Business groups are particularly dominant in: emerging economies. The correct option is C.
This is because in these economies, there is often a lack of strong legal and regulatory frameworks to govern the activities of businesses. As a result, business groups can operate with greater flexibility and less accountability than they might in more established economies.
In addition, emerging economies often have high levels of corruption and political instability, which can make it difficult for individual businesses to operate independently. By forming business groups, companies can pool their resources and leverage their collective influence to navigate these challenges.
In contrast, established economies tend to have stronger legal and regulatory frameworks that limit the power of business groups. Additionally, competition in these economies is often more intense, making it harder for business groups to dominate markets.
While business groups may also be present in the financial services and manufacturing industries, they are not typically as dominant as they are in emerging economies. Overall, the prevalence of business groups is largely determined by the political and economic conditions of a given region.
To know more about emerging economies, refer here:
https://brainly.com/question/26021151#
#SPJ11
Complete question:
business groups are particularly dominant in which of the following? multiple choice question.
a. financial services industry
b. manufacturing industry
c. emerging economies
d. established economies
in a free market, the price of a product is determined by the relationship between supply and demand. the price tends to stabilize at the point of intersection of the demand and supply equations. the point of intersection is called the
In a free market, the price of a product is determined by the relationship between supply and demand. the price tends to stabilize at the point of intersection of the demand and supply equations. The point of intersection is called the equilibrium price, or market-clearing price.
In a free market, the price of a product is determined by the relationship between supply and demand. As demand for a product increases, its price tends to go up, and as supply increases, its price tends to go down.
The point at which the supply and demand curves intersect is called the equilibrium price, or market-clearing price.
This is the price at which the number of goods supplied is equal to the number of goods demanded, and there is no excess supply or excess demand.
Read more about Equilibrium prices at brainly.com/question/13037087
#SPJ11
All else equal, properties with riskier expected future cash flowsa. sell at higher cap ratesb. have lower expected (internal) rates of returnc. sell at lower cap rates
When considering properties with riskier expected future cash flows, it is important to understand the relationship between risk and return. All else being equal, riskier properties are likely to have higher cap rates, which means they will sell at a lower price relative to their net operating income i.e option C.
This is because investors require a higher return to compensate for the increased risk. On the other hand, properties with lower risk and more stable expected future cash flows may sell at lower cap rates, indicating a higher price relative to their net operating income. This is because investors are willing to accept a lower return in exchange for a more predictable investment.
Additionally, properties with riskier expected future cash flows may also have lower expected internal rates of return. This is because the higher risk of these investments means that they are more likely to experience negative cash flows or lower returns than properties with more stable cash flows. As a result, investors may require a higher expected return to justify the additional risk, which may lower the expected internal rate of return.
Therefore, the right option is C.
To know more about risk and return, visit https://brainly.com/question/14735748
#SPJ11
a firm has a debt-to-equity ratio of 1:4. the wacc is 18.6%, and the pretax cost of debt is 9.4%. what is the cost of common equity if the tax rate is 21%? please enter your answer as a percent rounded to two decimal places
The cost of common equity is 20.54% rounded to two decimal places.
The cost of common equity can be calculated using the formula: Cost of Common Equity = WACC - ((Debt/Equity) x (WACC - Pretax Cost of Debt)).
First, we need to calculate the proportion of debt and equity in the firm's capital structure. The debt-to-equity ratio of 1:4 means that the firm has $1 of debt for every $4 of equity. Therefore, the proportion of debt and equity can be calculated as:
Debt/(Debt + Equity) = 1/(1+4) = 0.20
Equity/(Debt + Equity) = 4/(1+4) = 0.80
Next, we can substitute the given values into the formula:
Cost of Common Equity = 18.6% - ((0.20) x (18.6% - 9.4%))
Cost of Common Equity = 18.6% - (0.20 x 9.2%)
Cost of Common Equity = 16.18%
Finally, we need to adjust for the tax rate of 21%:
Cost of Common Equity = 16.18% / (1 - 21%)
Cost of Common Equity = 20.54%
Learn More about common equity here :-
https://brainly.com/question/17147773
#SPJ11
Mary incurred a $20,000 nonbusiness bad debt last year. She also had an $8,000 long-term capital gain last year. Her taxable income for last year was an NOL of $15,000. During the current year, she unexpectedly collected $12,000 on the debt. How should Mary account for the collection?
a. $0 income
b. $8,000 income
c. $11,000 income
d. $12,000 income
e. None of these
Mary had a bad debt from a non-business of $20,000 last year. Last year, she also realised a long-term capital gain of $8,000. She had a NOL of $20,000 in taxable income the previous year. She received an unexpected $12,000 in repayment of the debt throughout the current year. Around $11,000 has been earned by Mary from the collection.
To put it another way, the quantity of money that was taxed. The majority of the time, it includes all or some of the items of income and is reduced by expenses and other deductions. Different sums are included as income, costs, and other deductions depending on the country or system.
Numerous systems specify that certain expenses cannot be deducted from taxable income and that particular categories of income (commonly referred to as non-assessable income) are not taxed. Some taxation systems base taxes on the taxable income of the current period, whilst others base taxes on past periods.
Learn more about taxable income here:
brainly.com/question/17961582
#SPJ4
Your answer: b. $8,000 income. Mary had a nonbusiness bad debt of $20,000 last year, which was partially offset by her long-term capital gain of $8,000, resulting in a net operating loss (NOL) of $15,000. This year, she collected $12,000 on the debt.
Since the recovered amount ($12,000) is less than the bad debt ($20,000), she should recognize the lesser of the two amounts as income. In this case, it's the long-term capital gain amount of $8,000. Profit from the sale of a capital asset, such as stocks, real estate, or artwork, is referred to as a capital gain. It is the difference between the asset's acquisition cost (sometimes referred to as its "basis") and the price at which it is sold. Not all assets are liable to capital gains tax, which is an essential distinction to make. Some assets could be exempt from taxes or subject to separate tax laws. To learn how capital gains may apply to your particular case, it is advisable to speak with a tax expert.
Learn more about capital gain
https://brainly.com/question/24084696
#SPJ11
Question is Complete:The 5 Principles that Form the Foundation of FinanceIn Chapter 1 we learned about the (5) principles that form the foundation of Finance. Immediately upon graduation with your MSA degree, you apply for a job in a for-profit company and the first question they ask you is to explain the meaning of the five principles that form the foundation of finance.
The five principles that form the foundation of Finance are: (1) cash flow is what matters, (2) money has a time value, (3) risk requires a reward, (4) market prices are generally right, and (5) conflicts of interest cause agency problems.
These principles provide a framework for understanding the fundamental concepts of finance and guide decision-making processes in financial management.
Understanding these principles is crucial for financial professionals as they help in assessing the financial viability of projects, evaluating investment opportunities, and managing risks associated with financial decision-making.
For more questions like Interest click the link below:
https://brainly.com/question/30393144
#SPJ11
The call option gives the buyer of the option the right to buy the underlying asset at a set price during a set period of time. Pc True False Da WH
True is the correct answer.The call option gives the buyer of the option the right to buy the underlying asset at a set price during a set period of time.
A call option gives the buyer of the option the right to buy the underlying asset at a set price, known as the strike price, during a set period of time. This allows the option holder to benefit from potential price increases in the underlying asset without actually owning it.True is the correct answer.
For more such questions on buyer
https://brainly.com/question/14982906
#SPJ11
a rectangular lot measures 215 feet by 154 feet. if comparable land sells for $40,000 per acre, how much is this lot likely to sell for?
The rectangular lot would likely have a selling price of $30,392.
We are required to determine the selling price of a rectangular lot measuring 215 feet by 154 feet, with comparable land selling for $40,000 per acre
To determine the selling price of the rectangular lot, follow these steps:1. Calculate the area of the lot:
Area = length × width
Area = 215 ft × 154 ft
Area = 33,110 square feet.
2. Convert square feet to acres:
1 acre = 43,560 square feet, so
33,110 sq ft ÷ 43,560 sq ft/acre = 0.7598 acres.
3. Calculate the selling price of the lot:
Selling price = 0.7598 acres × $40,000/acre = $30,392.
So, this rectangular lot is likely to sell for approximately $30,392.
Learn more about Selling price:
https://brainly.com/question/26008313
#SPJ11
A project has the following forecasted cash flows:
Cash Flows ($ thousands)
C0 C1 C2 C3
−190 +130 +150 +140
The estimated project beta is 1.58. The market return rm is 18%, and the risk-free rate rf is 5%.
a. Estimate the opportunity cost of capital and the project’s PV (using the same rate to discount each cash flow). (Do not round intermediate calculations. Enter your cost of capital answer as a percent and enter your PV answer in thousands. Round your answers to 2 decimal places.)
Cost of capital %
PV $
b. What are the certainty-equivalent cash flows in each year? (Do not round intermediate calculations. Enter your answers in thousands rounded to 2 decimal places.)
Year Certainty-Equivalent
Cash Flow
1 $
2 $
3 $
c. What is the ratio of the certainty-equivalent cash flow to the expected cash flow in each year? (Do not round intermediate calculations. Round your answers to 4 decimal places.)
Year Ratio
1 2 3
The present value of the project is $120.16 thousand.
a. To estimate the opportunity cost of capital, we need to use the Capital Asset Pricing Model (CAPM):
Cost of capital = rf + beta * (rm - rf)
Cost of capital = 5% + 1.58 * (18% - 5%)
Cost of capital = 24.54%
To calculate the project's PV, we need to discount each cash flow using the cost of capital:
[tex]PV = C0 / (1 + r)^0 + C1 / (1 + r)^1 + C2 / (1 + r)^2 + C3 / (1 + r)^3\\PV = (-190) / (1 + 0.2454)^0 + 130 / (1 + 0.2454)^1 + 150 / (1 + 0.2454)^2 + 140 / (1 + 0.2454)^3[/tex]
PV = $120.16 thousand
b. To calculate the certainty-equivalent cash flows, we need to discount each cash flow using the risk-free rate:
Certainty-equivalent cash flow = [tex]Cash flow / (1 + rf)^n[/tex]
Year Certainty-Equivalent Cash Flow
1 $124.23 thousand
2 $115.47 thousand
3 $103.71 thousand
c. The ratio of the certainty-equivalent cash flow to the expected cash flow in each year is:
Year Ratio
1 0.9564
2 0.7695
3 0.6979
For more about present value:
https://brainly.com/question/17322936
#SPJ11
when grayce deposits $4,000 cash in her checkable deposit at the beach bank and the beach bank's excess reserves increase by $3,600, the desired reserve ratio is
When Grayce deposits $4,000 cash in her checkable deposit at the Beach Bank, the Beach Bank's excess reserves increase by $3,600. The desired reserve ratio can be calculated by dividing the excess reserves by the deposit amount. Therefore, the desired reserve ratio is 0.9 or 90%.
The reserve ratio is the percentage of a bank's deposits that it is required to hold in reserve, either in the form of vault cash or deposits at the Federal Reserve Bank. The reserve ratio is set by the central bank of a country to control the money supply and ensure the stability of the banking system.
When a customer deposits money in their account, the bank can use a portion of it to make loans, which can stimulate economic activity. However, banks must also maintain sufficient reserves to cover withdrawals and other obligations.
If a bank's reserves fall below the required reserve ratio, it may be required to borrow funds or sell assets to meet its obligations.
In this case, the Beach Bank's excess reserves increased by $3,600, indicating that it is holding more reserves than required. This suggests that the bank may be cautious about making loans or may have received deposits from other customers as well.
Overall, the desired reserve ratio is an important indicator of a bank's financial health and its ability to lend to customers.
To know more about deposit amount refer here
brainly.com/question/14017594#
#SPJ11
If STC = 200 +2q+4q^2 and SMC = 2+8q where q is output, what is hte minimum level of average variable cost
a. 6
b. 0
c. 2
d. 8
To find the minimum level of average variable cost (AVC), we first need to find the total variable cost (TVC) function. The STC function given is:
STC = 200 + 2q + 4q^2
Since the total fixed cost (TFC) is the constant term, TFC = 200. We can find the TVC by subtracting TFC from STC:
TVC = STC - TFC = (200 + 2q + 4q^2) - 200 = 2q + 4q^2
Now, we can calculate AVC by dividing TVC by the output q:
AVC = TVC/q = (2q + 4q^2)/q = 2 + 4q
To find the minimum level of AVC, we need to find the first derivative of AVC with respect to q and set it equal to zero:
d(AVC)/dq = d(2 + 4q)/dq = 4
Since the derivative is a constant, AVC does not have a minimum value within the given options. So, none of the choices a, b, c, or d are correct.
Learn more about minimum here:
https://brainly.com/question/21426575
#SPJ11
a senator leaves office and takes a position as a lobbyist for the farming industry. this is an example of
A senator leaves office and takes a position as a lobbyist for the farming industry. this is an example of the revolving door phenomenon in politics.
The revolving door phenomenon in politics, where people alternate between employment with the government and positions in the private sector like lobbying, consulting, or advocacy. In this situation, the senator's decision to leave office and work as a lobbyist for the agricultural sector raises the possibility of a conflict of interest because they might use their connections and influence in politics to advance the interests of their new employer.
Concerns about the possibility of corruption and unethical behavior have been raised by this contentious practice.
Learn more about senator at:
brainly.com/question/24779287
#SPJ4
You have bought a home that has a $750,000 mortgage and you have decided to use the variable closed rate of 2.65 percent that your bank has available and your payments will increase/decrease according to the new rate. The rate can adjust on a quarterly basis based on market changes. What is the payment if you amortize the mortgage over 25 years? Assume 6 months later the variable rate goes up to 3.15 percent as inflation has picked up. What is your monthly payment now? What is the impact and risk associated with this market and variable rate interest rates?
Use the space below to show your work. You can copy the text below into your answer to help you get started:
(8 pts ) What is the payment if you amortize the mortgage over 25 years?
_______
(7 pts) Assume 6 months later the variable rate goes up to 3.15 percent as inflation has picked up. What is your monthly payment now?
The payment if you amortize the mortgage over 25 years is $3,419.64
To calculate the initial monthly payment, we will use the mortgage payment formula: P = L[r(1 + r)ⁿ]/[(1 + r)ⁿ – 1], where P is the monthly payment, L is the loan amount ($750,000), r is the monthly interest rate (2.65% / 12 months), and n is the total number of payments (25 years * 12 months).
P = $750,000 * (0.0265/12(1 + 0.0265/12)³⁰⁰ ) / ((1 + 0.0265/12)³⁰⁰ - 1) = $3,419.64
(7 pts) Assume 6 months later the variable rate goes up to 3.15 percent as inflation has picked up. What is your monthly payment now?
Your answer: $3,631.90
After 6 months, the new interest rate is 3.15%, and the remaining loan term is 24.5 years (294 payments). We will use the same mortgage payment formula, updating the values for the new interest rate and remaining payments:
P = $750,000 * (0.0315/12(1 + 0.0315/12)²⁹⁴) / ((1 + 0.0315/12)²⁹⁴ - 1) = $3,631.90
The main impact of the variable rate is that your monthly payment can change according to market conditions, increasing or decreasing depending on the interest rate.
The risk associated with this type of mortgage is that you may experience higher payments when rates rise, which could make budgeting more difficult. However, variable rates can also decrease, leading to lower payments, but this uncertainty can be challenging for some homeowners.
To know more about interest rate click on below link:
https://brainly.com/question/13324776#
#SPJ11
What is the change in the money supply when the Fed purchases $700 worth of bonds and the required reserve ratio is 14 percent assuming banks hold no excess reserves? A. $50,000 B. $602 C. $5,000 D. $50
C. $5,000. The change in the money supply is calculated by taking the required reserves which are 14% of the value of the bonds and subtracting it from the total value of the purchase.
In this case, the value of the bonds is $700, so the required reserves will be $98 ($700 x 0.14). The change in money supply is then calculated by subtracting the required reserves from the total value of the purchase, which is $700 - $98 = $602.
The answer is therefore $5,000, as the money supply will increase by this amount. This is because the money supply is calculated by taking the total value of the bonds purchased, subtracting the required reserves, and then multiplying this by the amount of banks that hold the bonds. In this case, the money supply will increase by $5,000.
Know more about Reserves here
https://brainly.com/question/29651028#
#SPJ11
how can firms best maintain competitive advantage? multiple choice question. by divesting themselves of the brand by copying competitors' brands, images, products, and promotions by reinforcing the brand image through merchandise, service, and promotion by using the cheapest supplier for all raw materials
The best way for firms to maintain a competitive advantage is by building a strong brand through high-quality products or services, exceptional customer service, and effective marketing campaigns. This approach may require more investment upfront, but it will provide a sustainable competitive edge in the long run.
The best way for firms to maintain competitive advantage is by reinforcing the brand image through merchandise, service, and promotion. This means that the firm should focus on building a strong brand that resonates with its target audience and is perceived as unique and valuable. This can be achieved by creating high-quality products or services, delivering exceptional customer service, and developing effective marketing campaigns that highlight the strengths of the brand.
Copying competitors' brands, images, products, and promotions may provide short-term gains, but it is not a sustainable strategy for maintaining a competitive advantage. This approach can quickly lead to a race to the bottom, where firms are constantly lowering prices and cutting corners to keep up with their competitors.Divesting themselves of the brand is also not a viable option for maintaining a competitive advantage.
The brand is often a firm's most valuable asset, and getting rid of it would mean giving up any competitive edge it may have had.Using the cheapest supplier for all raw materials may help to lower costs, but it is not a guarantee of long-term success. A focus on cost-cutting can often lead to lower quality products or services, which can ultimately harm the brand and lead to a loss of competitive advantage.
For more such questions on firms
https://brainly.com/question/28261254
#SPJ11
Consider the following simplified financial statements for the wesney corporation (assuming no income taxes): income statement balance sheet sales $ 39,400 assets $ 29,200 debt $ 9,400 costs 34,700 equity 19,800 net income $ 4,700 total $ 29,200 total $ 29,200 the company has predicted a sales increase of 15 percent. It has predicted that every item on the balance sheet will increase by 15 percent as well. Create the pro forma statements and reconcile them. (input all amounts as positive values. Do not round intermediate calculations. )
The pro forma financial statements project the future financial performance of the company, assuming a 15% increase in sales and all other items on the balance sheet. These statements are useful in making financial decisions such as budgeting, forecasting, and investment analysis.
Pro forma financial statements are projected financial statements that indicate the expected future performance of a company. In this case, we need to create pro forma income statement and balance sheet for Wesney Corporation assuming a 15% increase in sales and all other items on the balance sheet.
The pro forma income statement can be created by multiplying each item on the income statement by 1.15 to reflect the 15% increase in sales. Thus, the projected sales, costs, and net income will be $45,310, $39,905, and $5,405 respectively.
The pro forma balance sheet can be created by multiplying each item on the balance sheet by 1.15. The projected total assets, total debt, and total equity will be $33,580, $10,810, and $22,770 respectively.
To reconcile the pro forma financial statements, we need to ensure that the balance sheet equation balances. The equation is: Assets = Liabilities + Equity. By summing up the projected total liabilities and equity, we get a total of $33,580, which is equal to the projected total assets.
Learn more about financial here:
https://brainly.com/question/24296949
#SPJ4
in Merryland, following goods are produced domestically-bread and clothes. The fixed market bundle of a typical family is 30 breads and 20 clothes. Consider 2017 as the base year.
Prices Quantity Bread Clothes Bread Clothes 2017 $50 $100 30 20 2018 $40 $110 35 30 2019 $55 $120 40 40 a. Calculate Inflation using GDP Deflator b. Calculate Inflation using CPI Calculate percentage change in Nominal GDP and Real GDP between 2018 and 2019. In which of these two years did economic well-being rise more? ©The New York Times cost $2.14 in 1970 and $20.42 in 2009. c. The CPI in 1990 was 150.2 and in 2009 was 214.5. Using this data, show in percentage terms the real increase or decrease in price.
Gross Domestic Product (GDP) is a measure of the total value of all goods and services produced within a country's borders during a specific time period, usually a year. It represents the economic output of a country and is used as a key indicator of the overall health and performance of an economy.
a. Inflation using GDP Deflator:
The GDP deflator is a measure of the average price level of all goods and services produced in an economy, including both domestically consumed and exported goods. It is calculated as the ratio of the nominal GDP to the real GDP, multiplied by 100 to express it as a percentage.
To calculate the inflation using the GDP deflator, we first need to calculate the nominal GDP and the real GDP for each year using the given prices and quantities.
Nominal GDP = Price of Bread × Quantity of Bread + Price of Clothes × Quantity of Clothes
Real GDP = Price of Bread (base year) × Quantity of Bread + Price of Clothes (base year) × Quantity of Clothes
Using the given data:
For 2017 (base year):
Nominal GDP = $50 × 30 + $100 × 20 = $1500 + $2000 = $3500
Real GDP = $50 × 30 + $100 × 20 = $1500 + $2000 = $3500
For 2018:
Nominal GDP = $40 × 35 + $110 × 30 = $1400 + $3300 = $4700
Real GDP = $50 × 30 + $100 × 20 = $1500 + $2000 = $3500
For 2019:
Nominal GDP = $55 × 40 + $120 × 40 = $2200 + $4800 = $7000
Real GDP = $50 × 30 + $100 × 20 = $1500 + $2000 = $3500
Now, we can calculate the GDP deflator for each year using the formula:
GDP Deflator = (Nominal GDP / Real GDP) × 100
For 2017:
GDP Deflator = ($3500 / $3500) × 100 = 100
For 2018:
GDP Deflator = ($4700 / $3500) × 100 ≈ 134.29
For 2019:
GDP Deflator = ($7000 / $3500) × 100 = 200
Therefore, the inflation using the GDP deflator for 2018 is approximately 34.29% and for 2019 is 100%.
b. Inflation using CPI:
CPI (Consumer Price Index) is a measure of the average price level of a basket of goods and services consumed by households.
To calculate the inflation rate using the Consumer Price Index (CPI), we can use the following formula:
CPI = (Cost of Market Basket in Current Year / Cost of Market Basket in Base Year) x 100
where the market basket represents the fixed bundle of goods and services consumed by a typical family.
Given the prices and quantities of bread and clothes in Merryland for the years 2017, 2018, and 2019 as provided, we can calculate the CPI for each year as follows:
For 2017 (base year):
CPI = (30 x $50 + 20 x $100) / (30 x $50 + 20 x $100) x 100
CPI = 100
For 2018:
CPI = (35 x $40 + 30 x $110) / (30 x $50 + 20 x $100) x 100
CPI = 128.57
For 2019:
CPI = (40 x $55 + 40 x $120) / (30 x $50 + 20 x $100) x 100
CPI = 150
To calculate the percentage change in Nominal GDP and Real GDP between 2018 and 2019, we need to use the CPI to adjust for inflation.
Nominal GDP is calculated using current prices, while Real GDP is calculated using constant prices, adjusted for inflation. The formula for calculating Real GDP is:
Real GDP = (Nominal GDP / CPI) x 100
For 2018:
Nominal GDP = 35 x $40 + 30 x $110 = $4,250
Real GDP = ($4,250 / 128.57) x 100 = $3,303.31
For 2019:
Nominal GDP = 40 x $55 + 40 x $120 = $8,200
Real GDP = ($8,200 / 150) x 100 = $5,466.67
The percentage change in Nominal GDP between 2018 and 2019 is:
((Real GDP in 2019 - Real GDP in 2018) / Real GDP in 2018) x 100
(($5,466.67 - $3,303.31) / $3,303.31) x 100
= 65.59%
Based on the calculations, the percentage change in Real GDP between 2018 and 2019 is 65.59%. This indicates that the economic well-being, as measured by Real GDP, rose more in 2019 compared to 2018 in Merryland.
c. Real increase or decrease in price using CPI:
Price of New York Times in 1970 = $2.14
Price of New York Times in 2009 = $20.42
CPI in 1990 = 150.2
CPI in 2009 = 214.5
Real price of New York Times in 1970 = (Price of New York Times in 1970 / CPI in 1990) x 100
Real price of New York Times in 1970 = ($2.14 / 150.2) x 100
Real price of New York Times in 1970 = $1.42
Real price of New York Times in 2009 = (Price of New York Times in 2009 / CPI in 2009) x 100
Real price of New York Times in 2009 = ($20.42 / 214.5) x 100
Real price of New York Times in 2009 = $9.52
Percentage increase or decrease in real price = ((Real price in 2009 - Real price in 1970) / Real price in 1970) x 100
Percentage increase or decrease in real price = (($9.52 - $1.42) / $1.42) x 100
Percentage increase or decrease in real price = 570.42%
Therefore, the real price of New York Times increased by 570.42% between 1970 and 2009 based on CPI.
To know more about GDP visit:
https://brainly.com/question/30737857
#SPJ11
abc company holds a well-diversified portfolio in the amount of $90,000 that has an expected return of 11.0% and a beta of 1.15. it is buying 1,000 shares of def company stock at $10 a share and adding them to its portfolio. def company has an expected return of 13.0% and a beta of 1.34. currently, the risk free rate is 3.5%, and the stock market return is 8.2%. what will the required rate of return on the new portfolio be after the purchase of def stock? (hint: compute a new portfolio beta first and then use the capm.)
The required rate of return on the new portfolio after purchasing DEF stock will be 11.24%.
1. Calculate the new portfolio value: ($90,000 + (1,000 shares * $10/share)) = $100,000
2. Calculate the weight of each stock in the portfolio: ABC weight = $90,000 / $100,000 = 0.9, DEF weight = $10,000 / $100,000 = 0.1
3. Compute the new portfolio beta: (ABC weight * ABC beta) + (DEF weight * DEF beta) = (0.9 * 1.15) + (0.1 * 1.34) = 1.159
4. Use the CAPM to calculate the required rate of return: Risk-free rate + (New portfolio beta * (Market return - Risk-free rate)) = 3.5% + (1.159 * (8.2% - 3.5%)) = 11.24%
To know more about rate of return click on below link:
https://brainly.com/question/24232401#
#SPJ11
Exploring Finance: Short-Term versus Long-Term Cash Flows
Conceptual Overview: Explore how time and the cost of capital affects the net present values of two alternative investments.
The equations below show the discounted or present value of cash flows either one year or twenty years in the future. The first equation in each set of three shows the discounted value when the interest rate (or cost of capital) equals 5%. The second equation in each set of three shows the discounted value for an interest rate that is controlled by the slider. The third equation compares the two discounted values. Change the slider and observe whether the discounted value of the one-year cash flow changes more or less quickly than the discounted value of the twenty-year cash flow.
In finance, the time value of money is a key concept that recognizes that a dollar received today is worth more than a dollar received in the future due to the opportunity cost of not having the use of that dollar today. The net present value (NPV) of a cash flow represents the value of that cash flow in today's dollars, given the time value of money and the cost of capital.
The equations provided illustrate how the NPV of cash flows changes with time and the cost of capital. When the interest rate is fixed at 5%, the NPV of a one-year cash flow is greater than the NPV of a twenty-year cash flow. However, when the interest rate is adjusted using the slider, the NPV of the twenty-year cash flow changes more than the NPV of the one-year cash flow. This illustrates the principle that the longer the time horizon of an investment, the more sensitive it is to changes in the cost of capital.
In practical terms, this means that short-term investments are generally less risky than long-term investments because there is less uncertainty about future interest rates and cash flows. Long-term investments, on the other hand, offer the potential for greater returns but also carry greater risk due to their sensitivity to changes in the cost of capital over time. Understanding the time value of money and the impact of the cost of capital on cash flows is crucial for making informed investment decisions.
Learn more about net present value
https://brainly.com/question/29669538
#SPJ4
how/why do economist use aggregate measures to monitor the preformance of the economy
Economists use aggregate measures to monitor the performance of the economy because these measures provide a comprehensive and simplified overview of overall economic activity. Some key terms related to aggregate measures are:
1. Gross Domestic Product (GDP): GDP is the total value of goods and services produced within a country during a specific period. It is a key indicator of a nation's economic health.
2. Consumer Price Index (CPI): CPI measures the change in the average price level of a basket of consumer goods and services over time. It is used to track inflation and evaluate the effectiveness of the monetary policy.
3. Unemployment Rate: This rate represents the percentage of the labor force that is unemployed and actively seeking employment. A high unemployment rate may indicate a weak economy, while a low rate may signify a strong economy.
4. Aggregate Demand: Aggregate demand is the total amount of goods and services demanded in the economy at a given overall price level and in a given time period.
5. Aggregate Supply: Aggregate supply is the total supply of goods and services produced within an economy at a given overall price level in a given time period.
By analyzing these aggregate measures, economists can identify trends, diagnose issues, and formulate policy recommendations to improve the overall performance of the economy. These measures help in understanding the complex interrelations between different sectors of the economy and guide decision-making for governments, businesses, and individuals.
To know more about goods and services:
https://brainly.com/question/30415217
#SPJ11
1. An investment earns 10% and 15% in the first year and second year, respectively, and loses 12% the third year. Calculate the arithmetic average return, the total compound rate of return over the 3 years, and the compound average rate of return.
2. A stock is expected to return 13% in an economic boom, 10% in a normal economy, and 3% in a recessionary economy. These economic states have probabilities of occurrence of 20%, 75%, and 5%, respectively. a. Extra Credit: List a table for the scenario analysis with economic states, probability of the states, and return under each state. b. Calculate the expected return of the stock. c. Calculate the risk of the stock
1. The arithmetic average return is 8.33%, the total compound rate of return over the 3 years is -2.44%, and the compound average rate of return is -0.81%.
2a. Scenario Analysis
Economic State | Probability | Return
Boom | 20% | 13%
Normal | 75% | 10%
Recession | 5% | 3%
2b. The expected return of the stock is 10.15%.
2c. The risk of the stock can be measured by its standard deviation. Standard deviation is a measure of the spread of the returns, so a higher standard deviation indicates more risk.
In this case, the risk of the stock is higher due to the possibility of a recession, which has a much lower return than the other two economic states. This means that there is a greater chance of making a lower return under the stock given the potential for a recession.
know more about Economic State here
https://brainly.com/question/31421904#
#SPJ11
during its most recent period, superior manufacturing expected to incur the following costs: $420,000 of overhead, $700,000 of materials, and $280,000 in labor. superior applied overhead based on direct labor cost. actual production required an overhead cost of $413,000, $798,000 in materials used, and $308,000 in labor. all of the goods were completed. how much is the amount of over or underapplied overhead? select answer from the options below
The amount of over or underapplied overhead is $7,000 overapplied.
This means that the actual overhead cost incurred was less than the amount of overhead applied based on direct labor cost. The formula for calculating over or underapplied overhead is:
Actual Overhead - Applied Overhead. In this case, it is $413,000 - ($280,000 / $308,000) x $280,000 = $413,000 - $256,363 = $7,000 overapplied.
This could be due to a variety of reasons such as lower actual overhead costs, higher direct labor costs than anticipated, or a combination of both. It is important for companies to monitor their overhead costs and adjust their applied overhead rates accordingly to avoid significant over or underapplied overhead.
To know more about overhead cost click on below link:
https://brainly.com/question/13384595#
#SPJ11
On a busy Saturday night, the manager comes through about every 2 hours and removes all of the bills $20 and larger. This is known as
bleeding the cash register
On a busy Saturday night, when the manager comes through every 2 hours to remove all bills $20 and larger from the cash register, this process is known as "bleeding the cash register."
It's possible that the term "bleeding the cash register" may be used to describe the process of periodically removing large bills from the cash register during peak hours to prevent the register from becoming too full or to reduce the risk of theft.
However, this term is not widely recognized and is not a standard practice in cash management. In most businesses, the process of managing cash registers, including removing bills or making change, is typically referred to as cash handling or cash management, and it is based on established procedures and best practices.
In general cash management practices, it is important to establish standard operating procedures for handling cash, including how to manage large bills, making change, counting and reconciling cash, and securing cash against theft or loss.
These procedures are typically based on sound accounting principles and internal controls to ensure the accuracy, security, and integrity of the cash handling process.
Proper cash management practices are essential for maintaining accurate financial records, preventing cash shortages or overages, and mitigating the risk of theft or fraud.
In conclusion, while the term "bleeding the cash register" may be used in specific local contexts or industries to describe a process of removing bills from the cash register, it is not a widely recognized term in general accounting or cash management practices.
It's important to rely on established cash management procedures and best practices to ensure accurate and secure handling of cash in a business setting.
To learn more about cash management, refer below:
https://brainly.com/question/27960916
#SPJ11
what is amazon's version of a sku (stock keeping unit) that is used to identify unique products on amazon?
Amazon's version of a SKU (Stock Keeping Unit) is known as an ASIN (Amazon Standard Identification Number).
What's ASIN (Amazon Standard Identification Number)It is a unique identifier assigned to each product that is listed on Amazon's marketplace.
ASINs are used to organize and differentiate products, making it easier for customers to search and find what they are looking for. Each product on Amazon has its own unique ASIN, even if the product is identical to another product.
This is because ASINs are specific to the product's packaging and other identifying features. Additionally, ASINs are used to link related products, such as different editions of a book or different colors of a shirt.
Overall, the ASIN system is an important aspect of Amazon's business model, allowing for efficient inventory management and streamlined product search and purchasing for customers.
Learn more about SKU at
https://brainly.com/question/26059030
#SPJ11
Consider a firm whose only asset is a plot of vacant land, and whose only liability is debt of $14.6 million due in one year. If left vacant, the land will be worth $10.2 million in one year. Alternatively, the firm can develop the land at an up-front cost of $19.5 million. The developed the land will be worth $36 million in one year. Suppose the risk-free interest rate is 10.1%, cash flows are risk-free, and there are no taxes a. If the firm chooses not to develop the land, what is the value of the firm's equity today? What is the value of the debt today? b. What is the NPV of developing the land? c. Suppose the firm raises $19.5 million from the equity holders to develop the land. If the firm develops the land, what is the value of the firm's equity today? What is the value of the firm's debt today? d. d. Given your answer to part (c), would equity holders be willing to provide the $19.5 million needed to develop the land'?
a. The value of the firm's equity today if the land is left vacant is $4.4 million ($10.2 million - $14.6 million). The value of the debt today is $14.6 million.
b. The NPV of developing the land is $2.9 million ($36 million / (1 + 10.1%) - $19.5 million).
c. If the firm develops the land and raises $19.5 million from equity holders, the value of the firm's equity today is $16.1 million ($36 million - $19.5 million). The value of the firm's debt today is still $14.6 million.
d. Yes, equity holders would be willing to provide the $19.5 million needed to develop the land because the value of the firm's equity increases from $4.4 million to $16.1 million if the land is developed. This represents a gain of $11.7 million for the equity holders, which is greater than the investment of $19.5 million.
To know more about investment click on below link:
https://brainly.com/question/15105766#
#SPJ11
Cirice Corp. is considering opening a branch in another state. The operating cash flow will be $154,200 a year. The project will require new equipment costing $601,000 that would be depreciated on a straight-line basis to zero over the 6-year life of the project. The equipment will have a market value of $183,000 at the end of the project. The project requires an initial investment of $42,500 in net working capital, which will be recovered at the end of the project. The tax rate is 40 percent. What is the project's IRR?
The project's IRR is approximately 16.4%.
How to calculate the project's IRR, we need to find the discount rate?To calculate the project's IRR, we need to find the discount rate that makes the net present value (NPV) of the project equal to zero. We can use the following formula:
NPV = -Initial Investment + PV of Cash Flows
where PV of Cash Flows = Operating Cash Flow x (1 - tax rate) x Present Value Factor for Annuity
To find the Present Value Factor for Annuity, we can use the formula:
[tex]PVFA = (1 - (1 + r)^-n) / r[/tex]
where r is the discount rate and n is the number of periods.
Using the given values, we get:
NPV = [tex]-42,500 + [154,200 x (1 - 0.40) x (1 - (1 / (1 + r)^6)) / r] + [(183,000 - 601,000) / (1 + r)^6][/tex]
Simplifying the equation, we get:
[tex]0 = -42,500 + [92,520 x (1 - (1 / (1 + r)^6)) / r] - [418,610 / (1 + r)^6][/tex]
Using trial and error or a financial calculator, we can find that the project's IRR is approximately 16.4%.
Learn more about discount rate
brainly.com/question/31430480
#SPJ11
On August 29th, 2020, you buy a share of Emerge Energy Services Stock (EMES) after getting a hot tip. The purchase price was $144.17. After what was a bit of a rough year, you sell the stock on August 29, 2021, for $17.88. Assume EMES paid a dividend of $7.25 the day before you sold the stock. What was your return? a. -87.59% b.-82.57% c.-92.63% d. -66.68%
The right response is b. -82.57%. You paid $144.17 on August 29th, 2020 to purchase a share of Emerge Energy Services (EMES) stock, which you then sold for $17.88 on August 29th, 2021.
EMES paid a dividend of $7.25 the day before you sold the stock. To calculate your return, you should consider both the capital gain/loss and the dividend received.Capital loss = (17.88 - 144.17) = -$126.29Dividend received = $7.25Total return = (Capital loss + Dividend received) = (-126.29 + 7.25) = -$119.04
Percentage return = (Total return / Initial investment) x 100 = (-119.04 / 144.17) x 100 ≈ -82.57%Your return on the Emerge Energy Services stock was approximately -82.57%. So the correct answer is b. -82.57%.
Learn more about Emerge Energy Services here:https://brainly.com/question/12306849
#SPJ11
a product that is bought by a company for use in making another product is called a(n) product.
A product that is bought by a company for use in making another product is called an intermediate product.
Intermediate products play a crucial role in the production process, as they serve as inputs or raw materials that are transformed into finished goods. These products can include various components, such as metals, plastics, or chemicals, which are used to create the final item.
Companies rely on intermediate products to manufacture their goods, and these products often pass through multiple stages of production before becoming part of the final product. It is important for businesses to source high-quality intermediate products to ensure the quality and efficiency of their production process. By using reliable suppliers and maintaining strong relationships with them, companies can better manage their supply chains and reduce potential disruptions in the production process.
In summary, intermediate products are essential elements in the manufacturing process, serving as building blocks for finished goods. Companies must carefully source and manage these products to maintain a smooth and efficient production process and ensure the quality of their end products.
Learn more about Intermediate products here: https://brainly.com/question/30010461
#SPJ11
You have 20 bucks in your pocket.
You got a paycheck this morning from part-time work: $50. 00
You bought a magazine in the store next to school at lunch: $6. 95
You bought breakfast at McDonalds: $9. 95
You take a friend to the show. It's the 8 p. M. Show: $20
A friend pays you back $15. 00 in the afternoon.
You buy two juices from the machine in the cafeteria at lunch: $4
Item: Description: Credit Debit
#1
$
$
#2
$
$
#3
$
$
#4
$
$
#5
$
$
#6
$
$
#7
$
$
Item: Description: Credit Debit
#1 Paycheck from part-time work $50.00#2 Magazine from store next to school $6.95 -$6.95#3 Breakfast at McDonalds $9.95 -$9.95#4 Show tickets for 8 p.m. show -$20.00#5 Friend pays back $15.00 $15.00#6 Two juices from the cafeteria vending machine -$4.00#7 Total $45.00 $40.90The table shows the transactions of a person who had $20.00 initially in their pocket. They received a paycheck of $50.00 from part-time work, but they spent $6.95 on a magazine, $9.95 on breakfast at McDonald's, and $20.00 on show tickets for an 8 p.m. show.
However, a friend paid them back $15.00 in the afternoon, and they spent $4.00 on two juices from the cafeteria vending machine. The ending balance is $40.90. This exercise demonstrates the importance of budgeting and tracking expenses to ensure that you don't overspend and end up with a negative balance.
To learn more about Credit Debit, here
https://brainly.com/question/12269231
#SPJ4
which of the following is a negative outcome of the management by objectives method? group of answer choices lack of direction for work units increased difficulty of the planning process increase in performance pressure and stress decrease in superior/subordinate communication
Increase in performance pressure and stress is a negative outcome of the management by objectives method.
Management by Objectives (MBO) is a human management strategy in which managers and staff collaborate to establish, document, and track goals for a predetermined amount of time. Top-down planning and organizational objectives are transformed into individual goals for each organizational member.
Peter Drucker, a management guru, promoted the method in the beginning, and it gained popularity in the 1960s. By clearly establishing the quantifiable goals and outcomes that are accepted by the management and staff of the organization, MBO aims to increase the performance level of the organization.
Learn more about Management by Objectives:
brainly.com/question/30709952
#SPJ4
what can firms do in terms of a high-level emergency preparedness plan to protect their information from human-made and natural disasters?
Firms can take several steps to protect their information from human-made and natural disasters in a high-level emergency preparedness plan.
Firstly, they should conduct a risk assessment to identify potential threats and vulnerabilities to their information assets. Based on this assessment, they can develop a business continuity plan that outlines procedures for responding to emergencies, such as power outages, floods, fires, and cyber-attacks.
To ensure the continuity of their operations, firms should also establish backup and recovery procedures for critical data and applications. This includes backing up data regularly, testing backup systems, and storing backups in secure off-site locations.
Furthermore, firms should train employees on emergency response procedures and security awareness to minimize the impact of any disaster. They should also have an incident response team in place that can quickly and efficiently respond to emergencies.
Overall, having a high-level emergency preparedness plan is essential for firms to protect their information assets from human-made and natural disasters. It helps to ensure the continuity of their operations, minimize downtime, and prevent loss of critical data.
To know more about human-made and natural disasters refer here:
https://brainly.com/question/29023821#
#SPJ11