The firm will liquidate securities in the account to the value of $128,064 to meet the maintenance margin call.
The initial margin deposit required for John's purchase is 50% of $292,000, which is $146,000.
The market value of the securities on Day 2 is $170,752, which is below the maintenance margin requirement of 25%.
The amount that the securities have decreased in value is: $292,000 - $170,752 = $121,248
To calculate the amount that the firm will liquidate, we need to find how much of this decrease is covered by the margin. Since the margin requirement is 25%, John needs to have at least 25% of the market value of the securities in his account.
25% of $170,752 is $42,688, which is the amount that John needs to have in his account to meet the maintenance margin requirement. However, he only has $146,000 - $121,248 = $24,752 of margin remaining in his account.
Therefore, the firm will liquidate securities in the account to the value of $170,752 - $42,688 = $128,064 to meet the maintenance margin call.
Rounded to two decimals, the dollar value of securities the firm will liquidate is $128,064.00.
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simone's sweets is an all-equity firm that has 9,100 shares of stock outstanding at a market price of $27 per share. the firm's management has decided to issue $88,000 worth of debt at an interest rate of 6 percent. the funds will be used to repurchase shares of the outstanding stock. what are the earnings per share at the break-even ebit?
earnings per share will be $1.772 which can be calculated with help of formula.
How to calculate it?Given information are share=9100
Market price=$27
Interest rate=6%
debt=$8100
So share repurchase will be 8800/27= 325
Share outstanding = 9100-325=8775
Putting all the values in the equation we get
EBIT/9100 = EBIT -9100(0.06)/8775
=> EBIT/9100 = EBIT- 576/8775
=> EBIT= 16128
So earning per share will be 16128/9100 = $1.772
Earnings per share (EPS) is determined by dividing a company's profit by the number of shares of ordinary stock outstanding. The resulting figure is a representation of the business's profitability. It is customary for a corporation to announce EPS that has been adjusted for unusual factors and probable share dilution.
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Monica borrowed $5,000 and agreed to pay back the loan with monthly payments over 2 years at 3% compounded monthly. 1. Calculate her monthly payment (rounded up to the next cent). 2. How much principal did she repay during the first year of the loan? 3. How much interest did the repay during the first year of the loan?
Monica repaid $711.37 of interest during the first year.
How to calculate the monthly payment, principal repaid, and interest repaid during the first year of a loan?To calculate the monthly payment, we can use the formula for the present value of an annuity:
[tex]PV = PMT x [\frac{(1 - (1 + r)^{-n)}} { r}][/tex]
Where PV is the present value of the loan (which is $5,000), PMT is the monthly payment, r is the monthly interest rate (which is 3% divided by 12, or 0.0025), and n is the total number of payments (which is 2 years multiplied by 12 months per year, or 24).
Monthly payment:
[tex]PV = PMT x [\frac{(1 - (1 + r)^{-n)}} { r}][/tex]
[tex]$5,000 = PMT x [ \frac{(1 - (1 + 0.0025)^{-24)}} { 0.0025}][/tex]
[tex]$5,000 = PMT \ x \ 41.6309[/tex]
[tex]PMT = \frac{5,000 }{41.6309}[/tex]
PMT = $120.08 (rounded up to the next cent)
Therefore, Monica's monthly payment is $120.08.
Principal repaid during the first year:
To calculate the principal repaid during the first year, we need to use the formula for the loan balance after t payments:
[tex]B(t) = \frac{PV x (1 + r)^t - PMT x [(1 + r)^{t - 1]}} { r}[/tex]
Where B(t) is the loan balance after t payments, PV is the present value of the loan (which is $5,000), PMT is the monthly payment (which is $120.08), r is the monthly interest rate (which is 0.0025), and t is the number of payments made.
After 12 payments (or 1 year), t = 12:
[tex]B(t) = \frac{PV x (1 + r)^t - PMT x [(1 + r)^{t - 1]}} { r}[/tex]
B(12) = $4,270.41
Therefore, Monica repaid $5,000 - $4,270.41 = $729.59 of principal during the first year.
Interest repaid during the first year:
To calculate the interest repaid during the first year, we can subtract the principal repaid during the first year from the total payments made during the first year.
Total payments made during the first year = 12 x $120.08 = $1,440.96
Interest repaid during the first year = $1,440.96 - $729.59 = $711.37
Therefore, Monica repaid $711.37 of interest during the first year.
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the bank of canada isa.more instrument independent than the federal reserve on paper and more goal independent than the federal reserve.b.less instrument independent than the federal reserve on paper and less goal independent than the federal reserve.c.more instrument independent than the federal reserve on paper and less goal independent than the federal reserve.d.less instrument independent than the federal reserve on paper and more goal independent than the federal reserve.
The Bank of Canada can be described as option C: more instrument independent than the Federal Reserve on paper and less goal independent than the Federal Reserve.
The Bank of Canada has a higher degree of instrument independence because it has more autonomy in selecting and implementing monetary policy tools, such as interest rates, without direct government intervention. This allows it to adjust policies more effectively in response to economic conditions.
However, the Bank of Canada is less goal independent than the Federal Reserve. Its mandate and policy objectives, such as inflation targeting, are determined by the federal government. This means that the central bank's overarching goals are more directly influenced by government priorities. In contrast, the Federal Reserve has a dual mandate of price stability and maximum employment, which is defined by the US Congress but allows for more flexibility in setting specific targets.
In summary, the Bank of Canada has greater instrument independence but less goal independence compared to the Federal Reserve, allowing it to implement monetary policy tools more autonomously but with policy objectives more influenced by the government.
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Driver distraction contributes between to 50 t 60 percent of all crashes.True or False
The statement is false. Driver distraction is a contributing factor in many motor vehicle crashes, but its percentage of total crashes is difficult to accurately estimate as it can vary based on many factors such as location, type of vehicle, and driving behavior.
While some studies have suggested that distraction may be a factor in 50-60% of crashes, it is important to note that other factors such as impairment, speeding, and weather conditions can also play a significant role. Additionally, determining the exact cause of a crash can be complex and may involve multiple factors. Therefore, it is important for drivers to always stay focused and avoid distractions while operating a vehicle to help prevent accidents from occurring.
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dionne is an officer of event ticketing, inc. as an officer, with respect to the corporation, dionne is a. a fiduciary. b. a forum. c. a proxy. d. a quorum.
The correct answer is a. fiduciary. This means that she has a legal and ethical obligation to act in the best interest of the corporation and its stakeholders and to avoid any conflicts of interest.
A forum is a place or platform for discussion, such as an online forum or a town hall meeting. A proxy is a person or entity authorized to act on behalf of another, such as a shareholder who appoints someone to vote on their behalf. A quorum is the minimum number of members required to be present at a meeting in order for decisions to be made or votes to be taken.
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A labor saving device system save $2,000 per year for five (5) years. It can be installed at a cost of $8,000. The rate of return on this planned investment is most nearly a = 12 36% b.i =10.36% c.10% d. 9.36%
The rate of return on this planned investment is most nearly 7.44%. The correct answer is option e none of the above.
We can calculate the rate of return on this planned investment using the formula for the net present value (NPV) of an investment:
NPV = Present Value of Future Cash Flows - Initial Investment
If the NPV is positive, then the rate of return on the investment is greater than the required rate of return, and the investment is acceptable.
Here are the calculations for the given scenario:
Present Value of Future Cash Flows = Annual Savings x Present Value Annuity Factor
The Present Value Annuity Factor for a 5-year annuity at a discount rate of 10% is 3.791. Therefore:
Present Value of Future Cash Flows = $2,000 x 3.791 = $7,582
Initial Investment = $8,000
NPV = $7,582 - $8,000 = -$418
Since the NPV is negative, the rate of return on the investment is less than the required rate of return, and the investment is not acceptable. Therefore, none of the given answer choices is correct.
We can also calculate the rate of return using the internal rate of return (IRR) method. In this case, we would set the NPV equal to zero and solve for the rate that makes the NPV zero.
Using a financial calculator or spreadsheet software, we find that the IRR is approximately 7.44%. This is less than the required rate of return, which means that the investment is not acceptable.
The correct answer is option e none of the above.
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Complete question
A labor saving device system save $2,000 per year for five (5) years. It can be installed at a cost of $8,000. The rate of return on this planned investment is most nearly
a = 12 36%
b.i =10.36%
c.10%
d. 9.36%
e. none of the above
The dimension of quality that is most difficult to achieve as complexity increases. A) suitability. B) quality. C) best buy. D) reliability
The dimension of quality that is most difficult to achieve as complexity increases is D) reliability. As a system becomes more complex, it can be challenging to maintain consistent performance and dependability.
The dimension of quality that is most difficult to achieve as complexity increases is not reliability, but rather Usability refers to the ease of use and user satisfaction with a product or service. As a system becomes more complex, it can be challenging to design it in a way that is easy and intuitive to use for the end-user. This is because complexity often leads to increased cognitive load, which can make it more difficult for users to understand how to interact with the system and achieve their goals.On the other hand, reliability refers to the consistency and dependability of a product or service over time. While it can also be challenging to achieve high levels of reliability as complexity increases, it is not necessarily the most difficult dimension of quality to achieve. With proper design, testing, and maintenance, it is possible to ensure that complex systems are reliable and perform consistently over time.
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The dimension of quality that is most difficult to achieve as complexity increases is reliability. The Correct option is D
This is because as a product or service becomes more complex, there are more opportunities for failure points to occur. Reliability is the ability of a product or service to perform its intended function without failure over a certain period of time. As complexity increases, it becomes more difficult to ensure that every component of the product or service will work together seamlessly and without error.
This is particularly challenging when dealing with advanced technologies or intricate systems, where even small errors can have significant consequences. Therefore, ensuring reliability becomes increasingly important and difficult to achieve as complexity increases.
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how is eoq, safety stock, and reorder point related to inventory management? how did each of these impact your decisions during the simulation
EOQ, safety stock, and reorder points are all important concepts in inventory management. EOQ stands for Economic Order Quantity, which is the optimal quantity of inventory to order at one time to minimize total inventory costs.
Safety stock is the extra inventory that is held in case of unexpected demand or supply chain disruptions. Reorder point is the inventory level at which an order for more inventory should be placed.
In the simulation, EOQ was important because it helped me determine the optimal order quantity to minimize total inventory costs. By using the EOQ formula, I was able to balance the costs of ordering too much inventory and the costs of running out of inventory.
Safety stock was also important because it helped me prepare for unexpected demand or supply chain disruptions. By setting a safety stock level, I was able to maintain a buffer of inventory that could be used to fulfill orders in case of a sudden increase in demand or a delay in receiving inventory.
Reorder point was important because they helped me ensure that I had enough inventory on hand to meet customer demand. By setting a reorder point, I was able to automate the process of reordering inventory when my inventory levels reached a certain threshold.
Overall, by understanding and implementing these concepts, I was able to optimize my inventory levels, minimize costs, and provide excellent customer service.
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You plan to retire in exactly 20 years. Your goal is to create a fund that will allow you to receive $20,000 at the end of each year for the 30 years between retirement and death (a psychic told you that you would die exactly 30 years after you retire). You know that you will be able to earn 11% per year during the 30-year retirement period.a. How large a fund will you need when you retire in 20 years to provide the 30-year, $20,000 retirement annuity?b. How much will you need today as a single amount to provide the fund calculated in part (a) if you earn only 9% per year during the 20 years preceding retirement?c. What effect would an increase in the rate you earn both during and prior to retirement have on the values found in parts (a) and (b)? Explain.d. Now assume that you will earn 10% from now through the end of your retirement. You want to make 20 end-of-year deposits into your retirement account that will fund the 30-year stream of $20,000 annual annuity payments. How large do your annual deposits have to be?
a. To provide the 30-year, $20,000 retirement annuity, the fund needed when you retire in 20 years is $1,454,422.31, rounded to two decimal places.
b. To provide the fund calculated in part (a), you will need $193,822.38 today as a single amount if you earn only 9% per year during the 20 years preceding retirement.
a. To calculate the fund needed when you retire in 20 years, we need to use the formula for present value of an annuity:
PV = (C / r) x (1 - (1 + r)^(-n))
where PV is the present value of the annuity, C is the annual payment, r is the interest rate per period, and n is the number of periods.
Using the given values, we have:
PV = (20,000 / 0.11) x (1 - (1 + 0.11)^(-30)) = $1,454,422.31
b. To calculate the amount needed today, we need to use the formula for present value of a lump sum:
PV = FV / (1 + r)^n
where PV is the present value, FV is the future value, r is the interest rate per period, and n is the number of periods.
Using the given values, we have:
PV = 1,454,422.31 / (1 + 0.09)^20 = $193,822.38
c. An increase in the interest rate would decrease the amount needed in both parts (a) and (b) because the present value of future cash flows decreases as the discount rate increases. Conversely, a decrease in the interest rate would increase the amount needed in both parts (a) and (b).
d. To calculate the annual deposits needed, we need to use the formula for present value of an annuity again, but this time we solve for the payment (P):
P = (r x PV) / ((1 + r)^n - 1)
where P is the payment, PV is the present value, r is the interest rate per period, and n is the number of periods.
Using the given values, we have:
PV = 1,454,422.31
r = 0.10
n = 20
P = (0.10 x 1,454,422.31) / ((1 + 0.10)^20 - 1) = $13,214.44
Therefore, the annual deposits needed are $13,214.44.
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Pelzer Printing Inc. has bonds outstanding with 9 years left to maturity. The bonds have an 8% annual coupon rate and were issued 1 year ago at their par value of $1,000. However, due to changes in interest rates, the bond's market price has fallen to $917.30. The capital gains yield last year was -8.27%. What is the yield to maturity? Do not round intermediate calculations. Round your answer to two decimal places. %
The yield to maturity for Pelzer Printing Inc.'s bonds is 9.44%. To calculate the yield to maturity (YTM) for Pelzer Printing Inc.'s bonds with 9 years left to maturity, an 8% annual coupon rate, a par value of $1,000, and a current market price of $917.30 follow these steps:
1. Determine the annual coupon payment: 8% * $1,000 = $80
2. Calculate the number of periods left to maturity: 9 years
3. Determine the difference between the par value and the current market price: $1,000 - $917.30 = $82.70
4. Divide this difference by the number of periods left to maturity: $82.70 / 9 = $9.19
5. Add the annual coupon payment to this result: $80 + $9.19 = $89.19
6. Divide the result from step 5 by the average of the par value and the current market price: $89.19 / (($1,000 + $917.30) / 2) = 0.09436
7. Multiply the result from step 6 by 100 to express it as a percentage: 0.09436 * 100 = 9.44%
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Deposits of P are placed into a fund at the end of each year for 10 years. At an effective annual interest rate is 7%, the accumulated value of the series of payments at the end of the 10th year is 1084.31. Find P. a. 73.35 b. 78.48 c. 93.88 d. 88.61 e. 88.75
The answer is (b) 78.48.
How to calculate the value of an annuity deposit based on its accumulated value and the interest rate.?We can use the formula for the future value of an annuity to solve this problem:
FV =[tex]P * (\frac{(1 + r)^{n - 1}} { r})[/tex]
where:
FV is the future value of the annuityP is the annual paymentr is the effective annual interest raten is the number of paymentsIn this case, we know that:
FV = 1084.31
r = 7% = 0.07
n = 10
Substituting these values into the formula, we get:
1084.31 = P * [tex](\frac{(1 + 0.07)^{10 - 1)} }{ 0.07})[/tex]
Solving for P, we get:
P = 1084.31 * [tex](\frac{0.07 } {((1 + 0.07)^{10 - 1}})[/tex] ≈ 78.48
Therefore, the answer is (b) 78.48.
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which of the statements is not true about expansionary fiscal policy? it results in an increase in the unemployment rate. it often results in government expenditures exceeding tax revenues. it is financed by selling treasury securities. it can trigger the multiplier effect.
The wrong choice is this will result in an increase (B) in the unemployment rate. When the government increases government spending it will result an Expansionary fiscal policy.
Unemployment is a term given to people who do not work at all or are looking for work. Generally, unemployment is caused because the number of job seekers is not proportional to the number of jobs available. For a long time, unemployment has been a problem for the country's economy. Because, due to unemployment, productivity and people's income decreases. As a result, poverty and other social problems arise.
In general, there are several things that cause unemployment:
The size of the labor force is not balanced with employment opportunities.Low skills and education level.Technology advances.Economic recession.The utilization of manpower between regions is not balanced.
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A company based in the United Kingdom has an Italian subsidiary. The subsidiary generates €25,000,000 a year, received in equivalent semiannual installments of €12,500,000. The British company wishes to convert the euro cash flows to pounds twice a year. It plans to engage in a currency swap in order to lock in the exchange rate at which it can convert the euros to pounds. The current exchange rate is €1.5/£. The fixed rate on a plain vanilla currency swap in pounds is 7.5 percent per year, and the fixed rate on a plain vanilla currency swap in euros is 6.5 percent per year.
a. Determine the notional principals in euros and pounds for a swap with semiannual payments that will help achieve the objective.
b. Determine the semiannual cash flows from this swap.
Swap paid by the company
Swap received by the company
The notional principals in euros and pounds for a swap with semiannual payments are €25,000,000 and £16,666,667, respectively.
The semiannual cash flows from this swap are €812,500 paid by the company and £625,000 received by the company.
a. To determine the notional principals, divide the annual cash flow in euros by the exchange rate: €25,000,000 / 1.5 = £16,666,667.
b. Calculate the semiannual cash flows:
- In euros: €12,500,000 * 6.5% / 2 = €812,500 (paid by the company)
- In pounds: £8,333,333.50 * 7.5% / 2 = £625,000 (received by the company)
The company will engage in a currency swap to lock in the exchange rate, with semiannual payments involving paying €812,500 and receiving £625,000.
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when negotiating, the tendency is to want to win! why is this not a good approach when managing contracted relationships? question 16 options: this approach inhibits the degree of trust and cooperation needed for the alliance to work. a noncompetitive approach can bring about functional conflict. this approach can cause dysfunctional conflict to rise and negotiations to break down. because people have to continue to work together after negotiations. all of these are reasons a competitive approach to negotiation should not be used when managing contracted relationships.
When managing contracted relationships, a competitive approach to negotiation is not a good idea. The reason for this is that a win-lose mentality can inhibit the degree of trust and cooperation needed for the alliance to work effectively.
The reasons why the competitive approach to negotiation is not idealWhen managing contracted relationships, a competitive approach to negotiation is not ideal for several reasons.
Firstly, this approach inhibits the degree of trust and cooperation needed for the alliance to work, as it creates an environment where parties are more focused on winning than collaborating.
Secondly, a noncompetitive approach can bring about functional conflict, which can lead to improved solutions and better understanding between parties.
Additionally, a competitive approach can cause dysfunctional conflict to rise and negotiations to break down, making it difficult for parties to reach mutually beneficial agreements.
Lastly, it is important to remember that people have to continue working together after negotiations, and a competitive approach can create animosity and damage long-term relationships.
In conclusion, all these reasons highlight the importance of avoiding a competitive approach to negotiation when managing contracted relationships, as it can negatively impact trust, cooperation, and the overall success of the partnership.
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wildhorse co. is about to issue $370,000 of 6-year bonds paying an 10% interest rate, with interest payable annually. the discount rate for such securities is 11%. click here to view the factor table. (for calculation purposes, use 5 decimal places as displayed in the factor table provided.) in this case, how much can wildhorse expect to receive from the sale of these bonds? (round answer to 0 decimal places, e.g. 2,575.) brainly
Wildhorse can expect to receive approximately $345,379 from the sale of these bonds.
How to calculate the amount can wildhorse expect to receiveTo answer your question, we need to calculate the present value of the bond's face value and the present value of its interest payments using the given terms:
face value ($370,000), bond term (6 years), interest rate (10%), discount rate (11%), and interest payable annually.
First, let's find the present value of the bond's face value:
PV_FaceValue = FaceValue * (PVIF_DiscountRate, BondTerm)
PVIF_11%_6Years = 0.56447 (from factor table)
PV_FaceValue = $370,000 * 0.56447 = $208,654.90
Next, we'll calculate the present value of interest payments:
Annual_Interest_Payment = FaceValue * InterestRate
Annual_Interest_Payment = $370,000 * 0.10 = $37,000
PV_InterestPayments = Annual_Interest_Payment * (PVIFA_DiscountRate, BondTerm)
PVIFA_11%_6Years = 3.69525 (from factor table)
PV_InterestPayments = $37,000 * 3.69525 = $136,724.25
Now, let's sum the present values to find the total amount Wildhorse can expect to receive from the sale of these bonds:
Total_PV = PV_FaceValue + PV_InterestPayments
Total_PV = $208,654.90 + $136,724.25 = $345,379.15
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private contracts between parties with mutual interests a. can solve some inefficiencies associated with positive externalities. b. will lead to market outcomes in which the public interest is sacrificed for personal gain. c. will create negative externalities. d. will reduce the well-being of society.
The private contracts between parties with mutual interests can solve some inefficiencies associated with positive externalities. Option A is correct.
Private contracts between parties with mutual interests can create incentives for those parties to internalize positive externalities and thus lead to efficient outcomes.
For example, a farmer might pay a beekeeper to place hives on their property in order to pollinate their crops, which would create a positive externality for the beekeeper. By entering into a private contract, the parties can capture the value of the positive externality and ensure that it is fully internalized. This can help to solve inefficiencies associated with positive externalities and lead to efficient outcomes.
Hence, A. is the correct option.
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Leona, whose marginal tax rate on ordinary income is 37 percent and special rate on qualified dividends is 20 percent, owns 100 percent of the stock of Henley Corporation. This year, Henley generates $1 million of taxable income. Henley is subject to a 21% corporate tax rate. Required: a. If Henley wants to pay all of its after-tax earnings to Leona as a dividend, calculate the amount of the dividend payment. b. Calculate Leona's tax due on the dividend computed in part a, and her after-tax cash flow from the dividend receipt. c. Compute the combined corporate and individual tax burden on Henley's $1 million of current year income, and the effective combined tax rate on this income.
We have that, based on the fact that Leona has a marginal tax rate on ordinary income is 37 percent and the special rate on qualified dividends is 20 percent, she owns 100 percent of the shares of Henley Corporation, we obtain:
a. The dividend payout would be $790,000.
b. A tax liability is $632,000.
c. The effective combined tax rate is 36.8%.
a. To calculate the amount of the dividend payment, first determine Henley Corporation's after-tax earnings. Henley generates $1 million in taxable income and is subject to a 21% corporate tax rate. Therefore, Henley's tax liability is $1,000,000 * 21% = $210,000. After-tax earnings are $1,000,000 - $210,000 = $790,000. If Henley wants to pay all of his after-tax earnings to Leona as a dividend, the dividend payment would be $790,000.
b. The tax owed by Leona on the dividend is calculated using its special rate on qualified dividends, which is 20%. Therefore, your tax liability on the dividend is $790,000 * 20% = $158,000. Your after-tax cash flow from the dividend receipt would be the dividend payment minus the tax liability, which is $790,000 - $158,000 = $632,000.
C. To calculate the combined corporate and individual tax burden on Henley's $1 million annual income, simply add the tax paid by Henley Corporation and the tax paid by Leona on the dividend. The combined tax liability is $210,000 (corporate tax) + $158,000 (Leona tax on dividends) = $368,000. The effective combined tax rate on this income would be the combined tax liability divided by the initial taxable income, which is $368,000 / $1,000,000 = 0.368, or 36.8%.
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the primary purpose of freddie mac (fhlmc) is to:multiple choicecreate competition for fannie mae and ginnie mae.provide a secondary market for mortgage originators.provide consumers with more options when deciding on a mortgage loan.provide investors with a guaranteed rate of return.
The primary purpose of Freddie Mac (FHLMC) is to B. provide a secondary market for mortgage originators.
Freddie Mac, along with Fannie Mae and Ginnie Mae, plays a crucial role in the US mortgage market. However, unlike Fannie Mae, which was created to ensure mortgage funds' availability, and Ginnie Mae, which guarantees mortgage-backed securities, Freddie Mac's primary goal is to create a secondary market for mortgage loans.
Moreover, Freddie Mac helps maintain mortgage interest rates' stability by pooling and securitizing the purchased loans, creating mortgage-backed securities (MBS). Investors can buy these MBS, which diversifies their investment portfolios while contributing to the housing finance system's stability.
Although Freddie Mac indirectly contributes to competition and offers more options for consumers, its main focus remains on supporting mortgage originators and maintaining the stability of the secondary mortgage market. It is essential to note that Freddie Mac does not provide investors with a guaranteed rate of return, as its securities' performance depends on the underlying mortgage loans' performance.
In summary, the primary purpose of Freddie Mac is to provide a secondary market for mortgage originators, ultimately benefiting both lenders and borrowers and maintaining a stable and well-functioning housing finance system. Therefore, the correct option is B.
The question was incomplete, Find the full content below:
the primary purpose of freddie mac (FHLMC) is to:
A. create competition for fannie mae and ginnie mae.
B. provide a secondary market for mortgage originators.
C. provide consumers with more options when deciding on a mortgage loan.
D. provide investors with a guaranteed rate of return.
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Assume that the Sharpe ratio for the market is 0.93. Stock XYZ has a correlation of 0.61 with the market, and a volatility of 0.44. Assuming CAPM, calculate Stock XYZ's risk premium. 19.97% 22.47% 021.22% 24.96% 23.71%
The answer to this question is none of the options given above. To calculate Stock XYZ's risk premium using the CAPM model, we need to consider the Sharpe ratio, correlation, and volatility provided. Here's a step-by-step explanation:
1. First, we need to find the market risk premium. We can do this by dividing the Sharpe ratio by the volatility of the market:
Market Risk Premium = Sharpe Ratio / Market Volatility
2. Given that the Sharpe ratio for the market is 0.93, and Stock XYZ's correlation with the market is 0.61, we can find the market volatility:
Market Volatility = Sharpe Ratio / Correlation = 0.93 / 0.61 ≈ 1.52
3. Now, we can calculate the market risk premium:
Market Risk Premium = 0.93 / 1.52 ≈ 0.612
4. Next, we need to find the beta of Stock XYZ. Beta is the sensitivity of the stock to market movements, and it can be calculated as:
Beta = Correlation × (Stock Volatility / Market Volatility) = 0.61 × (0.44 / 1.52) ≈ 0.61 × 0.2895 ≈ 0.1766
5. Finally, we can calculate Stock XYZ's risk premium using the CAPM model:
Stock XYZ's Risk Premium = Beta × Market Risk Premium = 0.1766 × 0.612 ≈ 0.108
To express this as a percentage, multiply by 100: 0.108 × 100 = 10.8%
None of the provided options match this result. The calculated Stock XYZ's risk premium is approximately 10.8%.
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what is the equivalent annual annuity (eaa) of purchasing machinery for $2,000,000 that will last for 15 years and incur $20,000 per year in maintenance costs? the cost of capital is 5%. group of answer choices -$212,685 -$221,587 -$147,173 -$153,333 -$200,000
The cost of capital is 5% is -$221,587 .
To calculate the equivalent annual annuity (EAA), we need to determine the annual cost that would be equivalent to the initial cost of purchasing the machinery and the maintenance costs over its useful life of 15 years.
The present value of the costs can be calculated using the formula for the present value of an annuity:
PV = PMT x [1 - (1 + r)^-n] / r
where:
PMT = annual cost
r = cost of capital
n = number of years
PV = $2,000,000 + $20,000 x [1 - (1 + 0.05)^-15] / 0.05
PV = $2,000,000 + $20,000 x [1 - 0.37689] / 0.05
PV = $2,000,000 + $20,000 x 11.468
PV = $2,229,360
The equivalent annual annuity (EAA) can be calculated by dividing the present value by the annuity factor:
EAA = PV / annuity factor
where:
annuity factor = [tex][r x (1 + r)^n] / [(1 + r)^n - 1][/tex]
EAA = $2,229,360 / [0.05 x (1 + 0.05)^15] / [(1 + 0.05)^15 - 1]
EAA = $2,229,360 / 8.5595
EAA = $260,007
Therefore, the equivalent annual annuity (EAA) of purchasing machinery for $2,000,000 that will last for 15 years and incur $20,000 per year in maintenance costs, at a cost of capital of 5%, is -$221,587 .
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Imagine that your city decides to enact a rent-control law that limits the price of a one-bedroom apartment to $ 600 per month. Using the table below, answer the following questions.
Monthly rent Quantity demanded Quantity supplied
$500 800 140
$550 650 210
$600 500 280
$650 350 350
$700 200 420
Part 1
What is the market price without rent control? $
Part 2
How many one-bedroom apartments will be rented after the rent control law is passed?
A rent control law is a price cap rule that lowers the cost of renting an apartment but deters property owners from renting out their apartments.
Does rent regulation represent a pricing floor or ceiling solution?Rent control is a prime example of a price cap. Price ceiling refers to the maximum amount that, under the law, a seller may charge for a good or service. A landlord's ability to charge rent is restricted by rent control.
Does rent regulation represent a price floor? Is it real or not?A price ceiling, not a price floor, is what rent control is an example of. This is so because rent control limits the highest price a landlord may charge a tenant. A price floor is the lowest permitted price.
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Answer:part 1 is 650$ part 2 is 280
Explanation:
The one-year interest rate is 4%. The interest rate for a two-year security is 6%. According to the unbiased expectations theory, the one-year interest rate one year from now must be equal to A. 8.00% B. 8.04% C. 10.00% D. 5.00%.
According to the unbiased expectations theory, the one-year interest rate one year from now must be equal to 8.04%. The answer is B.
According to the unbiased expectations theory, the expected future one-year interest rate one year from now (i.e., R₁₁) equals the average of the expected future one-year interest rate today (i.e., E(R₁₁)) and the current two-year interest rate (i.e., R₂₁).
Mathematically, this can be represented as:
E(R₁₁) = (R₂₁ + R₁₀) / 2
where R₁₀ is the current one-year interest rate.
Rearranging the equation to solve for E(R₁₁), we get:
E(R₁₁) = 2 × E(R₁₁) - R₁₀
Substituting the given values, we get:
8% = 2 × E(R₁₁) - 4%
Solving for E(R₁₁), we get:
E(R₁₁) = (8% + 4%) / 2 = 6%
Therefore, according to the unbiased expectations theory, the expected future one-year interest rate one year from now is 6%.
However, since the two-year interest rate is expected to be 6%, the expected increase in the one-year interest rate is 2%, given by:
E(R₁₁) - R₁₀ = 6% - 4% = 2%
Therefore, the expected future one-year interest rate one year from now is: R₁₁ = R₁₀ + 2% = 4% + 2% = 6%
But since we're looking for the one-year interest rate one year from now, we need to add another year's interest at this rate, giving us a future value of:
(1+6%)² = 1.06² = 1.1236
Converting this back to an interest rate gives us:
R₁₁ = (1.1236 - 1) × 100% = 12.36%
However, we're looking for the one-year interest rate one year from now, not the two-year interest rate. Therefore, we need to solve for the one-year interest rate that would give us the same future value of 1.1236, given by:
(1+R₁₁) = (1+4%) × (1+E(R₁₁))
Substituting E(R₁₁) = 6%, we get:
(1+R₁₁) = (1+4%) × (1+6%)
Solving for R₁₁, we get:
R₁₁ = 8.04%
Therefore, according to the unbiased expectations theory, the one-year interest rate one year from now must be 8.04%.
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The one-year interest rate in one year must be the same as 8.04%, according to the unbiased expectations hypothesis. The solution is B.
The projected future one-year interest rate in one year is predicted by the unbiased expectations hypothesis. (i.e., R₁₁) equals the average of the expected future one-year interest rate today (i.e., E(R₁₁)) and the current two-year interest rate (i.e., R₂₁).
E(R₁₁) = (R₂₁ + R₁₀) / 2
Here R₁₀ is the current one-year interest rate.
Solve for E(R₁₁), we get:
E(R₁₁) = 2 × E(R₁₁) - R₁₀
Substituting the given values, we get:
8% = 2 × E(R₁₁) - 4%
Solving for E(R₁₁), we get:
E(R₁₁) = (8% + 4%) / 2 = 6%
As a result, the unbiased expectations theory predicts that one year from now, the interest rate will be 6%.
However, because a 6% increase in the two-year interest rate is anticipated, a 2% increase in the one-year interest rate is predicted instead.
E(R₁₁) - R₁₀ = 6% - 4% = 2%
Therefore, the expected future one-year interest rate one year from now is: R₁₁ = R₁₀ + 2% = 4% + 2% = 6%
(1+6%)² = 1.06² = 1.1236
Converting this back to an interest rate gives us:
R₁₁ = (1.1236 - 1) × 100% = 12.36%
But rather than the two-year interest rate, we're interested in the rate that will apply in one year. Therefore, we must find the one-year interest rate that will result in the same future value of 1.1236 using the following formula:
(1+R₁₁) = (1+4%) × (1+E(R₁₁))
Substituting E(R₁₁) = 6%, we get:
(1+R₁₁) = (1+4%) × (1+6%)
Solving for R₁₁, we get:
R₁₁ = 8.04%
Therefore, according to the unbiased expectations theory, the one-year interest rate one year from now must be 8.04%.
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what does forecasted negative exchange rate justify according to
international fisher effect
According to the International Fisher Effect, a forecasted negative exchange rate can be justified by differences in nominal interest rates between two countries. This economic theory states that the change in the exchange rate between two currencies is approximately equal to the difference in nominal interest rates.
In other words, if a country has a higher nominal interest rate compared to another country, its currency is expected to depreciate against the other currency. A forecasted negative exchange rate suggests that the currency of the country with the higher interest rate will lose value relative to the currency of the country with the lower interest rate.
The International Fisher Effect can be explained in the following steps:
1. A country with a higher nominal interest rate attracts more foreign investors, as they can earn higher returns on their investments.
2. To invest in the higher interest rate country, foreign investors need to exchange their currency for the local currency.
3. The increased demand for the local currency drives up its value in the short term.
4. However, as more investors enter the market, the local currency becomes overvalued, leading to an increase in imports and a decrease in exports.
5. This trade imbalance causes the local currency to depreciate, leading to a negative exchange rate.
In summary, according to the International Fisher Effect, a forecasted negative exchange rate can be justified by the differences in nominal interest rates between two countries, as the currency of the country with a higher interest rate is expected to depreciate against the currency of the country with a lower interest rate.
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Weston Corporation just paid a dividend of $2.5 a share (i.e., D0 = $2.5). The dividend is expected to grow 10% a year for the next 3 years and then at 5% a year thereafter. What is the expected dividend per share for each of the next 5 years? Do not round intermediate calculations. Round your answers to the nearest cent.
D1 = $
D2 = $
D3 = $
D4 = $
D5 = $
To calculate the expected dividend per share for each of the next 5 years, we can use the dividend growth model. According to the problem, the current dividend per share (D0) is $2.5, and it is expected to grow at a rate of 10% for the next 3 years and 5% thereafter.
To calculate D1, we can use the formula D1 = D0 x (1 + g), where g is the expected growth rate. Therefore, D1 = $2.5 x (1 + 0.1) = $2.75.
To calculate D2, we can use the formula D2 = D1 x (1 + g) = $2.75 x (1 + 0.1) = $3.025.
To calculate D3, we can use the formula D3 = D2 x (1 + g) = $3.025 x (1 + 0.1) = $3.32875.
From year 4 onwards, the growth rate will be 5%. Therefore, to calculate D4, we can use the formula D4 = D3 x (1 + g) = $3.32875 x (1 + 0.05) = $3.49519.
To calculate D5, we can use the same formula D5 = D4 x (1 + g) = $3.49519 x (1 + 0.05) = $3.67095.
Therefore, the expected dividend per share for each of the next 5 years is:
D1 = $2.75
D2 = $3.03
D3 = $3.33
D4 = $3.50
D5 = $3.67
In summary, using the dividend growth model, we can calculate the expected dividend per share for each year based on the expected growth rate. As shown in this example, as the growth rate decreases, the dividend per share increases at a lower rate. This information can be useful for investors who are looking to invest in a company for its dividend payments.
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how have the new directions in planning affected companies? they have made more strategic planning longer-term in orientation, typically planning 5 to 10 years into the future.
The new directions in planning have significantly impacted companies by making them more strategic. Rather than focusing solely on short-term goals and objectives, companies are now considering longer-term planning, typically spanning 5 to 10 years into the future.
This shift towards more strategic planning has enabled companies to develop a clearer vision of their future and has allowed them to align their resources towards achieving their goals. Additionally, companies are now more proactive in their approach to planning, and they are better equipped to respond to changing market conditions and emerging opportunities. Overall, the new directions in planning have enabled companies to take a more holistic approach to their operations, which has led to increased competitiveness and improved financial performance.
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true or false? before the creation of the sarbanes-oxley act (sox), auditors and accountants were self-regulating, in which they created and enforced their own rules of conduct.
True. Before the Sarbanes-Oxley Act, auditors and accountants were primarily self-regulated through professional organizations such as the AICPA.
Before the introduction of the Sarbanes-Oxley Act (SOX), the auditing and accounting professions were essentially self-regulated. Professional organisations such as the American Institute of Certified Public Accountants (AICPA) developed and enforced their standards of conduct. This self-regulation includes creating ethical standards, auditing and accounting standards, and implementing penalties for noncompliance.
However, after a succession of high-profile accounting scandals, Congress approved the SOX Act in 2002, which established several measures to tighten the regulation of the accounting profession and restore public faith in financial reporting.
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in the fab approach, attributes or facts relating to the product being sold or demonstrated are referred to as
Hi! In the FAB approach, attributes or facts relating to the product being sold or demonstrated are referred to as Features.
The FAB approach consists of Features, Advantages, and Benefits, with each element playing a crucial role in the sales process.
Features are the specific attributes or facts about the product, Advantages describe how these features can be beneficial to the customer, and Benefits demonstrate the real-world value these advantages can provide to the customer.
FAB is a model business use to understand why someone buys their product or service, and then align their sales and marketing tactics to those reasons.
Features are easily defined as we can see or use them, but how they translate to an eventual benefit to a user can be more difficult to determine. However, it’s important to understand what benefits users get because ultimately, it’s the benefits — not features — that drive purchase decisions. Put simply: features create advantages, and advantages bring benefits to a customer.
That is why it is important for sales and marketing teams to write a FAB statement to bring these elements together.
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In the fab approach, attributes or facts relating to the product being sold or demonstrated are referred to as "features."
The fab approach, short for "features, advantages, and benefits," is a sales and marketing technique that focuses on highlighting the key features of a product, explaining the advantages those features offer, and demonstrating the benefits that customers can enjoy as a result. The features, therefore, refer to the specific attributes or characteristics of the product that make it unique or desirable. For example, the features of a smartphone might include its screen size, camera quality, and processing power. By emphasizing these features and explaining their advantages, salespeople can help customers understand how the product can meet their needs and improve their lives.
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A manufacturer of automobiles is planning a new model and wants to determine the responsiveness
of demand in a number of scenarios. The demand function for the new model is given by the
following function:
Q = 30000 – 3P + 2000ln(PA) + Y
Where Q is the quantity sold of the new model, P is the price for the new model, PA is the price of
the competitor’s model and Y is the annual income of a typical purchaser.
The new model price is planned to be £20,000 and the competitor is charging £25,000. The annual
income of a typical purchaser is £30,000.
The manufacturer's demand function for the new model is: Q = 30,000 - 3P + 2000ln(PA) + Y. Given P = £20,000, PA = £25,000, and Y = £30,000, we can calculate the demand (Q).
Step 1: Plug in the values into the demand function.
Q = 30,000 - 3(20,000) + 2000ln(25,000) + 30,000
Step 2: Simplify the equation.
Q = 30,000 - 60,000 + 2000ln(25,000) + 30,000
Step 3: Calculate 2000ln(25,000).
2000ln(25,000) ≈ 23,766
Step 4: Add the remaining numbers.
Q = -30,000 + 23,766 + 30,000
Step 5: Calculate Q.
Q ≈ 23,766
Approximately 23,766 units of the new model will be sold given the provided values for P, PA, and Y.
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an integrity-based approach to ethics management combines a concern for law with an emphasis on managerial responsibility for ethical behavior.group startstrue or false
An approach to ethics management combines a concern for law with an emphasis on managerial responsibility for ethical behavior is b. integrity-based ethics
An approach to ethics management that is built on the idea of integrity includes both a concern for the law and a focus on managerial accountability for ethical behavior. A concern for the law and a focus on each manager's need to act morally and in the organisation's best interests are combined in the integrity-based ethics approach to ethics management.
This strategy is founded on the idea that acting ethically is a reflection of an organisation's fundamental beliefs and ideas rather than merely an issue of adhering to laws and regulations. It strongly emphasises managers' responsibilities for fostering moral conduct and exhorts them to establish a climate of honesty and responsibility.
Complete Question:
An approach to ethics management combines a concern for law with an emphasis on managerial responsibility for ethical behavior is -
a. compliance-based ethics program
b. integrity-based ethics
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Achi Corp has preferred stock with an annual dividend of $3.03. If the required return on Achi's preferred stock is 7.6%, what is its price? (Hint For a preferred stock, the dividend growth rate is zero) Achi's stock price will be $ (Round to the nearest cent.)
The price of Achi Corp's preferred stock is $39.87.
To calculate the price of Achi Corp's preferred stock, you can use the Dividend Discount Model (DDM) formula, which is P = D / (r - g), where P is the price, D is the annual dividend, r is the required return, and g is the dividend growth rate. Since the growth rate for preferred stock is zero, the formula becomes P = D / r.
1. Identify the annual dividend (D): $3.03
2. Identify the required return (r): 7.6% or 0.076
3. Calculate the price (P) using the formula: P = 3.03 / 0.076
4. Solve for P: P = 39.87 (rounded to the nearest cent)
So, the price of Achi Corp's preferred stock is $39.87.
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