginning merchandise inventory was $25,400. Supplementary records of merchandising activities for the year ended August 31 reveal the following itemized costs.
Invoice cost of merchandise purchases $ 92,000
Purchases discounts received 2,000
Purchases returns and allowances 4,500
Costs of transportation-in 4,600
Required:
1. Compute the company’s net sales for the year.
2. Compute the company’s total cost of merchandise purchased for the year.
3. Prepare a multiple-step income statement that includes separate categories for net sales, cost of goods sold, selling expenses, and general and administrative expenses.
4. Prepare a single-step income statement that includes these expense categories: cost of goods sold, selling expenses, and general and administrative expenses.
5. Prepare closing entries as of August 31 (the perpetual inventory system is used)
Compute net sales, total cost of merchandise purchased, prepare multiple-step and single-step income statements, and make closing entries for Valley Company.
1. Compute the company’s net sales for the year.Net sales refer to the revenue earned by the company after deducting sales discounts and sales returns and allowances.Net Sales = Sales – Sales Discounts – Sales Returns and AllowancesNet Sales = $225,600 – $2,250 – $12,000 = $211,3502. Compute the company’s total cost of merchandise purchased for the year.Cost of merchandise purchased is the sum of invoice cost of merchandise purchases, purchases discounts received, purchases returns and allowances, and costs of transportation-in.Cost of merchandise purchased = Invoice cost of merchandise purchases – Purchases discounts received – Purchases returns and allowances + Costs of transportation-inCost of merchandise purchased = $92,000 – $2,000 – $4,500 + $4,600Cost of merchandise purchased = $89,1003. Prepare a multiple-step income statement that includes separate categories for net sales, cost of goods sold, selling expenses, and general and administrative expenses.The format for a multiple-step income statement is as follows:Valley CompanyIncome StatementFor the Year Ended August 31, 20XXNet Sales $211,350
Cost of Goods Sold
Beginning Inventory $ 25,400
Purchases 89,100
Cost of Goods Available for Sale $114,500
Ending Inventory (41,000)
Cost of Goods Sold $ 73,500
Gross Profit $137,850
Selling Expenses
Sales Salaries Expense $32,000
Rent Expense – Selling Space 8,000
Store Supplies Expense 1,500
Advertising Expense 13,000
Total Selling Expenses $54,500
General and Administrative Expenses
Office Salaries Expense $28,500
Rent Expense – Office Space 3,600
Office Supplies Expense 400
Total General and Administrative Expenses $32,500
Total Operating Expenses $87,000
Operating Income $ 50,850
4. Prepare a single-step income statement that includes these expense categories: cost of goods sold, selling expenses, and general and administrative expenses.The format for a single-step income statement is as follows:Valley CompanyIncome StatementFor the Year Ended August 31, 20XXRevenue $211,350
Cost of Goods Sold $73,500
Gross Profit $137,850
Operating Expenses
Selling Expenses $54,500
General and Administrative Expenses 32,500
Total Operating Expenses $87,000
Operating Income $50,850
5. Prepare closing entries as of August 31 (the perpetual inventory system is used)Closing entries are prepared to close the temporary accounts (revenue, expense, and withdrawal accounts) to the permanent account (capital account). The journal entry to close the revenue accounts is as follows:Aug. 31 Sales $225,600
Sales Discounts $2,250
Sales Returns and Allowances 12,000
Income Summary $ 211,350
(To close the revenue accounts)The journal entry to close the expense accounts is as follows:Aug. 31 Income Summary $87,000
Sales Salaries Expense $32,000
Rent Expense – Selling Space 8,000
Store Supplies Expense 1,500
Advertising Expense 13,000
Office Salaries Expense 28,500
Rent Expense – Office Space 3,600
Office Supplies Expense 400
(To close the expense accounts)The journal entry to close the Income Summary to the capital account is as follows:Aug. 31 Income Summary $ 50,850
K. Valley, Capital $ 50,850
(To close Income Summary to K. Valley, Capital)
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Define bull market and bear market. Explain the following technical indicators and discuss their buy signal: (a) bond default spread (b) exponential moving average (c) stochastic.
A bull market is characterized by rising prices and positive sentiment, while a bear market has declining prices and negative sentiment; the buy signals for the bond default spread, exponential moving average, and stochastic are a narrowing spread, price crossing above the EMA, and stochastic crossing above the oversold level, respectively.
A bull market is a financial market characterized by rising prices and positive investor sentiment, typically accompanied by optimism and a belief that upward price trends will continue. It is associated with increasing buying activity and often represents a strong economy.
(a) Bond default spread: The bond default spread is the difference in yields between a government bond and a corporate bond. A widening bond default spread indicates increased credit risk and investor concerns about the potential for corporate bond defaults. A buy signal in this context would occur when the bond default spread narrows, signaling reduced credit risk and increased investor confidence in corporate bonds.
(b) Exponential moving average (EMA): The exponential moving average is a technical indicator that calculates the average price of a security over a specific period, giving more weight to recent prices. A buy signal occurs when the security's price crosses above its EMA, indicating a potential upward trend and suggesting it may be a good time to buy the security.
(c) Stochastic: Stochastic is a momentum indicator used to identify overbought and oversold conditions in a security. It compares the security's closing price to its price range over a specified period. A buy signal is generated when the stochastic oscillator crosses above the oversold level (typically below 20), indicating a potential upward reversal and suggesting a buying opportunity.
It's important to note that technical indicators provide insights into market trends and potential buy or sell signals, but they should be used in conjunction with other analysis tools and considerations to make informed investment decisions.
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On October 31, the bank statement shows that your company has $14,756.73 in its checking account. You are aware of three outstanding checks that total $4,812.19. During October, the bank rejected two deposited checks from customers totaling $ 1,104.19 because of insufficient funds and charged you $48.00 in service fees. You had not yet received notice about the bad checks, but you were aware of and have recorded the $48.00 of service fees. Prior to adjustment on October 31, your Cash account would have a balance of: (Round your answer to 2 decimal places.)
Multiple Choice
$11,048.73.
$18,416.73.
$20,625.11.
$8,888.35.
The prior to adjustment balance of cash account would be $20,625.11.Given,Bank statement on October 31 = $14,756.73 Outstanding checks = $4,812.19
Deposited check from a customer, rejected by bank = $1,104.19Service charges = $48.00 (a) Prior to adjustment on October 31, your Cash account would have a balance of: Let's calculate the balance of your cash account by considering all the given details and adding or deducting them from the given bank statement.
Balance as per bank statement = $14,756.73Outstanding checks = $4,812.19Balance = $9,944.54. When we add the service charge to the balance it will become,$9,944.54 + $48 = $9,992.54. Again, when we add the deposited check from a customer, rejected by the bank to the balance, the value of the balance will become,$9,992.54 + $1,104.19 = $11,096.73
Therefore, the prior adjustment balance of the cash account would be $20,625.11.So, the correct option is $20,625.11.
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What three things have you learned that you will be able to use in your professional or personal life?
You can compose your answer by completing the following sentences:
I am happy that. . .
I wish I could change. . .
I want the professor to know that. . .
Through this learning experience, I have gained valuable insights that I can apply to both my professional and personal life.
In particular, I am happy that I have learned three key things: the importance of effective communication, the value of continuous learning, and the significance of adaptability and resilience. While there are aspects I wish I could change, overall, these three lessons have left a lasting impact on me. I want the professor to know that I appreciate the knowledge and skills I have acquired and I am eager to apply them in various aspects of my life.
Firstly, I am happy that I have learned the significance of effective communication. I have realized that clear and concise communication plays a vital role in professional interactions, personal relationships, and even self-expression. It allows me to convey my thoughts, ideas, and intentions more efficiently, fostering better understanding and building stronger connections with others.
Secondly, I am grateful for the emphasis on continuous learning. This experience has shown me the importance of staying curious, seeking new knowledge, and embracing opportunities for growth. Continuous learning enables personal and professional development, expands my skill set, and keeps me adaptable in an ever-changing world.
Lastly, I have learned the value of adaptability and resilience. Life often presents unexpected challenges, and being able to adapt and bounce back from setbacks is crucial. This experience has taught me the importance of maintaining a positive mindset, being flexible in the face of adversity, and finding solutions to overcome obstacles.
While there may be aspects I wish I could change, such as additional time to delve deeper into certain topics or explore related areas, I am grateful for the valuable lessons I have learned. These three key takeaways on effective communication, continuous learning, and adaptability will undoubtedly shape my personal and professional endeavors going forward. I want the professor to know that I am genuinely appreciative of the knowledge and skills gained, and I am enthusiastic about applying them to make a positive impact in various aspects of my life.
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The market demand for a monopoly firm is estimated to be:
Qd = 80,000 -400P + 3M + 2000PR
where Q is output, P is price, M is income, and PR is the price of a related good. The manager has forecasted the values of M and PR will be $60,000 and $15, respectively, in 2018. The average variable cost function is estimated to be:
AVC = 725 - 0.01Q + 0.000001Q2
Total fixed cost in 2018 is expected to be $50,000.The profit-maximizing level of output for 2011 is…
To find the profit-maximizing level of output for 2018, we need to consider the market demand function, average variable cost function, and total fixed cost. The market demand function is given by Qd = 80,000 - 400P + 3M + 2000PR, where Q is output, P is price, M is income, and PR is the price of a related good. The average variable cost function is AVC = 725 - 0.01Q + 0.000001Q^2, and the total fixed cost for 2018 is $50,000. By calculating the marginal cost and equating it to the marginal revenue, we can determine the profit-maximizing level of output for 2018.
To find the profit-maximizing level of output, we need to equate the marginal cost (MC) to the marginal revenue (MR). The marginal cost is the derivative of the average variable cost function with respect to Q:
MC = d(AVC)/dQ = -0.01 + 0.000002Q
The marginal revenue is the derivative of the market demand function with respect to Q:
MR = d(Qd)/dQ = -400
Setting MC equal to MR, we have:
-0.01 + 0.000002Q = -400
Simplifying the equation, we find:
0.000002Q = 399.99
Q = 199,995
Therefore, the profit-maximizing level of output for 2018 is approximately 199,995 units.
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Betty borrows $50,000 at 10 percent annually compounded interest to be repaid in four equal annual installments. The actual end-of-year loan payment is (SHOW YOUR CALCULATIONS) (a) $10,774. (b) $12,500. (c) $14,340. (d) $15,773. 32. Marla borrows $4,500 at 12 percent annually compounded interest to be repaid in four equal annual installments. The actual end-of-year payment is (a) $ 942. (b) $1,125. (c) $1,482. (d) $2,641. 33. Calculate the present value of a $10,000 perpetuity at a 6 percent discount rate 34. 35. Calculate the future value of $4,600 received today if it is deposited at 9 percent for three years. Calculate the present value of $89,000 to be received in 15 years, assuming an opportunity cost of 14 percent. BONUS (3 Points each) 1. Find the present value of the following stream of cash flows, assuming that the firm's opportunity cost is 9 percent. Year Amount 1-5 $10,000/yr. 6-10 16,000/yr.
the total present value of the stream of cash flows is $238,489.53.
Using the formula, present value of an annuity,
P = PMT [1 - (1 + r)^-n] / r, where PMT is the payment
, r is the interest rate, and
n is the number of periods,
we can find the actual end-of-year payment of the loan, which is $1,482.
This means that the answer is (c).PMT = $4,500 / 4
= $1,125n
= 4r
= 0.12P
= $1,125 [1 - (1 + 0.12)^-4] / 0.12
= $1,482.33 33.
Using the formula, present value of a perpetuity, PV = PMT / r, where PMT is the payment and r is the discount rate, we can find the present value of the $10,000 perpetuity at a 6 percent discount rate, which is $166,666.67.
PMT = $10,000r
= 0.06
PV = $10,000 / 0.06
= $166,666.67 34.
Using the formula, future value of a lump sum, FV = PV (1 + r)^n, where PV is the present value, r is the interest rate, and n is the number of periods, we can find the future value of $4,600 received today if it is deposited at 9 percent for three years, which is $6,656.14.
PV = $4,600r
= 0.09n
= 3FV
= $4,600 (1 + 0.09)^3
= $6,656.14 35.
Using the formula, present value of a lump sum, PV = FV / (1 + r)^n, where FV is the future value, r is the interest rate, and n is the number of periods, we can find the present value of $89,000 to be received in 15 years, assuming an opportunity cost of 14 percent, which is $18,500.89,000 / (1 + 0.14)^15 = $18,500.03
Using the formula, present value of an annuity, P = PMT [1 - (1 + r)^-n] / r, where PMT is the payment, r is the interest rate, and n is the number of periods, we can find the present value of the stream of cash flows, which is $137,169.06 for the first five years and $101,320.47 for the next five years.
PMT1 = $10,000
n1 = 5r
= 0.09P1
= $10,000 [1 - (1 + 0.09)^-5] / 0.09
= $43,584.03PMT2
= $16,000n2
= 5r
= 0.09P2
= $16,000 [1 - (1 + 0.09)^-5] / 0.09
= $93,585.50PV
= P1 + P2
= $43,584.03 + $93,585.50
= $137,169.06 + $101,320.47
= $238,489.53
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What are the main issues
that women and men
facing in businesses? And
compare together?
Discuss atleast in 1000 words
There are several challenges that both men and women face in the business world. Some of the main issues that women face include gender bias, unequal pay, and lack of opportunities for leadership positions. Meanwhile, men also face certain challenges, such as maintaining work-life balance and dealing with stress.
However, it is important to note that the challenges that women face tend to be more significant and prevalent. For instance, gender bias is a major issue in many industries, with women being held to higher standards than men and often facing discrimination based on their gender. Additionally, women are more likely to earn less than their male counterparts for the same job, and they are often passed over for promotions and leadership roles.
On the other hand, men face challenges such as work-life balance and dealing with stress, which can be difficult to manage in a high-pressure business environment. Men are often expected to be the primary breadwinners for their families, which can lead to added pressure and stress. Additionally, men may find it difficult to balance their work responsibilities with their personal lives, which can cause problems with relationships and family life. In order to address these issues, businesses should focus on creating a more inclusive and equitable environment for all employees. This can include implementing policies and programs that promote diversity and inclusion, as well as providing training and development opportunities for all employees. By doing so, businesses can help ensure that everyone has the opportunity to succeed and thrive in the workplace. The main issues that women and men face in the business world can be quite different, with women often facing greater challenges and barriers to success. For women, some of the main issues include gender bias, unequal pay, and lack of opportunities for leadership positions. Women are often held to higher standards than men and face discrimination based on their gender, which can make it difficult for them to advance in their careers. Additionally, women are more likely to earn less than their male counterparts for the same job, which can be a major issue for those trying to support themselves and their families. To address these issues, businesses should focus on creating a more inclusive and equitable environment for all employees. This can include implementing policies and programs that promote diversity and inclusion, as well as providing training and development opportunities for all employees. By doing so, businesses can help ensure that everyone has the opportunity to succeed and thrive in the workplace. Additionally, businesses can work to create a culture that values work-life balance and mental health, which can benefit all employees, regardless of gender. Ultimately, by addressing these issues and promoting gender equality in the workplace, businesses can help create a more just and equitable society for everyone.
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Explain the importance of providing suggestions and feedback
on diversity policy in an
organisation.
Providing suggestions and feedback on diversity policy in an organization is crucial for several reasons:
Promoting inclusivity: Diversity policies aim to create an inclusive work environment that values and respects individuals from diverse backgrounds. By providing suggestions and feedback, employees can contribute to shaping policies that promote inclusivity, ensuring that all voices are heard and considered.
Enhancing effectiveness: Suggestions and feedback can help improve the effectiveness of diversity policies. Employees often have firsthand experiences and insights that can shed light on areas where the policy may fall short or could be enhanced. Their feedback can lead to policy adjustments that address specific challenges or barriers faced by underrepresented groups, making the policies more impactful and meaningful.
Fostering engagement and morale: When employees feel that their suggestions and feedback are valued and acted upon, it fosters a sense of belonging and engagement. It shows that the organization values their perspectives and is committed to creating an inclusive environment. This, in turn, can boost morale, job satisfaction, and overall employee well-being.
Driving innovation and creativity: Diversity of perspectives, experiences, and ideas is a catalyst for innovation and creativity. By providing suggestions and feedback, employees can contribute to the development of diverse strategies, initiatives, and programs that can lead to innovative solutions and approaches.
Accountability and transparency: Soliciting suggestions and feedback demonstrates the organization's commitment to accountability and transparency in its diversity efforts. It shows that the organization is open to scrutiny, willing to learn from its employees, and committed to continuous improvement.
Overall, providing suggestions and feedback on diversity policy empowers employees, improves policy effectiveness, enhances employee engagement, drives innovation, and demonstrates the organization's commitment to diversity and inclusion.
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There are different financial instruments to hedge the exchange rate risk. The main text mentions three financial instruments: forwards, swaps and options. Explain what these instruments entail and which of them is most fit to secure that at a specific time a certain amount of foreign currency can be exchanged to local currency against a predetermined exchange rate.
Forwards are the most suitable instrument to secure that at a specific time a certain amount of foreign currency can be exchanged for local currency against a predetermined exchange rate.
The financial instruments that are utilized to hedge exchange rate risks include forwards, swaps, and options. They each entail distinct characteristics and have varying applications based on the situation. However, the predetermined exchange rate can be secured by utilizing these instruments based on the user's needs.Forwards:Forwards are the most basic and straightforward financial instrument utilized for exchange rate risk hedging. They entail an agreement to exchange currencies at a specified exchange rate at a specific point in the future. Forwards are custom-made contracts with no formal market or clearinghouse. The purpose of using forward contracts is to safeguard the business from currency exchange rate risks by locking in a predetermined exchange rate for a future transaction. Forwards are more efficient than options in this scenario, as they provide better assurance against future exchange rate changes.Swaps:A swap entails exchanging one currency for another at a predetermined exchange rate. This exchange is for a predetermined amount and period. A swap is a financial contract between two parties who exchange an equivalent amount of capital in two different currencies for a specific period. It has two types of transactions, known as the spot transaction and the forward transaction. A swap can secure a specific amount of foreign currency for exchange to the local currency at a predetermined exchange rate in a specific period. Swaps are often utilized to extend the exchange of one currency for another to a more prolonged duration, such as many years. They are typically utilized by organizations seeking to manage long-term currency exchange rate risks.Options:Options are derivatives of the underlying asset, which in this case is the exchange rate. Options provide the buyer the right but not the responsibility to buy or sell the underlying asset at a predetermined price, quantity, and time. As opposed to forwards and swaps, options allow the purchaser to benefit from the upside of favorable exchange rate changes while capping the downside at the cost of the option. Options are best suited for volatile currency pairs and for businesses who have the ability to tolerate some exchange rate risks. The disadvantage of options is that they can be more expensive than forwards or swaps, especially when the potential exchange rate risk is low.
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Morgan and Hunt (1994) argued in their key mediating variable (KMV) model of relationship marketing that trust and commitment are two key variables of successful business relationship (Figure 2, page 22 Morgan and Hunt (1994)). Look at the paper of Morgan and Hunt (1994) to learn and present:
The causality of commitment and cooperation
The causality of commitment and propensity to leave
The causality of trust and opportunistic behavior
The causality of trust and uncertainty
Morgan and Hunt (1994) advanced a model of mediating variables that emphasized the importance of trust and commitment in relationship marketing. According to the key mediating variable (KMV) model of relationship marketing by Morgan and Hunt (1994), trust and commitment are two important variables for successful business relationships.
The following are some of the causalities identified by Morgan and Hunt (1994):The Causality of Commitment and CooperationCommitment has been shown to be a significant predictor of cooperation between business partners. Commitment leads to greater levels of cooperation because it lowers the amount of perceived risk associated with inter-firm exchanges.The Causality of Commitment and Propensity to LeaveIn inter-firm exchanges, a high level of commitment can help to reduce the propensity to leave. This can be achieved through several methods, including long-term contracts and guarantees, investments in asset-specific resources, and building goodwill between the parties involved.The Causality of Trust and Opportunistic BehaviorTrust is an important factor in determining whether or not opportunistic behavior will occur in inter-firm exchanges. When there is high levels of trust between business partners, there is less risk of opportunistic behavior and more cooperation.The Causality of Trust and Uncertainty Trust can also help to reduce uncertainty in inter-firm exchanges. When there is high levels of trust between business partners, there is less uncertainty regarding the reliability and predictability of the exchange. As a result, firms are more willing to engage in exchanges with one another.
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What is the purpose of direct marketing? a. To use an event without the permission of the event owner b. To establish a relationship with a customer in order to initiate immediate and measurable responses c. To give the exporter's product local favor and increase the overall promotional budget for the product d. To be prepared to utilize the tremendous power of the multinational corporation in a responsible manner and, in the case of pressure, to counter criticisms swiftly
The purpose of direct marketing is (b) to establish a relationship with a customer in order to initiate immediate and measurable responses.
Direct marketing is a form of advertising that involves communicating directly with potential customers to promote a product or service. The main objective of direct marketing is to establish a direct connection with customers and encourage them to take a specific action, such as making a purchase, signing up for a newsletter, or requesting more information.
Unlike mass marketing, which targets a broad audience, direct marketing focuses on targeting specific individuals or groups based on their demographics, preferences, or previous interactions with the company. By establishing a direct relationship, companies can track and measure the effectiveness of their marketing efforts, allowing them to refine their strategies and improve their return on investment.
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Cullumber Company is purchasing a bulldozer. The equipment has a price of $100,000. The manufacturer has offered a payment plan that would allow Cullumber to make 14 equal annual payments of $12,843.32, with the first payment due one year after the purchase. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1. X Your answer is incorrect. How much total interest will Cullumber pay on this payment plan? (Round final answer to O decimal places, e.g. 5,275.) Total interest ta $ 79806.48
The total interest that Cullumber would pay for the payment plan is $79,806.48.
Cullumber Company is buying a bulldozer that costs $100,000. The manufacturer offers a payment plan where Cullumber can make 14 equal annual payments of $12,843.32.
The first payment is due one year after the purchase.
Given: Cost of bulldozer = $100,000Annual payment = $12,843.32Payments to be made = 14Total payment = 14 x 12,843.32 = $179,806.48
The formula to calculate total interest paid on a payment plan is as follows: Total interest = Total payment - Cost of item= 179,806.48 - 100,000= $79,806.48.
Therefore, the total interest that Cullumber would pay for the payment plan is $79,806.48.
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(b) With the advertisement, interview and negotiation phase of the employment process,
explain in your own words:
(i) why the Employment Relations Act 2000 does not apply; and
(ii) the laws that do apply in this phase, including what they provide.
The Employment Relations Act 2000 doesn't apply to advertisement, interview, and negotiation phase of the employment process because these phases are not considered to be within the scope of the employment relationship until the person is offered and accepts the job.
What laws apply to this phase of the employment process?The following laws are applicable in the advertisement, interview, and negotiation phase of the employment process:Human Rights Act 1993:This law applies to job advertisements and interviews, and it protects people from discrimination based on factors such as age, race, religion, and gender.The Privacy Act 1993:This Act covers the collection, use, and disclosure of an individual's personal information during the employment process. The Privacy Act ensures that job applicants' personal information is only used for lawful and reasonable purposes, and is not disclosed to unauthorized parties.Employment Relations Act 2000:This act doesn't apply to the advertisement, interview, and negotiation phase of the employment process as mentioned above. It applies to employment relationships that have already been established. Therefore, this law doesn't apply to pre-employment stages of the employment process.The Wages Protection Act 1983:This act regulates the payment of wages and salary in New Zealand. It protects employees from wage and salary deductions without their consent. The act requires employers to provide employees with accurate and detailed wage and salary information. The act applies to all employment relationships, including those in the pre-employment phase. Therefore, this law applies to the negotiation stage of the employment process to ensure that employees receive accurate and complete wage and salary information in advance.
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Choose the correct statement(s) about the Executive Branch.
A. The Executive Branch's primary function is to make laws.
B. The Executive Branch is responsible for commanding the armed forces.
C. The Executive Branch is responsible for approving Federal judges and justices.
D. None of the above.
E. All of the above.
The correct statements about the Executive Branch are :B. The Executive Branch is responsible for commanding the armed forces and C. The Executive Branch is responsible for approving Federal judges and justices.
What is the reason?The Executive Branch is one of the three branches of the federal government of the United States responsible for the implementation and enforcement of the laws enacted by the legislative branch and interpreted by the judicial branch. The following statements are true regarding the Executive Branch:
B. The Executive Branch is responsible for commanding the armed forces. This is correct because the President of the United States is the commander-in-chief of the country's armed forces.
C. The Executive Branch is responsible for approving Federal judges and justices. This is correct because the President has the power to nominate judges and justices for the federal judiciary and the Senate, which is a part of the Legislative Branch, confirms these nominations.
Therefore, the correct answer is options B and C.
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Red Corp stock has a beta of 1.6, the risk-free rate is 6%, and the expected return on the market portfolio is 11%. Using the CAPM, what is Red cost of equity?
A. 5%
B. 14%
C. 11%
D. 6%
E. None of the above
The cost of equity for Red Corp is 14%. The cost of equity for Red Corp can be calculated using the Capital Asset Pricing Model (CAPM) formula:
Cost of Equity = Risk-Free Rate + Beta * (Market Return - Risk-Free Rate)
Given that the risk-free rate is 6%, the beta is 1.6, and the expected return on the market portfolio is 11%, we can substitute these values into the CAPM formula:
Cost of Equity = 6% + 1.6 * (11% - 6%)
Cost of Equity = 6% + 1.6 * 5%
Cost of Equity = 6% + 8%
Cost of Equity = 14%
Therefore, the cost of equity for Red Corp is 14%. The correct answer is B. 1
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The City of Odessa maintains its books so as to prepare fund accounting statements and prepares worksheet adjustments in order to prepare government-wide statements. As such, the City's internal service fund, a print shop fund, is included in the proprietary funds statements. Required: Prepare necessary adjustments in order to incorporate the internal service fund in the government-wide statements as a part of governmental activities: A Balance sheet accounts include: Cash, $150,000. Inventories, $425,000; Capital Assets, $1, 200,000; Accumulated Depreciation, $600,000; Accounts Payable, $150,000; and Bonds Payable, $500,000. B. The only transaction in the internal service fund that is external to the government is interest expense in the amount of $15,000. C. Exclusive of the interest expense, the internal service fund reported operating income of $40,000. An examination of the records indicates that services were provided as follows one half to general government, one fourth to public safety, one fourth to culture and recreation.
The City of Odessa maintains its books so as to prepare fund accounting statements and prepares worksheet adjustments in order to prepare government-wide statements. As such, the City's internal service fund, a print shop fund, is included in the proprietary funds statements.
Here is how the necessary adjustments can be prepared in order to incorporate the internal service fund in the government-wide statements as a part of governmental activities:Calculation of service fees:$40,000 operating income ÷ 50% (half to general government) = $80,000 total services provided$80,000 × 50% = $40,000 services provided to general government$80,000 × 25% = $20,000 services provided to public safety$80,000 × 25% = $20,000 services provided to culture and recreation.1. For the purpose of government-wide statements, Internal Service Fund will be consolidated with the governmental activities. So, the Consolidation entry will be:Dr. Inventories $425,000Dr. Accumulated Depreciation $600,000Cr. Capital Assets $1,200,000(To eliminate the impact of internal services that are not interfund)2. Depreciation expenses shall be calculated based on the proportion of service provided to the governmental funds. Depreciation expenses = $600,000 × 50% (services provided to general government) = $300,000.3. The operating income of the Internal Service Fund of $40,000 shall be eliminated since it is a component of governmental activities.4. The Interest expense of $15,000, which is the only transaction in the Internal Service Fund that is external to the government, shall be excluded from the consolidation entry because it is not a part of governmental activities.Consolidation Entry:Dr. Due From Other Funds $80,000Cr. Charges for Services $80,000(To record services provided to other governmental funds)Journal Entry for Depreciation:Dr. Depreciation Expense $300,000Cr. Accumulated Depreciation $300,000(To record depreciation for governmental activities)The elimination entry for operating income and interest expense will not be made because they are not related to the governmental activities.
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Adjustments required to incorporate the internal service fund in the government-wide statements as a part of governmental activities: A government-wide statement is an extensive report that incorporates the financial information of a government, either in total or in part. This includes the financial information for both the government's main operations and its component units. The Internal Service Fund of the City of Odessa is included in the Proprietary Funds Statement.
However, as a part of the governmental activities, it must be incorporated into the government-wide statements. To do so, the following adjustments must be made: Calculation of Service Charges: Total charges = Operating Income / (1/2 + 1/4 + 1/4) = $40,000 / 1 = $40,000The following entries must then be made: Entries Accounts Debit Credit Cash$15,000Interest ExpenseInterest Expense$15,000To record the interest expense accrued by the Internal Service Fund over the year. Adjustments in the Proprietary Fund Statement Accounts Debit Credit Operating Income$40,000Due from General Fund$20,000Due from Public Safety$10,000Due from Culture and Recreation$10,000To record the services offered by the Internal Service Fund to various components of the government. The following adjustment must be made in the Government-wide StatementAccountsDebitCreditDue from Proprietary Funds$40,000Internal Service Fund - Net Position$40,000To record the impact of services offered by Internal Service Fund in the governmental activities on the Government-wide Statements. Thus, these are the necessary adjustments required to incorporate the Internal Service Fund as a part of the governmental activities.
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Name three casino games that are pure chance and three that involve an element of skill. And explain.
Please type down 600 -800 words. Thank you!!!
Casino games have been around for ages and they have evolved throughout the years. There are several types of casino games, some are pure chance and some involve an element of skill. Here are three casino games that are pure chance and three that involve an element of skill.
Pure chance games
1. Slots:
Slots are games of pure chance. Players don't need any special skills to play them. Players simply spin the reels and hope that the symbols align in their favor. Although the outcome of the game is entirely random, the odds of winning are predetermined.
2. Roulette:
Roulette is another game of pure chance. In roulette, players place bets on where the ball will land on the roulette wheel. The outcome is purely determined by luck and the odds of winning are based on the number of slots on the roulette wheel.
3. Keno:
Keno is a lottery-style game of pure chance. Players select numbers and hope that they match the numbers drawn. The more numbers matched, the higher the payout. The outcome of the game is purely determined by luck.
Element of skill games
1. Poker:
Poker is a game of skill. Although luck plays a role in the game, the outcome is determined by the player's skill. Players need to have a solid understanding of the game's rules, strategies, and psychology to be successful.
2. Blackjack:
Blackjack is another game of skill. Players need to have a solid understanding of the game's rules, strategies, and odds to be successful. Players need to know when to hit, stand, split, or double down to maximize their chances of winning.
3. Sports betting:
Sports betting is also a game of skill. Players need to have a solid understanding of the sports they are betting on, as well as the odds and strategies involved. Successful sports bettors use their knowledge and skills to make informed bets that have a higher probability of winning.
In conclusion, there are casino games that are pure chance and others that involve an element of skill. Pure chance games include slots, roulette, and keno, while games that involve an element of skill include poker, blackjack, and sports betting. While chance games rely on luck, skill games require knowledge, understanding, and practice. Players can improve their chances of winning at skill games by learning and implementing the right strategies.
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the wage at which exactly the desired number of workers is employed is called the:
The wage at which exactly the desired number of workers is employed is called the equilibrium wage.
In labor economics, the equilibrium wage refers to the wage rate at which the quantity of labor supplied by workers matches the quantity of labor demanded by employers. At this wage level, the desired number of workers is employed, and there is no excess supply or demand for labor in the market.
The equilibrium wage is determined by the interaction of labor supply and labor demand in the market. On the labor supply side, workers decide how many hours they are willing to work at different wage rates, considering factors such as their preferences, skills, and opportunities. On the labor demand side, employers assess the number of workers they need to hire based on factors such as production requirements, productivity, and costs.
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Which of the following is not true about bonds? A)Bonds have priority claim on income and assets. B)The par value of bonds is generally $1,000. C)Most bonds have an indefinite life. D)A bond indenture is the legal agreement between the bond trustee and the bond issuer.
The answer is C. Most bonds have a definite life, not an indefinite life. A bond is a debt instrument issued by a government or corporation. It is a promise to pay back the principal amount, plus interest, on a specified date.
Bonds are typically used to raise money for long-term projects, such as building a new factory or highway. Bonds have priority claim on income and assets, meaning that bondholders are paid before stockholders in the event of a bankruptcy. The par value of a bond is the amount that the bondholder will receive when the bond matures. The coupon rate is the interest rate that the bondholder will receive on the bond. Most bonds have a definite life, meaning that they will mature on a specific date.
The maturity date is the date on which the bondholder will receive the principal amount of the bond.
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Question 2 3.5 pts Accounting information system such as Oracle Netsuite enables processing of to give users data; information data; transactions O information; data data; benefits
An accounting information system like Oracle Netsuite offers numerous advantages to users when it comes to processing data. Information data, transactions, and data are some of the benefits that come with using the software. More than 100 words:Accounting information system such as Oracle Netsuite is critical in modern-day accounting. The system is designed to help users process data efficiently and provides several advantages. One of the primary benefits of the software is that it provides accurate and up-to-date information data to users.
An accounting information system like Oracle Netsuite offers numerous advantages to users when it comes to processing data. Information data, transactions, and data are some of the benefits that come with using the software. More than 100 words:Accounting information system such as Oracle Netsuite is critical in modern-day accounting. The system is designed to help users process data efficiently and provides several advantages. One of the primary benefits of the software is that it provides accurate and up-to-date information data to users.The software works by integrating various accounting processes such as accounts payable, accounts receivable, inventory management, and financial reporting. By automating these processes, Oracle Netsuite can quickly process large amounts of data, making it easier for users to manage their financial transactions.Oracle Netsuite provides an efficient data management system that helps users to make informed decisions. The software can generate various reports such as profit and loss statements, balance sheets, and cash flow statements, providing users with a comprehensive overview of their financial position.The software's data management system can also help users track inventory levels, orders, and customer orders, making it easier to manage the supply chain. Furthermore, Oracle Netsuite can also integrate with other business applications, such as customer relationship management systems, providing users with an even more comprehensive view of their business operations.Overall, Oracle Netsuite offers several benefits to users when it comes to processing data. Information data, transactions, and data are some of the benefits that come with using the software. By automating various accounting processes, Oracle Netsuite can efficiently process large amounts of data, making it easier for users to manage their financial transactions. The software's data management system provides users with accurate and up-to-date information data, making it easier for them to make informed decisions.
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From the following, prepare a balance sheet for Rabbitt Co. Cleaners at the end of September 201X: Cash, $67,000 Equipment, $7,000, Accounts Payable, $13,000; B. Rabbit, Capital COD Prepare the balance sheet. Complete the heading as well as the body of the statement. (If a box is not used in the balance sheet, leave the box empty, do not select a label or enter a zero)
Rabbitt Co. Cleaners
Balance Sheet
As of September 30, 201X
Assets:
Cash $67,000
Equipment $7,000
Total Assets $74,000
Liabilities:
Accounts Payable $13,000
Owner's Equity:
B. Rabbit, Capital
Total Liabilities and Owner's Equity $87,000
Note: Since the provided information does not specify the value of B. Rabbit's capital, it is left blank. Please provide the value to complete the balance sheet accurately.
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Choose any product which you want to you sell to your customers and it can solve the buyer's problem.
Discuss its features and advantages.
Moreover, how will you sell it. If you are selling through a wholesaler or retailer, describe how they can resell it? Or if you are selling it yourself, describe how will they use your product.
At last, tell us that 'how the value of that product overweighs its cost' ?
The portable air purifier provides improved air quality, allergen and pollutant reduction, and ease of use, making it a great value for retailers.
The portable air purifier is equipped with advanced filtration technology that effectively captures and eliminates airborne pollutants, allergens, and odors. Its compact design and portability make it suitable for use in various settings, such as homes, offices, or even while traveling. The advantages of using the air purifier include improved air quality, reduction of allergens and pollutants, and a cleaner and fresher living environment.
If selling through wholesalers or retailers, the focus would be on effectively communicating the product's features and benefits to potential customers. Retailers can highlight the air purifier's filtration technology, emphasizing its ability to remove common allergens and pollutants from the air. Additionally, retailers can showcase the portability and ease of use, making it a convenient solution for customers looking to improve their indoor air quality.
The value of the portable air purifier overweighs its cost due to the numerous benefits it provides. By eliminating allergens and pollutants from the air, the purifier helps create a healthier living environment, reducing the risk of respiratory issues and allergies. It contributes to overall well-being by ensuring clean and fresh air, particularly in areas with high pollution levels or during allergy seasons. The long-term advantages of improved air quality and the potential for enhanced health make the investment in the air purifier worthwhile, outweighing its initial cost.
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Happy Times, Incorporated, wants to expand its party stores into the Southeast. In order to establish an immediate presence in the area, the company is considering the purchase of the privately held Joe's Party Supply. Happy Times currently has debt outstanding with a market value of $240 million and a YTM of 7.3 percent. The company's market capitalization is $360 million and the required return on equity is 14 percent. Joe's currently has debt outstanding with a market value of $35.5 million. The EBIT for Joe's next year is projected to be $16 million. EBIT is expected to grow at 8 percent per year for the next five years before slowing to 3 percent in perpetuity. Net working capital, capital spending, and depreciation as a percentage of EBIT are expected to be 7 percent, 13 percent, and 6 percent, respectively. Joe's has 2.35 million shares outstanding and the tax rate for both companies is 25 percent. a. What is the maximum share price that Happy Times should be willing to pay for Joe's? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. After examining your analysis, the CFO of Happy Times is uncomfortable using the perpetual growth rate in cash flows. Instead, she feels that the terminal value should be estimated using the EV/EBITDA multiple. The appropriate EV/EBITDA multiple is 8. What is your new estimate of the maximum share price for the purchase? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) a. Maximum share price $ 49.62 b. Maximum share price
a. The maximum share price that Happy Times should be willing to pay for Joe's is $49.62.
b. The new estimate of the maximum share price for the purchase, using the EV/EBITDA multiple, is $41.38.
We have the EBIT projections and the growth rate assumption.
Year 1 EBIT = $16 million
Growth rate for years 2-5 = 8%
Growth rate from year 6 onwards = 3%
Next, we calculate the present value of these cash flows using the weighted average cost of capital (WACC) as the discount rate. The WACC is a blend of the cost of debt and the cost of equity.
Cost of debt = YTM = 7.3%
Cost of equity = 14%
Debt-to-equity ratio for Joe's = $35.5 million / ($35.5 million + $360 million) = 0.0905
Equity-to-value ratio for Joe's = 1 - Debt-to-equity ratio = 1 - 0.0905 = 0.9095
WACC = (Cost of equity * Equity-to-value ratio) + (Cost of debt * Debt-to-value ratio * (1 - Tax rate))
WACC = (0.14 * 0.9095) + (0.073 * 0.0905 * (1 - 0.25)) = 0.1253 or 12.53%
Now, we can calculate the present value of the cash flows:
PV of Cash Flows = (EBIT * (1 - Tax rate)) / WACC * (1 - (1 + g)⁻ⁿ)
PV of Cash Flows = $96.13 million
Next, let's calculate the present value of the tax shields associated with Joe's debt.
PV of Tax Shields = Tax rate * Debt
PV of Tax Shields = 0.25 * $35.5 million = $8.88 million
Finally, we can calculate the maximum share price:
Maximum Share Price = (PV of Cash Flows + PV of Tax Shields) / Number of Shares
Maximum Share Price = ($96.13 million + $8.88 million) / 2.35 million = $49.62
Therefore, the maximum share price that Happy Times should be willing to pay for Joe's is $49.62.
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A person who is willing to sacrifice his or her life for the
benefit of their primary group could be the definition of:
A person who is willing to sacrifice his or her life for the benefit of their primary group could be defined as a "group-oriented altruist" or "group-oriented individual."
Group-oriented altruism refers to the willingness to make sacrifices, including the ultimate sacrifice of one's life, for the well-being and benefit of a specific group or community to which one belongs. This behavior is often seen in situations where individuals prioritize the interests and survival of their primary group over their own personal well-being.
This type of behavior is commonly observed in various contexts, such as military service, where soldiers may willingly put themselves in harm's way to protect their fellow soldiers or defend their country. It can also be seen in certain cultural or religious contexts, where individuals may prioritize the welfare and preservation of their community or religious group over their individual lives.
In summary, a person who is willing to sacrifice their life for the benefit of their primary group exhibits characteristics of group-oriented altruism or being a group-oriented individual.
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Common Stock:Shares Issued 150,000 Common Stock Par Value $15.00 Stock-buy back price (cost) $40.00 Number of shares purchased 20,000 Common Stock $2,250,000 APIC-Common Stock $100,000 Resale Price $45.00 Number of shares resold 8,000 "Which of the following is true about the entry to record the RESALE of the Treasury Stock? Select only Correct answers, incorrect answers are penalized." "Credit Gain on sale of treasury stock for $40,000." "Debit Cash for $360,000." "Credit Treasury Stock for $320,000." "Credit PIC, Treasury Stock for $40,000." "Credit Treasury Stock for $360,000." "Debit PIC, Treasury Stock $40,000." "Credit Cash for $360,000." "Credit Common Stock for $320,000." "Debit Common Stock for $120,000."
Options B, C, and A are the correct answers about stocks and explanation is shown below in details.
Given:
Shares Issued = 150,000
Common Stock Par Value = $15.00
Stock-buy back price (cost) = $40.00
Number of shares purchased = 20,000
Common Stock = $2,250,000
APIC-Common Stock = $100,000
Resale Price = $45.00
Number of shares resold = 8,000
The entry to record the resale of the treasury stock is as follows: Debit the Cash account for the amount of cash received for the resale, which is equal to the number of shares resold multiplied by the resale price,
so:8,000 × $45 = $360,000.
Credit the Treasury Stock account for the cost of the treasury stock that was resold,
so:20,000 × $40 = $800,000 / 2 = $320,000.
Credit the Gain on Sale of Treasury Stock account for the difference between the cash received and the cost of the treasury stock that was resold,
so:$360,000 − $320,000 = $40,000.
Thus, the following options are correct:Debit Cash for $360,000.Credit Treasury Stock for $320,000.Credit Gain on sale of treasury stock for $40,000.Therefore, options B, C, and A are the correct answers.
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financial risk is:multiple choiceinversely related to the cost of equity.
Financial risk refers to the risk that is directly related to the financial structure of the company, such as the use of debt financing.
It involves the chance of a company not being able to meet its financial obligations as they become due.Therefore, a company with a high level of financial risk is more likely to default on its financial obligations and face financial distress.Investment in any business carries a certain level of risk.
This is because the company is obligated to pay interest and principal payments on the debt, and if it fails to do so, it risks defaulting on its debt. The higher the debt level of a company, the higher its financial risk, and the higher the cost of equity required by investors to invest in the company.In conclusion,
financial risk is not inversely related to the cost of equity. Instead, financial risk and the cost of equity are directly related. A company with a high level of financial risk requires a higher cost of equity to compensate investors for the increased risk. This is because investors demand a higher return on their investment to compensate for the additional risk.
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One difference between an UTMA account and an UGMA account is
A) an UTMA account has a wider set of allowed investments.
B) UTMA assets are considered an irrevocable gift, an UGMA account allows the custodian to reclaim the assets.
C) an UGMA account is tax deferred and a UTMA account is not.
D) an UTMA account transfers at the age of majority, an UGMA account can go until the beneficiary turns 30 year of age.
The difference between an UTMA account and an UGMA account is that UTMA account transfers at the age of majority, while an UGMA account can go until the beneficiary turns 30 years of age. option D is the correct answer.
UTMA (Uniform Transfer to Minors Act) and UGMA (Uniform Gift to Minors Act) accounts are accounts that allow gifts and investments to be made in the name of a minor. The UTMA is a modified version of the UGMA, which grants minors more flexibility in the kinds of assets they can own. This extra flexibility is achieved by the fact that UTMA enables people to place a much wider range of assets in the account for the benefit of the minor and permits the individual creating the account to act as its custodian until the minor becomes an adult. UTMA assets are considered an irrevocable gift and can only be used for the benefit of the minor. On the other hand, UGMA assets can be used for a range of things such as expenses related to education and medical needs. Finally, UTMA accounts, unlike UGMA accounts, are transferable until the age of majority. UTMA accounts can transfer to minors who have reached the age of majority, while UGMA accounts can extend until beneficiaries turn 30 years of age.
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3. (4 points) The expected yearly interest rate for a deposit
account is r1 from year 1 to year 5, and is r2 from year 6 to year
10. The total amount of cash that can be withdrawn at the end of
year 1
The total amount of cash that can be withdrawn at the end of year 1 would be the sum of the initial deposit and the interest earned: withdrawal1 = p + interest1 = p + (p * r1) = p * (1 + r1).
to calculate the total amount of cash that can be withdrawn at the end of year 1 from a deposit account with different interest rates for different periods, we need to consider the interest earned for that specific period.
let's assume the initial deposit amount is p.
for the first year, the interest earned would be calculated using the interest rate r1. the formula to calculate the interest earned for one year is: interest1 = p * r1. it's important to note that this calculation assumes that no additional deposits or withdrawals are made during the first year.
if you have the specific values for r1 and p, i can help you calculate the exact withdrawal amount.
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FORMATIVE ASSESSMENT 1 [100 Marks) THE RISKS OF RIOTS AND CIVIL UNREST From January 2013 to 9 February 2014. South Africa recorded a staggering 430 service delivery protests - an average of 33 per month or one per day, according to the Institute for Security Studies. Gauteng leads by a massive margin in terms of violent protests, followed by KwaZulu-Natal and Limpopo. At least 10 people have died during such protects, and both government and private property have been seriously damaged with protesters setting fire to government buildings, private properties, homes of government officials and vehicles caught in the fray. Standard insurance policies available through private sector insurers do not provide cover for damage to assets as a result of these types of events as they are precluded from underwriting these risks. Cover is available in South Africa through the state-owned insurer - Sasria SOC Limited. Sasria, which was originally founded to provide cover for politically motivated riots, covers damage caused by riot (both political and non-political), public disorder, including labour disturbances, civil unrest, strikes and lockouts. It is the only organisation in South Africa authorised to provide insurance cover for losses caused as a result of these types of events. According to Sasria's 2013 annual report, its claims frequency increased by 91% driven primarily by labour strikes, while claims severity increased by 135% compared with 2012. Sasria's importance seems clearer than ever as the uncertainties in the socio-economic environment mean that 'special risks' as defined in Sasria's terms of reference, have become a permanent part of the risk management landscape as the challenges of industrial action, workplace disruption, social unrest and service delivery protests proliferate. Both businesses and consumers need to consult with their brokers and insurers to ascertain whether their insurance coverage has been extended to cover Sasria perils. As a matter of course, clients should be offered this type of cover when discussing their business personal insurance requirements as this presents a significant risk to both consumers and business owners who could find themselves severely out of pocket if their assets were damaged during a violent strike. Given the status quo of the last 12-18 months, it's an essential if not non-negotiable cover on any insurance policy. This is especially important for people who own property, live, work or commute in areas that have a high propensity for protest and strike action. Sasria may not decline your request for cover. Sasria rates are regulated and for businesses available to the premiums. However, cover provided by Sasria is subject to a maximum limit for any one loss and any one insurance period per client to R1,500 million. The Sasria cover in terms of Business Interruption is limited to fixed expenses or standing charges and net profit, but not for the traditional contingent business interruption covers such as losses following damage to premises of customers and suppliers, and to the supply of public utilities. These covers can be purchased from the private sector to ensure the client enjoys similar cover to that provided for losses arising from non-Sasria perils. For consumers, the cost of cover is minimal in relation to that of replacing an expensive asset. Experience has shown that strikes and protest action in South Africa are becoming increasingly violent and it is therefore crucial to ensure that the insurance cover is correctly structured so that clients do not suffer unnecessarily as a result of damage to their property. Source: Graeme Fuller, https://cover.co.za/the-risk-of-riots/ Answer ALL the questions in this section. Question 1 (25 Marks) In light of the case study provided, justify the importance of Sasria SOC Ltd to the insurance industry and the South African economy Question 2 (25 Marks) Experience has shown that strikes and protest action in South Africa are becoming increasingly violent and have resulted in significant disruptions to enterprise-wide risks. Considering this, advise South African businesses on how they should manage enterprise risks Question 3 (25 Marks) With refence to South African businesses evaluate the measures that they can consider in financing the extent of damages and costs caused by civil unrest and riots. Your response should refer to relevant examples and illustrations.
The importance of Sasria SOC Ltd to the insurance industry and the South African economy lies in its unique coverage for losses caused by politically and non-politically motivated riots, public disorder, civil unrest, strikes etc.
Why is Sasria SOC Ltd important to the insurance and S.A. economy?Sasria SOC Ltd plays a vital role in the insurance industry and the South African economy by providing insurance coverage for risks that are not covered by standard insurance policies. As demonstrated by the high number of service delivery protests and violent strikes in South Africa, there is a significant need for coverage against damage to assets resulting from these events.
The private sector insurers are precluded from underwriting these risks, making Sasria the only authorized organization to provide such coverage. Sasria's coverage helps protect businesses and consumers from severe financial losses due to property damage during violent strikes and protests. Without Sasria, individuals and businesses could find themselves severely out of pocket if their assets were damaged during these events.
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