Your net profit per share to buy and sell XYZ after considering the commissions and any exchange fees or credits is -$0.0050.
To calculate your net profit per share when buying and selling XYZ, we need to consider the broker charges, exchange fees or credits, and the change in the stock price.
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XYZ stock price and dividend history are as follows: Year Beginning-of-Year Price dividend paid at years end
2007 $330 $5
2008 $340 $5
2009 $320 $5
2010 $325 $5
An investor buys 3 shares of XYZ at the beginning of 2007, buys another 2 shares at the beginning of 2008, sells 1 share at the beginning of 2009, and sells all 4 remaining shares at the beginning of 2010. Requirement 1: What are the arithmetic and geometric average time-weighted rates of return for the investor? (Round your answers to 2 decimal places. Omit the "%" sign in your response.) Arithmetic mean Geometric mean % % Requirement 2: (a) What is the dollar-weighted rate of return? (Negative value should be indicated by a minus sign. Round your answer to 2 decimal places. Omit the "%" sign in your response.) Rate of return %
The arithmetic mean rate of return is 1.00%, the geometric mean rate of return is -2.00%, and the dollar-weighted rate of return is -20.89%
To calculate the time-weighted rates of return, we need to find the ending value of the investment and the holding period return for each period:
Year | Shares | Beginning Value | Dividend | Ending Value | Holding Period Return
2007 | 3 | $990 | $15 | $1,035 | (1,035 - 990 - 15) / 990 = 0.03
2008 | 5 | $1,700 | $25 | $1,790 | (1,790 - 1,700 - 25) / 1,700 = 0.03
2009 | 4 | $1,280 | $20 | $1,305 | (1,305 - 1,280 - 20) / 1,280 = 0.02
2010 | 0 | $0 | $0 | $0 | (0 - 1,305 - 20) / (1,305 + 20) = -0.011
Arithmetic mean = (0.03 + 0.03 + 0.02 - 0.011) / 4 = 0.0185 = 1.85%
Geometric mean =
[(1 + 0.03) × (1 + 0.03) × (1 + 0.02) × (1 - 0.011)][tex]^(1/4)[/tex] - 1 = 0.0109 = 1.09%
To calculate the dollar-weighted rate of return, we need to find the initial and ending values of the investment, and the cash flows for each period:
Year | Shares | Beginning Price | Beginning Value | Dividend | Cash Flow | Ending Price | Ending Value | Holding Period Return
[tex]2007 | 3 | $330 | $990 | $15 | -$1,005 | $340 | $1,020 | (1,020 - 990 - 15) / (990 + 1,005)[/tex]= 0.0142
[tex]2008 | 5 | $340 | $1,700 | $25 | -$1,725 | $320 | $1,600 | (1,600 - 1,700 - 25) /[/tex] (1,700 + 1,725) = -0.0739
[tex]2009 | 4 | $320 | $1,280 | $20 | -$20 | $325 | $1,300 | (1,300 - 1,280 - 20) / (1,280 + 20)[/tex] = 0.0169
[tex]2010 | 0 | $325 | $0 | $0 | $1,300 | $0 | $0 |[/tex]
0 = -$450
Initial value = $990 + $1,700 = $2,690
Ending value = $0
Dollar-weighted rate of return = (0 - 2,690 - (-450)) / 2,690 = -0.2089 = -20.89%
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Nieman Company purchased merchandise on account from a supplier for $10,900, terms 1/10, n/30. Nieman Company returned $2,400 of the merchandise and received full credit. a. If Nieman Company pays the invoice within the discount period, what is the amount of cash required for the payment? If required, round the answer to the nearest dollar.
$ b. What account is credited by Nieman Company to record the return?
The amount of cash required for the payment is $8,415 and the account that is credited is the "Accounts Payable" account.
a. First, let's calculate the net purchase amount by subtracting the returned merchandise value from the total purchase amount:
$10,900 (purchase amount) - $2,400 (returned merchandise) = $8,500 (net purchase amount)
Now, we need to determine the discount for paying within the 1/10 discount period. The discount is calculated as 1% of the net purchase amount:
$8,500 * 0.01 = $85 (discount)
Now, subtract the discount from the net purchase amount to find the cash required for payment:
$8,500 (net purchase amount) - $85 (discount) = $8,415
If Nieman Company pays the invoice within the discount period, the amount of cash required for the payment is $8,415 (rounded to the nearest dollar).
b. When Nieman Company records the return of merchandise, the account that is credited is the "Accounts Payable" account. By crediting this account, Nieman Company reduces its liability to the supplier, reflecting the fact that they have returned merchandise and received full credit for it.
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a ________, which is conducted by the project manager, involves determining if the information system makes sense for the organization from an economic and operational standpoint.
A - b. Feasibility study which is conducted by the project manager, involves determining if the information system makes sense for the organization from an economic and operational standpoint.
A feasibility study is a quick examination of a proposed project or endeavor to assess its benefits and viability.
Hence, option B. is correct.
An example of Feasibility study ?A hospital, for instance, may do a feasibility study if it plans to grow, i.e., construct an addition to the structure. The research will help decide if the project should move forward. Costs associated with labour and materials will be taken into consideration by those conducting the study.
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The complete question is-
A ________,which is conducted by the project manager, involves determining if the information system makes sense for the organization from an economic and operational standpoint.
A)Tool
B)Feasibility study
C)Data flow
D)Methodology
_____ is the process of hiring, developing, motivating, and evaluating people in order to achieve organizational goals.
A) Developmental Management
B) Functional organization
C) Operations Management
D) Human resource Management
E) Production Management
The correct answer to the given question is D) Human Resource Management. It is the process of hiring, developing, motivating, and evaluating people in order to achieve organizational goals.
Human Resource Management (HRM) is a crucial function that focuses on the recruitment, selection, and retention of qualified employees who can contribute to the success of the organization.
HRM involves a variety of activities, including job analysis, recruitment, selection, orientation, training and development, performance appraisal, compensation, and benefits. The HR department plays a vital role in managing the organization's workforce and ensuring that the employees are motivated and engaged to achieve the organization's goals.
HRM also involves developing and implementing policies and procedures that ensure compliance with employment laws and regulations. The HR department must also create a positive work environment that promotes employee satisfaction, engagement, and productivity. So, the correct option in D) Human resource Management.
In summary, Human Resource Management is essential to the success of any organization. It helps to attract and retain talented employees, develop their skills, and motivate them to achieve organizational goals. By focusing on the people within an organization, HRM can create a competitive advantage that enables the organization to succeed in a dynamic and ever-changing business environment.
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Human Resource Management is the process of hiring, developing, motivating, and evaluating people in order to achieve organizational goals.
HRM involves various activities, including recruitment and selection of suitable candidates, training and development to enhance skills and capabilities, performance management to ensure employees meet or exceed expectations, and motivation strategies to encourage employees to contribute their best efforts towards organizational objectives. HRM also includes compensation and benefits administration, employee relations, and employee engagement initiatives to create a positive work environment. Effective HRM practices are crucial for organizations to attract and retain top talent, maximize employee productivity, and achieve overall success.
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Griffey Communications recently realized $122,500 in operating income. The company had interest income of $35,000 and realized $70,000 in dividend income. The company’s interest expense was $55,000. Its corporate tax rate is 25%. Griffey is a small company, so it is not subject to the interest expense deduction limitation. Assume a 50% dividend exclusion for taxes on dividends. a. $43,125 b. $34,375 c. $25,625 d. $48,125
C - $25,625.
Griffey Communications recently realized $122,500 in operating income. The company had interest income of $35,000 and realized $70,000 in dividend income.
The company’s interest expense was $55,000. Its corporate tax rate is 25%. Griffey is a small company, so it is not subject to the interest expense deduction limitation. Assume a 50% dividend exclusion for taxes on dividends.
To calculate the company’s taxable income, we must first subtract the interest income and interest expense from the operating income. This leaves us with $32,500.
We then subtract the 50% dividend exclusion for taxes on dividends, which leaves us with $17,500. Finally, we multiply this amount by the corporate tax rate of 25%, which gives us $25,625. Therefore, the company’s taxable income is $25,625.
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a firm will obtain its profit-maximizing level of employment where group of answer choices value of marginal product equals marginal wage cost. marginal revenue product equals marginal wage cost. marginal product equals marginal revenue product. marginal revenue product equals value of marginal product.
A firm will obtain its profit-maximizing level of employment where the value of the marginal product equals to marginal wage cost. Option A is correct.
The value of marginal product (VMP) represents the additional revenue that a firm generates by employing one more unit of labor, while the marginal wage cost (MWC) represents the additional cost incurred by the firm when it hires a one more unit of labor.
To maximize profits, a firm should continue hiring more workers as long as the VMP exceeds the MWC. Once the VMP becomes equal to the MWC, the firm has reached its profit-maximizing level of employment. At this point, hiring any additional workers would result in the firm incurring more costs than the additional revenue generated by their employment, leading to a decrease in profits.
Hence, A. is the correct option.
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--The given question is incomplete, the complete question is
"A firm will obtain its profit-maximizing level of employment where group of answer choices A) value of marginal product equals marginal wage cost. B) marginal revenue product equals marginal wage cost. C) marginal product equals marginal revenue product. D) marginal revenue product equals value of marginal product."--
An import/export business has contracted to deliver marble slabs to a retail business that sells the slabs directly to consumers. Due to months-long delays at U.S. ports, the importer is concerned that it may not make its next delivery on time. The importer needs to determine its contract with the retailer allows for modifications to the contract's delivery or performance dates. Which of the following clauses might be most helpful for the importer? a non compete clause an exculpatory clause a choice of forum clause a harship clause
The clause that might be most helpful for the importer is the hardship clause. In this scenario, an import/export business is facing potential delays in delivering marble slabs to a retail business due to port issues. The importer wants to know if their contract allows for modifications to delivery or performance dates.
Out of the given options, the most helpful clause for the importer would be a hardship clause. A hardship clause allows for contract modifications when unforeseen circumstances, such as delays at U.S. ports, make performance difficult or impossible. This clause provides flexibility in the contract and may allow the importer to adjust delivery dates without breaching the contract.
In contrast, a non-compete clause, an exculpatory clause, and a choice of forum clause are not directly relevant to the issue at hand. A non-compete clause prevents parties from competing with each other, an exculpatory clause limits liability for damages, and a choice of forum clause determines the location for dispute resolution.
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the evidence from hyperinflations indicates that money growth and inflationa.are not related in a discernible fashion, which is consistent with the quantity theory of money.b.are positively related, which is not consistent with the quantity theory of money.c.are positively related, which is consistent with the quantity theory of money.d.are not related in a discernible fashion, which is not consistent with the quantity theory of money.
A - the evidence from hyperinflations indicates that money growth and inflation are not related in a discernible fashion, which is consistent with the quantity theory of money.
What is quantity theory of moneyThis theory states that changes in the money supply will lead to proportionate changes in the price level. However, hyperinflationary episodes have shown that this relationship is not always straightforward.
In some cases, hyperinflation has occurred despite low money growth rates, while in others, high money growth rates have not led to significant inflation. This is because other factors, such as political instability or supply shocks, can have a greater impact on inflation than changes in the money supply.
Therefore, while the quantity theory of money provides a useful framework for understanding inflation, it is not a foolproof predictor of inflationary outcomes.
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a call option currently sells for $7.25. it has a strike price of $55 and eight months to maturity. a put with the same strike and expiration date sells for $5.50. if the risk-free interest rate is 5.4 percent, what is the current stock price? (do not round intermediate calculations. round your answer to 2 decimal places.)
Answer: price will be 42.25 and the percentage price per stock $2.28
Explanation:
current price $7.25
strike price $55
reduce $ 5.50
$55-$7,25 = 47.75
47.75- 5.50 ( expiration date sells)
= 42.25
percentage of interest free = 42.25* 5.5%= 2.28
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the _____ approach examines a lifetime stream of additional earnings and cost savings for an investment and discounts the value of those investments by a specified interest rate.
The Net Present Value (NPV) approach examines a lifetime stream of additional earnings and cost savings for an investment and discounts the value of those investments by a specified interest rate.
This method takes into consideration the time value of money, recognizing that a dollar received today is worth more than a dollar received in the future.
The NPV approach allows investors to evaluate an investment based on its potential future cash flows, providing insight into the project's profitability and financial viability. By discounting future cash flows to present value, investors can compare different investment options on a consistent basis, helping them make informed decisions.
To calculate the NPV, investors identify the expected cash inflows and outflows over the lifetime of the investment, discount them using the specified interest rate, and then subtract the initial investment cost.
If the resulting NPV is positive, it suggests that the investment is likely to generate a return greater than the specified discount rate, making it an attractive option. Conversely, a negative NPV indicates that the investment may not yield returns as high as the specified discount rate and might be less appealing.
In summary, the NPV approach is a valuable tool for analyzing an investment's potential earnings and cost savings. By accounting for the time value of money and discounting future cash flows, this method enables investors to effectively compare and evaluate investment options based on their financial potential and risk profiles.
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Virginia Co. has expected earnings before interest and taxes of $9,000, an unlevered cost of capital of 10 percent, and debt with both a book and face value of $19,000. The debt has an 7 coupon. The tax rate is 21 percent. What is the value of the firm? A. $58,340 B. $67,310
C. $75,090 D. $93,870
The present value of the firm is $86310. The correct option is b) $67310.
To calculate the value of the firm, we need to use the formula for the weighted average cost of capital (WACC). First, we need to calculate the cost of debt, which is the coupon rate multiplied by (1-tax rate). So, the cost of debt for Virginia Co. is 5.53% (7%*(1-0.21)).
The weight of debt in the WACC calculation is the book value of debt divided by the sum of the book value of debt and the market value of equity. We don't have the market value of equity, but we can calculate it by subtracting the book value of debt from the value of the firm. So, using the WACC formula, we get:
WACC = (10%*(1-0.21)*(1-0.21)) + (5.53%*(19,000/(19,000+MVE)))
where MVE is the market value of equity. We can solve for MVE by setting the WACC equal to the unlevered cost of capital and solving for MVE. This gives us a value of $67,310, which is answer B. Therefore, the value of the firm is $86,310 ($67,310+19,000).
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(Common stockholder expected return) Ziercher executives anticipate a growth rate of 9 percent for the company's common stock. The stock is currently selling for $41.91 per share and pays an end-of-year dividend of $1.28 . What is your expected rate of return if you purchase the stock for its current market price of $41.91?
The stock would return 12.05% annually if bought at the current market price of $41.91.
To calculate the common stockholder expected return, we need to consider both the dividend yield and the expected capital appreciation. The dividend yield can be calculated by dividing the annual dividend by the current market price of the stock:
Dividend yield = Annual dividend / Current market price
In this case, the annual dividend is $1.28 and the current market price is $41.91, so:
Dividend yield = $1.28 / $41.91 = 0.0305 or 3.05%
The expected capital appreciation is given as 9%, so we can add this to the dividend yield to get the expected rate of return:
Expected rate of return = Dividend yield + Expected capital appreciation
Expected rate of return = 3.05% + 9% = 12.05%
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_____ are markets in which financial securities are issued for the first time, while _____ are markets where already existing securities are traded.
Primary Markets are markets in which financial securities are issued for the first time, while Secondary markets are markets where already existing securities are traded.
Primary markets are in which agencies issue new securities, including stocks and bonds, to elevate capital from investors. these securities are offered to the general public for the first time, frequently via an preliminary public offering (IPO).
In assessment, secondary markets are wherein already current securities are traded between investors, with out the involvement of the issuing corporation.
Examples of secondary markets include stock exchanges just like the big apple stock exchange and the Nasdaq, in which shares of publicly traded corporations are offered and offered by investors. Secondary markets offer liquidity to investors, as they offer a platform to trade securities easily and quickly.
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Primary Markets are markets in which financial securities are issued for the first time, while Secondary markets are markets where already existing securities are traded.
Primary markets are in which agencies issue new securities, including stocks and bonds, to elevate capital from investors. these securities are offered to the general public for the first time, frequently via an preliminary public offering (IPO). In assessment, secondary markets are wherein already current securities are traded between investors, with out the involvement of the issuing corporation. Examples of secondary markets include stock exchanges just like the big apple stock exchange and the Nasdaq, in which shares of publicly traded corporations are offered and offered by investors. Secondary markets offer liquidity to investors, as they offer a platform to trade securities easily and quickly.
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which of the following is the primary drawback of traditional strategic control systems? group of answer choices they are only appropriate when the environment is stable and simple. goals and objectives cannot be measured with a high level of certainty. they lead to complacency. they lack the flexibility needed to adjust to changes in the environment.
The primary drawback of traditional strategic control systems is that "they lack the flexibility needed to adjust to changes in the environment." (option d).
Traditional strategic control systems are designed to ensure that the organization's strategies and plans are executed effectively and efficiently. However, these systems are typically designed for stable and predictable environments, where changes are infrequent and can be anticipated. In dynamic and complex environments, traditional control systems can be too rigid and inflexible to adapt to changing circumstances and can hinder the organization's ability to respond to new challenges and opportunities.
Therefore, the lack of flexibility is the primary drawback of traditional strategic control systems.
Option d is answer.
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conditions that must be met for principal-principal (pp) conflicts to occur include of the following except group of answer choices a dominant owner or group of owners who have interests that are distinct from minority shareholders legislation that protects the interest of the minority shareholders a motivation for the controlling shareholders to exercise their dominant position to get an advantage few formal (legislation or regulation agencies) or informal constraints that discourage or prevent the controlling shareholders from exploiting their advantageous positions
The condition that must not be met for principal-principal (PP) conflicts to occur is "legislation that protects the interest of the minority shareholders." (option c).
Principal-principal (PP) conflicts refer to conflicts that arise between two or more controlling shareholders or groups of shareholders who have distinct interests. PP conflicts occur when a dominant owner or group of owners tries to maximize their own interests at the expense of other shareholders or the company as a whole. These conflicts can arise due to the motivations of controlling shareholders to exercise their dominant positions to gain an advantage.
Few formal or informal constraints that discourage or prevent the controlling shareholders from exploiting their advantageous positions can also lead to PP conflicts. However, legislation that protects the interest of the minority shareholders can help prevent such conflicts by ensuring that all shareholders have equal rights and representation on the board of directors.
Therefore, it is incorrect to say that legislation that protects the interest of the minority shareholders is a condition that must be met for PP conflicts to occur. Option c is answer.
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a high level manager may dress more formally, have a larger and more expensively furnished office, and walk and speak authoritatively. she is using nonverbal behaviors to .
A high-level manager may utilize nonverbal cues to communicate power and authority. Manager is a person in charge of supervising and controlling the work of others.
Dress, posture, and mannerisms, for example, can send vital messages to others about a person's rank, authority, and ability. To project power and authority to employees, colleagues, and clients, a high-level manager may dress more formally, have a larger and more expensively furnished office, and walk and speak authoritatively.
These nonverbal behaviors can convey competence and confidence to others and influence how they perceive and respond to the manager.
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jessica's boutique has cash of $218, accounts receivable of $457, accounts payable of $398, and inventory of $647. what is the value of the quick ratio? group of answer choices 1.05 1.32 .55 1.52 1.70
Jessica's boutique has cash of $218, accounts receivable of $457, accounts payable of $398, and inventory of $647. In this case, the inventory is not included in the quick ratio calculation. The quick ratio for Jessica's Boutique is approximately 1.70
Step 1: Add the cash and accounts receivable amounts.
Cash = $218,
Accounts Receivable = $457
Cash + Accounts Receivable =
$218 + $457 = $675
Step 2: Divide the sum by the accounts payable amount.
Accounts Payable = $398
Quick Ratio =
$675 / $398 ≈ 1.70
So, the quick ratio for Jessica's Boutique is approximately 1.70. Your answer is 1.70.
How well a business can pay off its present debts is determined by the fast ratio, calculation, and financial statistics. This ratio is frequently used by accountants and other finance experts to swiftly and easily assess the financial health of a company.
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meghan is a massage therapist whose client, reggie, pays $110 per hour-long session. reggie values this service at $125 per hour, while the opportunity cost of meghan's time is $85 per hour. the government places a tax of $8 per hour on massage therapists. after the tax, what is likely to happen in the market for massage therapy?
The market for massage therapy is likely to be affected by the tax. The tax reduces the net revenue that massage therapists receive, which may discourage some therapists from providing their services or may cause them to raise their prices. This could reduce the supply of massage therapy in the market.
After the tax of $8 per hour on massage therapists, Meghan's net revenue per hour will be $110 - $8 = $102. This is her post-tax revenue.
Reggie values the service at $125 per hour, which means he is willing to pay up to $125 for a one-hour session. However, the price he pays is only $110. This creates a consumer surplus for Reggie, which is the difference between the value he places on the service ($125) and the price he pays ($110). So Reggie's consumer surplus is $15 ($125 - $110) per hour.
Meghan's opportunity cost of time is $85 per hour. This means that if she were not a massage therapist, she could earn $85 per hour doing something else. However, as a massage therapist, she earns $102 per hour after the tax. This creates a producer surplus for Meghan, which is the difference between the price she receives for her service ($102) and her opportunity cost of time ($85). So Meghan's producer surplus is $17 ($102 - $85) per hour.
If the tax were higher, the deadweight loss would be greater and could potentially reduce the overall welfare of consumers and producers in the market for massage therapy.
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You have bought the exchange-listed convertible bonds of a company today on Jan 2, 20X1, immediately after the coupon payment. The bond has the following features: Coupon rate of 6.30% (compounded semi-annually, coupon payable every six months); yield-to-maturity of 4.75% (compounded semi-annually); maturity on Jan 2 of 20X9; and coupon payable on every Jan 2 and Jul 2. Each $1,000 face value convertible bond converts into 30 company shares. Comparable plain-vanilla (non-convertible) bonds with the same maturity, coupon, and credit risk are yielding 5.65% compounded semi-annually. The company shares are currently trading at $35.26 per share. The company doesn't pay any dividend. The delta of long-dated, at-the-money call options on the company's shares is 0.613 and is not expected to change with short-term changes in prices of the underlying. What is the price of the convertible bond (per $1,000 face value) today?
The price of the convertible bond today (per $1,000 face value) is $1,165.58.
To calculate the price of the convertible bond, we need to calculate the present value of the bond's cash flows using the given yield-to-maturity of 4.75%.
We can use the bond pricing formula to calculate the present value of the bond's cash flows, which includes the semi-annual coupon payments and the principal payment at maturity. We can then add the value of the conversion option to get the price of the convertible bond.
Using the bond pricing formula, we get a present value of $1,118.27 for the bond's cash flows. To calculate the value of the conversion option, we need to calculate the price of 30 company shares using the current share price of $35.26 per share, which gives a value of $1,057.80.
We then multiply this value by the delta of the conversion option, which is 0.613, to get a value of $647.96. Adding this value to the present value of the bond's cash flows gives us a total price of $1,166.23 per $1,000 face value of the convertible bond.
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For the following options available on Australian dollars (A$), construct a worksheet for a long strangle.
Put option strike price = $0.64.
Call option strike price = $0.62.
Put option premium = $0.02 per unit.
Call option premium = $0.04 per unit.
Use a minus sign to enter loss values, if any. Use a minus sign to enter loss values, if any. If the answer is zero, enter "0". Round your answers to the nearest cent.
Value of Australian dollar at Option Expiration
$0.55 $0.62 $0.64 $0.70
Own a Call $ $ $ $
Own a Put $ $ $ $
Net $ $ $
For the following options available on Australian dollars (A$), construct a worksheet for a long strangle with the given information:
Put option strike price = $0.64
Call option strike price = $0.62
Put option premium = $0.02 per unit
Call option premium = $0.04 per unit
Value of Australian dollar at Option Expiration: $0.55, $0.62, $0.64, $0.70
Own a Call:
$0.55 - $0
$0.62 - $0
$0.64 - $0.02
$0.70 - $0.08
Own a Put:
$0.55 - $0.09
$0.62 - $0.02
$0.64 - $0
$0.70 - $0
Net:
$0.55 - (-$0.09)
$0.62 - (-$0.02)
$0.64 - (-$0.02)
$0.70 - $0.08
The resulting worksheet is as follows:
Value of Australian dollar at Option Expiration | Own a Call | Own a Put | Net
$0.55 | $0 | -$0.09 | $0.09
$0.62 | $0 | -$0.02 | $0.02
$0.64 | -$0.02 | $0 | -$0.02
$0.70 | $0.08 | $0 | $0.08
Remember to use a minus sign to enter loss values, and round your answers to the nearest cent.
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What is the price of a 0.75-year floating rate bond that pays semi-annual coupon equal to the LIBOR plus 1.0% spread? Use the following information: (I) Price of the 0.25-year zero coupon bond is 99.9; (II) Price of the 0.5-year zero coupon bond is 99.6; (III) There is a 0.75-year coupon bond paying 2% quarterly and its price is 100.8945; (IV) 3 months ago, the 6-month LIBOR was 4%.
The price of a 0.75-year floating rate bond that pays semi-annual coupons equal to the LIBOR plus 1.0% spread is 100.0911.
To calculate this, follow these steps:
1. Determine the discount factors for each cash flow. Using the given zero-coupon bond prices: (I) DF1 = 99.9 / 100 = 0.999 and (II) DF2 = 99.6 / 100 = 0.996.
2. Calculate the forward LIBOR rate (fLIBOR) using the discount factors: fLIBOR = (DF1 / DF2 - 1) * 2 = (0.999 / 0.996 - 1) * 2 = 0.006012.
3. Calculate the cash flows of the floating rate bond: (IV) Coupon = (4% + 1%) / 2 = 2.5%, (III) Principal repayment = 100.8945.
4. Discount the cash flows using the discount factors: PV(Coupon) = 2.5 * DF1 = 2.5 * 0.999 = 2.4975, PV(Principal) = 100.8945 * DF2 = 100.8945 * 0.996 = 100.4936.
5. Sum the present values to find the bond price: 2.4975 + 100.4936 = 100.0911.
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you expect ccm corporation to generate the following free cash flows over the next five years: year 1 2 3 4 5 fcf ($ millions) 25 28 32 37 40 following year five, you estimate that ccm's free cash flows will grow at 5% per year and that ccm's weighted average cost of capital is 13%. if ccm has $200 million of debt and 8 million shares of stock outstanding, then the share price for ccm is closest to: group of answer choices $49.50. $12.50. $19.35. $24.50.
The value of the share price for CCM Corporation is $124.50.
How to calculate the share priceTo calculate the share price for CCM Corporation, we need to first calculate the present value of its free cash flows over the next five years.
Using the formula for present value of a growing perpetuity, we can calculate the present value of CCM's cash flows after year 5, which comes out to be $1.04 billion.
Next, we need to calculate the present value of the first five years' cash flows using the formula for present value of an annuity. This comes out to be $131.9 million.
Adding these two present values gives us a total present value of $1.17 billion.
Subtracting the $200 million debt gives us an equity value of $970 million.
Finally, dividing this equity value by the number of outstanding shares (8 million) gives us a share price of $121.25.
Therefore, the closest answer choice is $124.50.
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what would you expect to pay for a stock with a 17% required rate of return and negative 6% rate of dividend growth if the next yearly dividend is $3.50, to be paid one year from today? group of answer choices 17.47 12.86 15.22 19.03
The expected value to pay for a stock with a 17% required rate of return and negative 6% rate of dividend growth is approximately $15.22.
How to calculate the expected price for a stockTo find the expected price for a stock with a 17% required rate of return, a negative 6% rate of dividend growth, and a $3.50 next yearly dividend, we can use the Dividend Discount Model (DDM).
The DDM formula is:
Stock Price = D1 / (required rate of return - dividend growth rate)
D1 is the next yearly dividend, which is $3.50.
The required rate of return is 17%, or 0.17, and the dividend growth rate is -6%, or -0.06.
Plugging in the values:
Stock Price = $3.50 / (0.17 - (-0.06)) = $3.50 / 0.23
Stock Price ≈ $15.22
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the swanky hotel provides room service for its guests. the process for room service begins with a room service manager who takes orders by phone at an average of 2 minutes per order. the manager then sends the order to the kitchen, where it takes a cook an average of 16 minutes to prepare the food for each order. there are four cooks in the kitchen. if the customer orders a beverage, the room service manager sends the order to the bar at the same time the order is sent to the kitchen. it takes 3 minutes for a bartender to fill the order, and 80 percent of the orders require a beverage. when the kitchen and bar orders are both ready, a waiter takes them to the room and bills the guest. there are six waiters to provide the service, and each order takes 20 minutes for the waiter to complete. what is the capacity of the process, and what is the bottleneck? what is the throughput time of a typical order? assume that on friday evenings an average of 10 room-service orders per hour are placed. how many orders are in the system on average on friday nights? assume the following pay rates for the employees. waiters are paid $9 per hour (not including tips), cooks are paid $15 per hour, the bartender is paid $10 per hour, and the room service manager is paid $18 per hour. also, assume that 60 percent overhead is added to direct labor and that the cost of food and beverages averages $6 per order. what is the average cost of an order when operating at 10 orders per hour? what is the minimum cost per order that the system can achieve? what assumptions have you made in these calculations that may not be reasonable?
The process for room service at the Swanky Hotel involves several steps and multiple employees. The capacity of the process is determined by the bottleneck by determining the average cost.
In this case, the bottleneck is the cooking process, as it takes the longest time to complete an order. The throughput time of a typical order can be calculated by adding up the time taken at each step, which is 2 minutes for the room service manager, 16 minutes for the cook, and 20 minutes for the waiter, totaling 38 minutes. Assuming an average of 10 room service orders per hour on Friday evenings, the number of orders in the system on average would be 10 orders x 38 minutes/60 minutes = 6.33 orders.
The average cost of an order can be calculated by adding up the costs of direct labor, overhead, and food and beverage costs. At 10 orders per hour, the direct labor cost would be $198 (6 waiters x $9 per hour x 1.6 to include overhead), the cook cost would be $40 (4 cooks x $15 per hour x 1.6), the bartender cost would be $6 (1 bartender x $10 per hour x 1.6), and the room service manager cost would be $6.40 (20 minutes/60 minutes x $18 per hour x 1.6), totaling $250.40. Adding the food and beverage cost of $6 per order brings the average cost of an order to $25.04.
The minimum cost per order that the system can achieve is determined by identifying and eliminating any non-value-added activities or inefficiencies in the process. Assumptions made in these calculations include the steady demand for room service, the accuracy of the time estimates for each step in the process, and the assumption that all employees are working at their maximum efficiency.
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Suppose an individual who has an income M = 200, and who faces a game in which he must bet $10 to win $50 with a probability of 25%. Then the Expected value E(m) of wealth after this gamble is: (a) 200 b) 205 c) 150 d) 5
The expected value E(m) of wealth after this gamble will be 5 the correct option is d) 5
The expected value E(m) of wealth after this gamble can be calculated using the formula: E(m) = (probability of winning * amount won) - (probability of losing * amount lost).
In this case, the individual has a 25% chance of winning $50 and a 75% chance of losing $10. So, the expected value E(m) can be calculated as follows:
E(m) = (0.25 * $50) - (0.75 * $10)
E(m) = $12.50 - $7.50
E(m) = $5
Therefore, the correct answer is (d) 5.
This means that if the individual plays this game many times, on average they can expect to have a wealth of $5 after each game. However, it's important to note that this does not guarantee that the individual will always end up with $5 after playing the game, as the outcome can be different each time.
In conclusion, calculating the expected value of a gamble can help individuals make informed decisions about whether or not to take a risk. However, it's important to weigh the potential gain against the potential loss and consider factors such as personal risk tolerance and financial situation before making any decisions.
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(Common stock valuation) Herrera Motor Inc. paid a $3.75 dividend last year. At a constant growth rate of 4 percent, what is the value of the common stock if the investors require a rate of return of 18 percent?
The value of the Herrera Motor common stock is $? (Round to the nearest cent.)
If the company keeps its current dividend growth rate of 4% per year, the calculation of the stock value indicates that investors will pay $26.79 for each share of Herrera Motor Inc. common stock.
To calculate the value of Herrera Motor Inc.'s common stock, we can use the constant growth dividend discount model. According to this model, the value of a stock is equal to the present value of all future dividends.
Using the formula:
Stock value = Dividend / (Required rate of return - Growth rate)
Substituting the given values:
Stock value = 3.75 / (0.18 - 0.04) = $26.79
Therefore, the value of Herrera Motor Inc.'s common stock is $26.79.
The required rate of return is the minimum rate of return an investor expects from an investment. In this case, the investors require a rate of return of 18 percent. The constant growth rate of 4 percent is the rate at which the dividends of the company are expected to grow in the future. The model assumes that the growth rate remains constant forever.
The calculation of the stock value indicates that the investors will pay $26.79 for each share of Herrera Motor Inc.'s common stock, assuming that the company maintains a constant dividend growth rate of 4 percent per year.
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The pecking order theory says that insiders know more about firms than outside investors do, so when firms issue equity, investors suspect that the equity maybe overvalued and are only willing to buy the equity at a discount.
Select one:
True
False
The pecking order theory does not suggest that insiders know more about firms than outside investors, but instead suggests that firms use their internal resources to finance investments, so when firms issue equity, outside investors may be concerned that the equity is overvalued and unwilling to purchase it at the full value.
The pecking order theory states that when firms have other financing options such as retained earnings or debt, they will use those options first before issuing equity. This theory is based on the assumption that investors are risk averse and will not purchase equity at full value, so the firm will have to offer the equity at a discount.
This discount is meant to compensate investors for the added risk of investing in the firm's equity. As a result, the pecking order theory implies that firms must offer lower prices to attract investors to purchase the equity.
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If a brand element can be used to introduce new products in the same or different categories, the brand element is said to be ________.
a. memorable
b. meaningful
c. likeable
d. transferable
e. adaptable
If a brand element may be used to introduce new merchandise within the identical or different categories, the logo element is stated to be transferable.
A transferable brand element can assist a corporation leverage its current brand fairness and reduce the charges related to building brand recognition and loyalty for new merchandise.
For example, the Nike "swoosh" brand is a transferable brand element because it has been efficaciously used to introduce new products in various classes, consisting of shoes, garb, and sports activities system. This reduces the need for Nike to spend as much on advertising and brand-constructing for new merchandise, as customers already accomplice the swoosh logo with satisfactory and performance.
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If a brand element may be used to introduce new merchandise within the identical or different categories, the logo element is stated to be transferable.
A transferable brand element can assist a corporation leverage its current brand fairness and reduce the charges related to building brand recognition and loyalty for new merchandise. For example, the Nike "swoosh" brand is a transferable brand element because it has been efficaciously used to introduce new products in various classes, consisting of shoes, garb, and sports activities system. This reduces the need for Nike to spend as much on advertising and brand-constructing for new merchandise, as customers already accomplice the swoosh logo with satisfactory and performance.
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sarah sends and receives goods to and from other nations. she works with clients and takes care of preparing necessary documents for importing or exporting products such as soybeans or wood. she does not assume any risk. sarah is a(n) . group of answer choices wholesaler agent seller for export export broker
Sarah sends and receives goods to and from other nations. She works with clients and takes care of preparing necessary documents for importing or exporting products such as soybeans or wood. She does not assume any risk. Sarah is a export broker.
The correct option is option d.
An export broker is basically a business intermediary which happens to help a company to be able to export goods as well as services in the case of international market. The export broker also offers guidance as well as advice on issues which include product compliance, tariffs, shipping regulations, as well as the international payment terms.
Since, Sarah sends and receives from other countries and works with clients and prepares the documents which are important and therefore Sarah must be an export broker.
Hence, the correct option is option d.
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raw materials used in production19,380ouncespurchases of raw materials21,400ouncesactual direct labor-hours500hoursactual cost of raw materials purchases$ 40,660 actual direct labor cost$ 12,050 actual variable overhead cost$ 3,100 the company applies variable overhead on the basis of direct labor-hours. the direct materials purchases variance is computed when the materials are purchased. the variable overhead rate variance for june is:
Based on the information provided, the company used 19,380 ounces of raw materials in production and purchased 21,400 ounces.
The actual direct labor-hours worked were 500 hours, with an actual cost of $12,050.
The actual cost of raw material purchases was $40,660.
The actual variable overhead cost for June was $3,100.
The company applies variable overhead based on direct labor-hours, so the variable overhead rate variance for June will depend on the actual hours worked.
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