The theory of efficient markets suggests that all publicly available information about a particular asset or security is already reflected in its current market price. option b)a professional fund manager should not expect to beat the market average consistently - is the correct answer.
In other words, the market is efficient in that it quickly incorporates any new information that may impact the value of the asset. then it would imply that it is extremely difficult for a professional fund manager to consistently beat the market average over time. This is because any new information that the fund manager may have access to is already reflected in the market price, making it challenging to identify undervalued or overvalued assets.Therefore, - While there may be instances where a fund manager outperforms the market in a given year, this is unlikely to be sustainable over the long term.
Furthermore, option d) - a professional fund manager who beats the market average one year should be expected to not beat the market average the next year - is also a possibility. This is because market conditions can change quickly, and what worked in one year may not necessarily work in the next.
In summary, the theory of efficient markets suggests that it is difficult for professional fund managers to consistently beat the market average over time, and they should not expect to do so. While there may be exceptions to this rule, it is not a reliable strategy for long-term investment success.
To know more about market,visit:-
https://brainly.com/question/14726215
#SPJ11
Oasis Limited is involved in the manufacturing of a number of different products. The company is currently focusing on maximising the return the return it can generate from 3 of the products that in manufacturers product A product B product C . The the various cost associated with 3 products are set out below
Product A Product B Product C
Direct Materials 10 15 20
Direct Labour 10 20 16
Variable Over Head Cost 10 16 24
Fixed Oved Head Cost 20 30 24
Total 50 81 84
Selling Price 60 96 100
Budgeted Volumes (Per Quarter) 7,500 4,500 3,000
The management accountant of Oasis limited has been able to find out that direct materials are priced At €20 per kg. fixed overhead costs are attributed on the basis of direct labour hours and production volumes are equal to sales volumes no stocks are held however there is a problem with the supplies of the direct material due to a problem with the current supplier it is likely that the direct material will be limited to 9000 kg in the incoming quarter.
Required
determine the total break even point in units for the quarter you must show your calculations
Advice Oasis limited on the optimum production plan detailing the mix of products that should be produced during the quarter in order to maximise profits in the context of the limited supply of material.
Cost, volume, profit analysis has various limitations. Discuss the statement
The optimum production plan for the quarter would be:
Product A: 50 units, Product B: 45 units, Product C: 40 units
The limitations of cost, volume, profit analysis (CVP analysis) are:
Assumes a linear relationship, Ignores changes in product mix, Limited accuracy, Ignores non-financial factors, Assumes constant factors.
To determine the total break-even point in units for the quarter, we need to calculate the contribution margin per unit for each product. The contribution margin is the selling price per unit minus the variable costs per unit.
The variable costs per unit for each product are as follows:
Product A: Direct Materials (10) + Direct Labour (10) + Variable Overhead Cost (10) = 30
Product B: Direct Materials (15) + Direct Labour (20) + Variable Overhead Cost (16) = 51
Product C: Direct Materials (20) + Direct Labour (16) + Variable Overhead Cost (24) = 60
The contribution margin per unit for each product is calculated as:
Product A: Selling Price (60) - Variable Costs (30) = 30
Product B: Selling Price (96) - Variable Costs (51) = 45
Product C: Selling Price (100) - Variable Costs (60) = 40
Next, we need to determine the proportion of the limited direct material that can be allocated to each product. Since the total available direct material is limited to 9,000 kg, we can calculate the proportion for each product based on their direct material requirements.
The total direct material requirement for each product is:
Product A: Direct Materials (10 kg per unit) x Budgeted Volume (7,500 units) = 75,000 kg
Product B: Direct Materials (15 kg per unit) x Budgeted Volume (4,500 units) = 67,500 kg
Product C: Direct Materials (20 kg per unit) x Budgeted Volume (3,000 units) = 60,000 kg
To determine the proportion, we divide each product's direct material requirement by the total direct material available:
Product A: 75,000 kg / 9,000 kg = 8.33
Product B: 67,500 kg / 9,000 kg = 7.50
Product C: 60,000 kg / 9,000 kg = 6.67
These proportions represent how many times the available direct material can be allocated to each product. Since we can't allocate fractions, we need to find the smallest whole number among these proportions, which is 6.
Now we can determine the optimum production plan to maximize profits while considering the limited supply of direct material. We should produce the product that provides the highest contribution margin per unit and allocate the direct material proportionally based on the smallest whole number among the proportions.
In this case, we should produce Product B since it has the highest contribution margin per unit (45). Since the smallest whole number proportion is 6, we should allocate the limited direct material as follows:
Product A: 6 x 8.33 = 50 units
Product B: 6 x 7.50 = 45 units
Product C: 6 x 6.67 = 40 units
Therefore, the optimum production plan for the quarter would be:
Product A: 50 units
Product B: 45 units
Product C: 40 units
Moving on to the limitations of cost, volume, profit analysis (CVP analysis):
Assumes a linear relationship: CVP analysis assumes a linear relationship between costs, volumes, and profits. However, in reality, cost behavior may not always be linear, especially when there are significant economies of scale or diseconomies of scale.Ignores changes in product mix: CVP analysis assumes a constant product mix, but in practice, the product mix may change over time. Different products may have different contribution margins, and a change in the product mix can affect the overall profitability of the company.Limited accuracy: CVP analysis relies on assumptions and simplifications, which may lead to inaccuracies in the results. It assumes that all costs can be clearly classified as either fixed or variable, which may not always be the case in complex business environments.Ignores non-financial factors: CVP analysis focuses solely on financial factors and ignores non-financial factors such as customer preferences, market dynamics, and competition. These factors can significantly impact the success or failure of a business, but they are not considered in CVP analysis.Assumes constant factors: CVP analysis assumes that factors such as selling price, variable cost per unit, and fixed costs remain constant over the relevant range. However, in reality, these factors may change due to various internal and external factors, rendering the analysis less accurate.It's important to consider these limitations when using CVP analysis and supplement it with other analytical tools and qualitative factors to make well-informed business decisions.
To know more about CVP analysis, refer to the link below:
https://brainly.com/question/30905218#
#SPJ11
Which of the following is correct as it relates to mutually exclusive investments? Evaluate the difference between investment (marginal investment) and decide if the marginal investment is acceptable before choosing, Choose the investment with the highest net present value that is also greater than zero. O Choose the investment with the highest internal rate of return that is also greater than the cost of capital
The correct statement as it relates to mutually exclusive investments is: "Choose the investment with the highest net present value that is also greater than zero."
Mutually exclusive investments refer to a scenario where a company or individual has to choose between different projects or investments because they cannot be pursued simultaneously.
In such cases, the decision-making process should focus on selecting the most financially viable option.
Net present value (NPV) is a widely accepted financial evaluation method used to assess the profitability of an investment.
It takes into account the time value of money and calculates the difference between the present value of cash inflows and outflows associated with the investment.
By choosing the option with the highest NPV, we prioritize investments that generate the most value over their lifetime.
The condition of NPV being greater than zero ensures that the investment will yield a positive return and contribute to the company's wealth. This criterion aligns with the goal of maximizing shareholders' wealth and the financial soundness of the investment decision.
Comparatively, the other statement involving the "marginal investment" and acceptability evaluation does not provide a specific criterion for making a choice between mutually exclusive investments.
It doesn't consider the long-term financial impact or explicitly address profitability.
Therefore, in the context of mutually exclusive investments, the most appropriate guideline is to select the investment with the highest net present value that is also greater than zero.
Choose the investment with the highest net present value that is greater than zero when evaluating mutually exclusive investments. This criterion ensures maximizing profitability and long-term financial viability.
To know more about investment refer here:
https://brainly.com/question/14301649#
#SPJ11
Match each term with its related definition by selecting the appropriate definition in the dropdown provided. Term Definition 1. Balanced Scorecard 2. Centralized Organization 3. DuPont Method ſ 4. Hurdle Rate 5. Investment Center 6. Profit Center 7. Cost Center 8. Revenue Center 9. Profit margin 10. Return on Investment (ROI) A center where the manager has the responsibility to control both revenue and costs. A center where the manager has the responsibility to control revenue, costs, and manage assets. A center where the manager has the responsibility to generate revenues. A center where the manager is only responsible to control costs. A performance measurement method that looks at investment turnover and profit margin to gain a better understanding of the contributing factors. A center where the manager is only responsible to control costs. A performance measurement method that looks at investment turnover and profit margin to gain a better understanding of the contributing factors. A performance measurement system that focuses on return on investment. A performance measurement system that includes both lagging and leading indicators. An organization in which high-level executives make most of the decisions and charge others with implementing those decisions. An organization that delegates decision making to managers throughout the organization. Net operating income divided by average invested assets. The minimum required rate of return for a project. The ratio of net operating income to sales revenue. When the present value of the capital expenditure equals the present value of the expected net annual cash flows.
Each term represents a key concept or method used in assessing and managing different aspects of an organization's operations and financial performance.
The definitions for the terms are as follows:
1. Balanced Scorecard - It is a performance measurement system that includes both lagging (historical) and leading (future-oriented) indicators. It provides a comprehensive view of an organization's performance by considering financial, customer, internal process, and learning and growth perspectives.
2. Centralized Organization - In a centralized organization, decision-making authority rests primarily with high-level executives who make decisions and delegate their implementation to lower-level managers and employees.
3. DuPont Method - The DuPont method is a performance measurement method that analyzes a company's return on investment (ROI) by considering the factors of investment turnover and profit margin. It helps identify the drivers behind a company's profitability.
4. Hurdle Rate - The hurdle rate refers to the minimum required rate of return that a project must meet or exceed in order to be considered acceptable for investment. It is used to evaluate the feasibility and profitability of investment opportunities.
5. Investment Center - An investment center is a unit within an organization where the manager has the responsibility to control both revenue and costs, as well as manage the assets allocated to the center.
6. Profit Center - A profit center is a unit within an organization where the manager has the responsibility to control revenue, costs, and manage assets. The performance of a profit center is evaluated based on its ability to generate profits.
7. Cost Center - A cost center is a unit within an organization where the manager is only responsible for controlling costs. Cost centers are typically evaluated based on their ability to control and reduce costs while maintaining the desired level of output or service.
8. Revenue Center - A revenue center is a unit within an organization where the manager has the responsibility to generate revenues. Revenue centers are assessed based on their ability to generate sales and increase revenue for the organization.
9. Profit margin - Profit margin is a financial ratio that indicates the profitability of a company by measuring the proportion of net operating income (profit) to sales revenue. It shows how much profit is generated from each dollar of sales.
10. Return on Investment (ROI) - ROI is a financial metric that measures the profitability of an investment by dividing the net operating income (profit) by the average invested assets. It is expressed as a percentage and provides insight into the efficiency and profitability of an investment or business unit.
Understanding these definitions is important in the field of business and finance as they relate to performance measurement, decision-making authority, profitability analysis, and investment evaluation.
To know more about Balanced Scorecard, visit
https://brainly.com/question/28443455
#SPJ11
Which company was the first modern sport business enterprise?
a. Nelson Johnson Manufacturing Company
b. A.G. Spalding & Brothers
c. B.F. Goodrich
d. Nike
A.G. Spalding & Brothers is often considered the first modern sport business enterprise. However, the long answer requires some explanation. Spalding was founded in 1876 by former baseball player Albert Goodwill Spalding and his brother, J. Walter Spalding.
The correct answer is B.
Among the options provided, A.G. Spalding & Brothers, founded in 1876, was the first company to establish itself as a modern sport business enterprise. They played a significant role in the growth and development of sports by manufacturing and selling sports equipment and apparel.
A.G. Spalding & Brothers was founded by Albert Goodwill Spalding, a former baseball player, and his brother J. Walter Spalding. The company specialized in the production and distribution of sports equipment, including the first official baseball, basketball, and American football. By creating innovative products and promoting them through professional athletes, A.G. Spalding & Brothers set the foundation for modern sport business enterprises.
To know more about considered Visit;
https://brainly.com/question/7651461
#SPJ11
The interest cost component of a defined benefit pension plan is computed as the:
Multiple Choice
ending accrued pension liability times the discount rate.
beginning accrued pension liability times the discount rate.
beginning accumulated pension liability times the discount rate.
beginning projected benefit obligation times the discount rate.
The correct answer is: beginning accumulated pension liability times the discount rate.
The interest cost component of a defined benefit pension plan represents the increase in the pension liability over a specific period due to the passage of time. It is a component of the pension expense that reflects the cost of providing future pension benefits to employees. The interest cost is calculated by multiplying the beginning accumulated pension liability (the total pension obligation at the beginning of the period) by the discount rate. The discount rate is typically based on the expected rate of return on plan assets or an appropriate market rate.
Learn more about discount here;
https://brainly.com/question/13501493
#SPJ11
market street offers a full refund on products and wants customers to bring back products if dissatisfied. market street's liberal returns policy builds stronger relationships with its customers. this is an example of the process. a. customer relationship management (CRM) b. supplier-relationship management c. manufacturing flow management d. returns.
Market Street's full refund policy and focus on customer satisfaction is an example of customer relationship management (CRM).
By offering a liberal returns policy, Market Street is not only building stronger relationships with its customers but also gathering valuable feedback on their products. This information can be used to improve product quality and make more informed business decisions. Effective CRM is crucial in today's competitive market, as it allows companies to personalize their interactions with customers and build brand loyalty. In this case, Market Street's returns policy is a key component of their CRM strategy and is likely contributing to their success in retaining and attracting customers.
To learn more about customer satisfaction, visit:
https://brainly.com/question/30784324
#SPJ11
Computers makes
5,300
units of a circuit board, CB76 at a cost of
$290
each. Variable cost per unit is
$140
and fixed cost per unit is
$150.
Peach Electronics offers to supply
5,300
units of CB76 for
$270.
If
Davanit
buys from Peach it will be able to save
$15
per unit in fixed costs but continue to incur the remaining
$135
per unit. Should
Davanit
accept Peach's offer? Explain.
Yes, Davanit should accept Peach Electronics' offer to supply 5,300 units of CB76 for $270.
Davanit currently produces 5,300 units of CB76 at a cost of $290 each. The variable cost per unit is $140, and the fixed cost per unit is $150.
If Davanit accepts Peach Electronics' offer, they will save $15 per unit in fixed costs but continue to incur the remaining $135 per unit.
Let's calculate the total cost for both options:
Producing internally:
Variable cost per unit: $140
Fixed cost per unit: $150
Total cost per unit: $140 + $150 = $290
Total cost for 5,300 units: $290 * 5,300 = $1,537,000
Buying from Peach Electronics:
Cost per unit: $270
Fixed cost savings per unit: $15
Remaining fixed cost per unit: $135
Total cost per unit: $270 + $135 = $405
Total cost for 5,300 units: $405 * 5,300 = $2,151,500
Comparing the total costs, Davanit would spend $1,537,000 if they produce internally, while they would spend $2,151,500 if they buy from Peach Electronics. Therefore, by accepting Peach's offer, Davanit can save $614,500 ($2,151,500 - $1,537,000).
To know more about total costs, visit;
https://brainly.com/question/31228347
#SPJ11
Assume you wish to borrow $300,000 to buy a house with a 30 year loan. Assume you will make yearly payments and the loan has an interest rate of 3.4%. What will be the yearly payment amount?
The annual payment required for a 30-year loan of $300,000 at a 3.4% interest rate is approximately $15,004.44.
To calculate the yearly payment amount for a 30-year loan of $300,000 with an interest rate of 3.4%, we can use the formula for calculating the payment amount for an amortizing loan:
Payment Amount = P * r * (1 + r)^n / ((1 + r)^n - 1)
Where:
P = Principal amount of the loan ($300,000)
r = Monthly interest rate (3.4% / 12 = 0.2833% or 0.002833 as a decimal)
n = Total number of payments (30 years * 12 months = 360 payments)
Plugging in the values into the formula:
Payment Amount = $300,000 * 0.002833 * (1 + 0.002833)^360 / ((1 + 0.002833)^360 - 1)
Simplifying the equation:
Payment Amount = $300,000 * 0.002833 * (1.002833)^360 / ((1.002833)^360 - 1)
Calculating the numerator:
Numerator = $300,000 * 0.002833 * (1.002833)^360
Calculating the denominator:
Denominator = (1.002833)^360 - 1
Finally, calculating the payment amount:
Payment Amount = Numerator / Denominator
After evaluating the expression, the yearly payment amount for the loan is approximately $15,004.44.
To learn more about loan refer here:
https://brainly.com/question/11794123
#SPJ11
explain in your own words why process synchronization is critical in network process management.
Process synchronization is critical in network process management because
it ensures that multiple processes can effectively coordinate and communicate with each other in a shared network environment. In a networked system, different processes may need to access shared resources or exchange data, and without proper synchronization, conflicts and inconsistencies can arise. Synchronization mechanisms, such as locks, semaphores, or message passing protocols, enable processes to coordinate their activities and enforce mutual exclusion or ordering constraints. This prevents issues like data corruption, race conditions, or deadlock situations. By synchronizing processes, network process management ensures orderly and efficient execution, promotes data integrity, and enhances overall system reliability and performance in a networked environment.
learn more about synchronization here :
https://brainly.com/question/28166811
#SPJ11
Will Boeing's new "Quality Transformation" program fly? Boeing is revamping quality inspection processes and plans to eliminate up to 900 quality inspector jobs over the next two years. The plan involves mechanics doing more checks of their own work, rather than using inspectors to verify accuracy. In addition, automated processes or tools make mechanics' work simpler, more accurate, and faster, further reducing the number of inspections needed. Another key to the program is using sampling rather than inspecting every job for accuracy. In December, however, Boeing's sampling process indicated that one job category failed to meet its 95% standard, with only 93% of the sampled tasks being done correctly. Additionally, some unionized quality inspectors are concerned that quality is being compromised and that Boeing may be pressuring inspectors to make it look like the new processes are doing the job even if they aren't. Discussion Questions: Please answer the following questions in your discussion 1. Where did Boeing get its inspiration for the new quality approach? 2. How does Process Monitoring (Boeing's sampling process) work? What happens if a job fails to pass the quality test?
The inspiration for Boeing's new quality approach could come from various sources, including industry best practices, advancements in technology , and continuous improvement initiatives.
often look to improve their quality processes by studying successful implementations in other industries or by conducting internal research and development.
How does Process Monitoring (Boeing's sampling process) work? What happens if a job fails to pass the quality test?
Process Monitoring, in the context of Boeing's quality program, likely involves the sampling and inspection of a subset of completed tasks or products to assess quality standards. Rather than inspecting every job for accuracy, a sample is taken from the production line or processes.
If a job fails to pass the quality test during process monitoring, it indicates that the sampled task did not meet the required quality standards. This failure could trigger various actions, including:
Investigation: The cause of the quality failure would be identified and investigated to determine the root cause of the issue.
Corrective Actions: Steps would be taken to rectify the problem, addressing any defects, errors, or deviations from the required quality standards.
Process Improvement: Boeing may analyze the failed job to identify systemic issues or inefficiencies in the production process. This information can be used to improve processes, provide additional training, or implement ive measures to prevent future failures.
It's important to note that without specific information about Boeing's Quality Transformation program, the details and specific procedures regarding Process Monitoring may vary. It would be best to refer to official sources or industry reports for accurate and up-to-date information about Boeing's quality approach and process monitoring practices.
Learn more about technology here:
https://brainly.com/question/28288301
#SPJ11
i import goods from iceland. i learn that iceland is planning to raise interest rates. based on this scenario, please select the most accurate and complete response based on the below answer choices. as an importer of goods from iceland, i am disappointed to learn that iceland is planning to raise interest rates. this basically means that it will most likely cost me more in u.s. dollar terms to import goods from iceland. furthermore, if iceland raises interest rates, the icelandic krona will appreciate in value. iceland's balance of trade position will also most likely shift to more of a deficit surplus. as an importer of goods from iceland, i am disappointed to learn that iceland is planning to raise interest rates. this basically means that it will most likely cost me more in u.s. dollar terms to import goods from iceland. furthermore, if iceland raises interest rates, the icelandic krona will appreciate in value. iceland's balance of trade position will also most likely shift to more of a deficit position. as an importer of goods from iceland, i am pleased to learn that iceland is planning to raise interest rates. this basically means that it will most likely cost me less in u.s. dollar terms to import goods from iceland. furthermore, if iceland raises interest rates, the icelandic krona will depreciate in value. iceland's balance of trade position will also most likely shift to more of a deficit position. as an importer of goods from iceland, i am pleased to learn that iceland is planning to raise interest rates. this basically means that it will most likely cost me less in u.s. dollar terms to import goods from iceland. furthermore, if iceland raises interest rates, the icelandic krona will depreciate in value. iceland's balance of trade position will also most likely shift to more of a surplus position.
This basically means that it will most likely cost me more in U.S. dollar terms to import goods from Iceland. Furthermore, if Iceland raises interest rates, the Icelandic krona will appreciate in value. Iceland's balance of trade position will also most likely shift to more of a deficit position .
When Iceland raises interest rates, it implies that borrowing costs in Iceland will increase. This can lead to higher costs for businesses, including importers, as they might need to pay higher interest rates for loans or credit to fund their imports. Consequently, importing goods from Iceland will likely cost more in U.S. dollar terms.
When a country raises interest rates, it tends to attract foreign investment. Higher interest rates can make the country's currency more attractive, leading to an appreciation in its value. In this case, if Iceland raises interest rates, the Icelandic krona will likely appreciate in value relative to the U.S. dollar.
At the same time, imports become relatively cheaper for domestic consumers, potentially increasing import demand. These factors can lead to a shift in Iceland's balance of trade towards a deficit position, as imports may increase while exports may decrease.
This is because it will likely result in increased costs in U.S. dollar terms for importing goods, and the appreciation of the Icelandic krona may further impact the balance of trade, potentially shifting it towards a deficit position.
To know more about interest rate visit :
https://brainly.com/question/30109135
#SPJ11
A firm has two divisions: one is very risky and the other is much less risky. The company uses its investors' overall required rate of return to evaluate its investment projects. It is most likely that the firm will become:_(more/less risky) and (more or less valuable).
The firm is poised to experience an increase in riskiness while facing a decrease in overall value.
Given that one division of the firm is very risky and the other is much less risky, the use of the investors' overall required rate of return to evaluate investment projects suggests that the firm will become more risky and less valuable.
When a company uses the overall required rate of return of its investors, it implies that the firm is applying a single discount rate for evaluating investment opportunities across all divisions. This approach fails to consider the varying risk profiles of different divisions.
Since one division is very risky, it likely has higher volatility and uncertainty associated with its cash flows. By applying a single required rate of return, the firm is not adequately accounting for the higher risk associated with this division. This can lead to underestimating the true risk-adjusted return and overvaluing the projects in the risky division.
Conversely, the less risky division is being evaluated based on the same overall required rate of return, which might be higher than its inherent risk warrants. As a result, the firm may be overestimating the risk associated with the less risky division and undervaluing its investment projects.
Therefore, by using the investors' overall required rate of return, the firm is likely to become more risky as it fails to differentiate between the risk profiles of its divisions. Additionally, it is expected to become less valuable as it may overvalue projects in the risky division and undervalue projects in the less risky division, leading to suboptimal investment decisions.
To learn more about riskiness refer here:
https://brainly.com/question/30565341
#SPJ11
Johnnie is a Director of Newgames Plc who make the wildly successful video game Driablo. The Board of Directors has just finished hammering out a deal to sell the company to Computergiant Plc. Johnnie is a little unhappy with the final deal (selling out to the man) and decides that some people at least can benefit from the deal. He gives his sister £5000 to invest in Newgames Plc. before the sale is announced. When the news hits the socials, Newgames Plc shares go from £10 per share to £100. Explain to Johnnie and his sister what civil and criminal offences they have committed.
answer in IRAC model
Issue: Whether Johnnie and his sister have committed civil and criminal offenses.
Rule: Insider trading laws and fiduciary duty.
Analysis:
Civil Offense:
a) Breach of Fiduciary Duty: As a director of Newgames Plc, Johnnie owes a fiduciary duty to act in the best interests of the company and its shareholders. By providing his sister with confidential information and using it for personal gain, Johnnie may have breached his fiduciary duty.
Criminal Offenses:
a) Insider Trading: Insider trading involves trading securities based on material non-public information. Johnnie and his sister potentially engaged in insider trading by using the confidential information about the impending sale of Newgames Plc to make profitable trades.
Conclusion:
Based on the given scenario, it appears that Johnnie and his sister may have committed both civil and criminal offenses. Johnnie may have breached his fiduciary duty as a director, and both Johnnie and his sister may have engaged in insider trading by using confidential information to make profitable investments.
It is important to note that the specifics of insider trading laws can vary by jurisdiction, so consulting with a legal professional is advisable to understand the applicable laws and potential consequences in the relevant jurisdiction.
Learn more about IRAC model here:
brainly.com/question/14745003
#SPJ11
Erhemjamts plc (Erhemjamts) is a UK listed company that imports and exports goods on a regular basis. On 1 November 20X6 Erhemjamts signed three contracts. Payment of the sums due under each of these three contracts is to be made on 30 April 20X7. Brief details of the three contracts are as follows: A sale of goods to A Inc, a US customer, for $411,000 A sale of goods to B Inc, another US customer, for £1,100,000 A purchase of goods from C Inc, a US supplier, for $1,750,000 On 1 November the $/£ spot rate was quoted at $1.3800 1.3830/£ and the following information regarding sterling futures contracts: (contract size £62,500) Settlement date Contract price $/£ December 1.3670 March 1.3480 June 1.3270 September 1.3190 a) Explain how a futures hedge could have been established and executed on 1 November, making clear the precise contract that would have been used, whether that contract would have been bought or sold and calculating the number of contracts that would have been used for the futures hedge. (8 marks) b) Calculate the outcome of the futures hedge if, on 30 April 20X7, the spot rate is $1.4100 - 1.4130/£ and the price of the relevant futures contract is $1.4000. (10 marks) c) Explain the difference between microhedging and macrohedging for financial institutions.
(a) Erhemjamts would have sold 18 December sterling futures contracts to establish the futures hedge.
(b) Total gain or loss = ($0.0300/£ + $0.0330/£) × 18 × £62,500
(c) Microhedging focuses on hedging specific positions or exposures, while macrohedging aims to manage the overall risk profile of the financial institution. The choice between microhedging and macrohedging depends on the institution's risk management strategy, the complexity of its portfolio, and the level of risk it wants to mitigate.
a) To establish a futures hedge on 1 November, Erhemjamts could have used the December sterling futures contract. Since Erhemjamts has a pound-denominated receivable (sale of goods to B Inc), they would have sold the December sterling futures contracts to hedge against the potential depreciation of the pound. The contract size is £62,500.
To calculate the number of contracts needed, we divide the pound amount of the receivable by the contract size:
Number of contracts = £1,100,000 / £62,500 = 17.6 contracts (rounded up to 18 contracts)
Therefore, Erhemjamts would have sold 18 December sterling futures contracts to establish the futures hedge.
b) On 30 April, if the spot rate is $1.4100 - 1.4130/£ and the price of the December sterling futures contract is $1.4000, we can calculate the outcome of the futures hedge.
First, we calculate the gain or loss on the spot position:
Spot gain or loss = Spot rate on 30 April - Spot rate on 1 November
= $1.4100 - $1.3800 (assuming the spot rate on 1 November is the same as the bid rate on 30 April)
= $0.0300/£
Then, we calculate the gain or loss on the futures position:
Futures gain or loss = (Futures price on 1 November - Futures price on 30 April) × Number of contracts × Contract size
= ($1.4000 - $1.3670) × 18 × £62,500
= $0.0330/£ × 18 × £62,500
Total gain or loss = Spot gain or loss + Futures gain or loss
c) Microhedging and macrohedging are two different hedging strategies used by financial institutions:
Microhedging: Microhedging involves hedging specific individual positions or exposures within a financial institution's portfolio. It focuses on mitigating risk on a transaction-by-transaction basis. For example, a bank may use microhedging to hedge the interest rate risk on a specific loan or the currency risk on a particular foreign investment. Microhedging allows for more precise risk management but requires more monitoring and management of individual positions.
Macrohedging: Macrohedging involves hedging the overall aggregate risk exposure of a financial institution's entire portfolio. Instead of hedging individual positions, macrohedging aims to protect the overall risk profile of the institution. It considers the collective impact of various positions and exposures. Macrohedging can help manage systemic risks and provide a broader level of risk protection but may not address specific transaction-level risks.
In summary, microhedging focuses on hedging specific positions or exposures, while macrohedging aims to manage the overall risk profile of the financial institution. The choice between microhedging and macrohedging depends on the institution's risk management strategy, the complexity of its portfolio, and the level of risk it wants to mitigate.
Learn more about Microhedging:
https://brainly.com/question/22282124
#SPJ11
Which quadrant receives the most careful, yet frequent communication? Select an answer: high power, low interest high power; high interest low power, low interest low power, high interest
The quadrant that receives the most careful, yet frequent communication is the high power; high interest quadrant. : high power; high interest. In this quadrant, the individuals have a high level of power and influence, which makes them important stakeholders in the communication process.
Additionally, they also have a high level of interest in the topic at hand, which means that they are more likely to pay attention to the communication and engage with it. As a result, it is important to communicate with this group frequently and carefully to ensure that their needs are met and their concerns are addressed. The quadrant that receives the most careful, yet frequent communication is the high power, high interest quadrant.
In a stakeholder matrix, the high power, high interest quadrant represents stakeholders who have significant influence on a project or decision and are also very interested in its outcomes. Due to their high influence and interest, it is crucial to maintain careful and frequent communication with these stakeholders to ensure their needs and concerns are addressed.
To know more about stakeholders visit :
https://brainly.com/question/29532080
#SPJ11
On the statement of cash flows, cash generated from issuing a bond would come under: Investing activities Sales activities Financing activities Operating activities
On the statement of cash flows, cash generated from issuing a bond would come under Financing activities.
Cash generated from issuing a bond is considered a source of financing and hence it is recorded as a cash inflow under financing activities on the statement of cash flows. The statement of cash flows provides a summary of all the cash transactions that occurred during a given accounting period, and it is divided into three categories: Operating activities, Investing activities, and Financing activities.
Operating activities include all cash inflows and outflows that arise from the regular business operations of the company. Investing activities include all cash inflows and outflows that arise from the purchase and sale of long-term assets such as property, plant, and equipment, and also from investments in other companies.
Financing activities include all cash inflows and outflows that arise from the issuance and repayment of debt and equity securities, including bonds, stocks, and dividends.
To know more about Cash flow statement, refer to the link below:
https://brainly.com/question/29023403#
#SPJ11
francis enters a $100 check received from a customer into quickbooks online. if she views the transaction journal, which account would show as being debited $100?
If Francis enters a $100 check received from a customer into QuickBooks Online, the account that would show as being debited $100 in the transaction journal would typically be the Bank Account or Cash Account.
When a check is received from a customer, it represents an increase in the company's cash or bank balance. In the transaction journal, this increase is recorded as a debit to the Bank Account or Cash Account. By debiting the bank account, the accounting system reflects the inflow of cash into the company.
It's worth noting that the specific account name in QuickBooks Online may vary depending on the chart of accounts set up for the company. However, the account responsible for tracking cash or bank transactions would generally be debited in this scenario.
To learn more about Cash Account click here
https://brainly.com/question/28517676
#SPJ11
On January 1, Year 1, Indiana Water (lessor) and Koontz Lake (lessee) agreed to a 9-year lease for equipment that has an economic life of 10 years. Koontz Lake made its first annual payment on January 1, Year 2 for $3,000. Thereafter, eight more annual payments are due. Title reverts to Koontz Lake at the end of the lease term. The equipment has a fair market value at the lease inception date of $20,500. The discount rate is 5%.
Which one of the lease conditions below is not met?
Select one:
A. The lease term is at least 75% of the asset's remaining economic life.
B. The present value of the minimum lease payments is at least 90% of the leased asset's value.
C. The lease agreement transfers ownership of the leased asset.
D. The lease agreement contains a bargain purchase option.
The correct answer is Option C.The lease condition that is not met in this scenario is option C: The lease agreement transfers ownership of the leased asset.
According to the given information, the title reverts to Koontz Lake at the end of the lease term. This means that ownership of the leased asset is transferred back to the lessee. However, for a lease agreement to meet the condition of transferring ownership, the title should transfer to the lessee either during or at the end of the lease term, not back to the lessor.
In this case, the lease agreement does not transfer ownership of the leased asset to Koontz Lake. Therefore, option C is the lease condition that is not met.
Based on the provided information, it can be concluded that the lease agreement between Indiana Water (lessor) and Koontz Lake (lessee) does not meet the condition of transferring ownership of the leased asset.
The lease agreement states that the title of the equipment reverts to Koontz Lake at the end of the lease term. This implies that the ownership of the leased asset is transferred back to the lessee. However, to meet the condition of transferring ownership, the title should have been transferred to the lessee either during the lease term or at its conclusion, rather than reverting back to the lessee.
It is important to note that the other lease conditions mentioned in options A, B, and D have not been discussed as they are not relevant to this conclusion. The primary focus here is on the condition related to the transfer of ownership, which is not met in the given lease agreement.
To know more about lease ,visit:
https://brainly.com/question/15609473
#SPJ11
the department often measures inventory in terms of its cost or value in dollars, whereas tends to measure inventory in terms of units.
There is a difference in how the department and the company tend to measure inventory. The department measures inventory in terms of its cost or value in dollars, whereas the company tends to measure inventory in terms of units.
The department's approach is more focused on the financial aspect of inventory management. By measuring inventory in terms of cost or value in dollars, the department can determine the total value of their inventory and the cost of goods sold (COGS) accurately. This information is critical in making decisions about pricing, ordering, and stock levels.
On the other hand, the company's approach is more focused on the operational aspect of inventory management. Measuring inventory in terms of units allows them to track the physical amount of inventory they have on hand. This information is useful in determining when to reorder, how much to reorder, and where to store the inventory.
Overall, both methods have their advantages and disadvantages, and companies may choose to use one or both depending on their specific needs.
Learn more about inventory management: https://brainly.com/question/13439318
#SPJ11
The layout approach that addresses trade-offs between space and material handling is called the storage layout True False
The given statement "the layout approach that addresses trade-offs between space and material handling is called the storage layout" is true because the storage layout approach is designed to address the trade-offs between space and material handling.
It involves the proper arrangement of storage units and the use of equipment to optimize the use of available space while ensuring efficient material handling. This approach requires a careful assessment of the type of goods being stored and their volume, the frequency of movement, and the available space.
By properly balancing these factors, the storage layout can enhance the productivity of the facility and reduce the cost of material handling. The storage layout approach is widely used in various industries, including manufacturing, distribution, and warehousing.
For more about material:
https://brainly.com/question/30503992
#SPJ11
suppose that a small company is thinking of putting plants in their lobby for employees to view and enjoy. since the plants are to be viewed by employees, the plants are non-excludable (it is infeasible to move a plant each time a specific individual walks by) and non-rival in consumption (if one worker looks at the plant, it does not prevent another from doing so as well). the company employs three workers: tim, greg, and ray. the company is thinking about buying up to three plants, and wants to know how much workers would enjoy each plant. for tim, the first plant has a benefit of $17 per day, the second plant has a benefit of $13 per day, and the third plant has a benefit of $8 per day. for greg, the first plant has a benefit of $12 per day, the second has a benefit of $10 per day, and the third has a benefit of $6 per day. for ray, the first plant has a benefit of $8 per day, the second has a benefit of $5 per day, and the third has a benefit of $2 per day. given that no one else will see the plants, no one else values the plants in the lobby. what is the marginal social benefit of the first plant?'
The marginal social benefit of the first plant is $37 per day when considering the individual benefits of Tim, Greg, and Ray.
To determine the marginal social benefit of the first plant, we need to sum up the individual benefits for each worker associated with the first plant. The marginal social benefit represents the additional benefit generated by the first plant.
Worker benefits for the first plant:
Tim: $17 per day
Greg: $12 per day
Ray: $8 per day
To calculate the marginal social benefit, we sum up the individual benefits:
Marginal social benefit = Tim's benefit + Greg's benefit + Ray's benefit
= $17 + $12 + $8
= $37 per day
Therefore, the marginal social benefit of the first plant is $37 per day.
Based on the given information, the first plant would provide a marginal social benefit of $37 per day when considering the individual benefits of Tim, Greg, and Ray.
To know more about Margin visit:
https://brainly.com/question/30459935
#SPJ11
How do you manage risk and issues in a project? ( 50 words with
an example )
To manage risk and issues in a project, it's important to identify potential risks and create a plan to mitigate them. For example, if a software development project has a risk of delayed delivery, the team can plan to allocate more resources or break down the project into smaller phases.
Issues should also be tracked and addressed promptly to minimize their impact on the project timeline and budget. A proactive and methodical strategy is needed to effectively manage risk and issues in a project, which is a crucial component of project management. The first step is to undertake a thorough study of the project, taking into account both internal and external elements that could have an impact on its success. In order to obtain information and viewpoints, key stakeholders and project team members must be involved.
Risks should be discovered, evaluated, and prioritised based on their potential impact and propensity to occur. This aids in concentrating attention and resources on the threats that are most serious. The development of risk mitigation strategies and action plans is therefore necessary to reduce or eliminate these risks. It's critical to assign duties and set up precise deadlines for putting mitigating measures into action.
To know more about risk mitigation refer to:
https://brainly.com/question/28423174
#SPJ11
the primary deficit noted in cerebral achromatopsia refers to
The primary deficit noted in cerebral achromatopsia refers to the impaired perception of color due to damage or dysfunction in the cerebral cortex.
Cerebral achromatopsia is a form of color vision deficiency that is caused by damage or dysfunction in the cerebral cortex, the area of the brain responsible for processing visual information. The primary deficit in this condition is the inability to perceive and differentiate colors accurately. Individuals with cerebral achromatopsia may experience a limited or complete absence of color vision, seeing the world in shades of gray or with severely diminished color perception. This deficit can significantly impact their ability to appreciate and distinguish colors in their environment.
Learn more about cerebral cortex here:
https://brainly.com/question/1191477
#SPJ11
Assume Skyler Industries has debt of $4,500,000 with a cost of capital of 7.5% and equity of $5.500.000 with a cost of capital of 10.5%. What is Skyler's weighted average cost of capital? Round to the nearest hundredth, two decimal places and submit the answer in a percentage. 9.15 Question 12 Assume Skyler Industries has debt of $4,775,638with a cost of capital of 6.8% and equity of $5,701,243 with a cost of capital of 8.7%. What is Skyler's weighted average cost of capital for debt? Round to the nearest hundredth, two decimal places and submit the answer in a percentage. 12.282 Question 13 Assume Skyler Industries has debt of $4,336.299with a cost of capital of 9.1% and equity of $5,431,900 with a cost of capital of 7.9% What is Skyler's weighted average cost of capital for equity?
The weighted average cost of capital for equity is 7.9%.
The weighted average cost of capital (WACC) is the average rate of return required by both debt and equity investors to finance a company's operations. It is calculated by taking into account the proportion of debt and equity in the company's capital structure and their respective costs of capital.
Given data:
Debt: $4,336,299 with a cost of capital of 9.1%
Equity: $5,431,900 with a cost of capital of 7.9%
To calculate the weighted average cost of capital for equity, we need to determine the proportion of equity in the company's capital structure and multiply it by the cost of equity:
Weighted Average Cost of Capital for Equity = Proportion of Equity * Cost of Equity
The proportion of equity can be calculated by dividing the equity value by the total capital structure:
Proportion of Equity = Equity / (Debt + Equity)
Proportion of Equity = $5,431,900 / ($4,336,299 + $5,431,900)
Proportion of Equity ≈ 0.5564 (rounded to four decimal places)
Now, we can calculate the weighted average cost of capital for equity:
Weighted Average Cost of Capital for Equity = 0.5564 * 7.9%
Weighted Average Cost of Capital for Equity ≈ 0.5564 * 7.9% ≈ 4.39% (rounded to two decimal places)
The weighted average cost of capital for equity in Skyler Industries is approximately 7.9%. This means that equity investors require a return of 7.9% to finance the company's operations.
To know more about equity , visit :
https://brainly.com/question/31458166
#SPJ11
what does the bowed outward shape of the production possibilities curve indicate? b) which point(s) on the graph is (are) efficient production possibilities
The bowed outward shape of the production possibilities curve indicates increasing opportunity costs. Efficient production possibilities are represented by points on the curve.
The bowed outward shape of the production possibilities curve indicates that resources are not equally efficient in producing different goods or services. It implies that as an economy moves from producing more of one good to producing more of another good, the opportunity cost increases. This means that to produce more of a particular good, the economy must give up increasing amounts of the other good.
The reason for the bowed outward shape is the concept of diminishing returns. In the early stages of production, reallocating resources from one good to another may result in relatively small opportunity costs. However, as the economy continues to specialize and produce more of a particular good, the opportunity costs increase because the resources that are best suited for that good are being diverted from other goods where they are less productive.
Efficient production possibilities are represented by points on the production possibilities curve itself. These points indicate the maximum combination of goods that can be produced with the given resources and technology, without wasting any resources. Any point inside the curve represents an inefficient allocation of resources, while any point outside the curve is unattainable with the current resources and technology.
Learn more about Production Possibility Curve, below:
https://brainly.com/question/31815342
#SPJ11
Assume that the Seattle City Council wants to build a new waterfront seawall and park. The project will cost $800 Million and the City Council will only go forward with the project if it generates $1.2 billion in output for the economy via the multiplier effect. Assuming the simplest form of the spending multiplier, what is the minimum value of MPC that policymakers must assume for the bridge project to generate $1.2 billion in output? a. 0.25. b. 0.2. c. 0.33. d. 0.15
The minimum value of mpc that policymakers must assume for the bridge project to generate $1.
to determine the minimum value of the marginal propensity to consume (mpc) that policymakers must assume for the bridge project to generate $1.2 billion in output, we can use the formula for the spending multiplier.
the spending multiplier is given by the formula: 1 / (1 - mpc).
we know that the desired output from the project is $1.2 billion. let's denote this as yd.
yd = mpc * (change in spending)
since the project cost is $800 million, the change in spending is $800 million.
plugging these values into the formula, we have:
$1.2 billion = mpc * $800 million
simplifying, we find:
mpc = ($1.2 billion) / ($800 million)
mpc = 1.5 2 billion in output is 1.5.
none of the given options (a. 0.25, b. 0.2, c. 0.33, d. 0.15) matches the calculated value.
Learn more about marginal here:
https://brainly.com/question/28481234
#SPJ11
The first step in preparing a cost of production report is to _____.
compute equivalent units of production
determine the units to be assigned costs
determine the cost per equivalent unit
allocate costs to units transferred out and partially completed units
Answer:
determine the units to be assigned costs
Explanation:
The correct first step in generating a cost of production report is to identify the units to which expenses will be attributed.
Before calculating the costs, it is important to identify the number of units produced over a specific time to which the production costs will be ascribed. This entails recognizing units that have been completed and transferred out of the manufacturing process, as well as units that are half completed but still in the manufacturing process.
Following the determination of the units to be assigned costs, the next processes in generating a cost of production report often include computing equivalent units of production, determining the cost per equivalent unit, and ultimately allocating costs to units moved out and partially completed units.
The first step in preparing a cost of production report is to compute equivalent units of production. This involves calculating the number of units that are in the process of being completed, as well as those that have been fully completed during the accounting period.
This is an important step because it helps to determine the total cost of production for the period, which can then be allocated to the units that have been transferred out or are still partially completed. Once the equivalent units of production have been determined, the next step is to calculate the cost per equivalent unit, which involves dividing the total cost of production by the total number of equivalent units.
Finally, the costs are allocated to the units that have been transferred out and partially completed units based on their respective costs per equivalent unit. This process provides important information about the cost of production for the period, which can be used to make informed business decisions. In this step, you'll identify the number of units that have been completed during the accounting period and those that are still in progress. This is crucial for accurately allocating costs to the finished goods and work-in-process inventory.
To know more about production,visit:-
https://brainly.com/question/32173391
#SPJ11
SER Waterway Company made a purchase of merchandise on credit from Pharoah Company on August. for $10500, terms 2/10 30 On August 17. Waterway make payment to Pharoah Waterway Company uses a perpetual inventory system. The entry on August 17 for Waterway Company is:
The entry on August 17 for Waterway Company is:
Debit Accounts Payable: $10,500
Credit Cash: $10,290
In a perpetual inventory system, inventory and cost of goods sold are continuously updated as transactions occur. When Waterway Company made a purchase of merchandise on credit from Pharoah Company on August, it means that Waterway received goods from Pharoah but did not make an immediate payment.
The terms mentioned are 2/10, net 30. This means that Waterway Company is eligible for a 2% discount if the payment is made within 10 days, and the full amount is due within 30 days.
On August 17, Waterway Company made the payment to Pharoah Company. To record this transaction, Waterway Company needs to make the following entry:
Debit Accounts Payable: $10,500
Credit Cash: $10,290 (calculated as $10,500 - $210 discount)
The Accounts Payable account is debited because the company is reducing its liability by paying off the amount owed. The Cash account is credited for the net amount paid after deducting the discount.
In summary, the entry on August 17 for Waterway Company is a debit to Accounts Payable for $10,500 and a credit to Cash for $10,290. This entry reflects the payment made to Pharoah Company, taking into account the discount available under the terms.
To know more about perpetual inventory system, refer to the link below:
https://brainly.com/question/30780206#
#SPJ11
in 2015, the san francisco municipal transportation agency (sf muni) increased cable car fares from $6 to $7. following the fare increase, ridership decreased from 20,000 rides a day to 15,000 rides a day. what is the elasticity of demand for cable car rides?
To calculate the elasticity of demand for cable car rides, we use the formula:
Elasticity of Demand = (% change in quantity demanded) / (% change in price)
Given the information provided:
Initial quantity demanded (Q1) = 20,000 rides/day
Final quantity demanded (Q2) = 15,000 rides/dayw
Final price (P2) = $7
Let's calculate the percentage changes in quantity demanded and price:
% change in quantity demanded = ((Q2 - Q1) / Q1) * 100
% change in price = ((P2 - P1) / P1) * 100%
change in quantity demanded = ((15,000 - 20,000) / 20,000) * 100 = -25%
% change in price = (($7 - $6) / $6) * 100 ≈ 16.67%
Now, we can calculate the elasticity of demand:
Elasticity of Demand = (-25% / 16.67%) ≈ -1.5
The negative sign indicates that cable car rides have elastic demand. The magnitude of 1.5 suggests that for every 1% increase in price, the quantity demanded decreases by 1.5%.Therefore, the elasticity of demand for cable car rides is approximately -1.5.
To know more about elasticity of demand, click here https://brainly.com/question/30704413
#SPJ11
you have received 1600 transactions today and you have 8 hours to complete those transactions. you have a total of 11 team members. calculate the takt time in minutes.
The takt time is 0.3 minutes per transaction.
to calculate the takt time, we divide the available working time by the number of transactions. here's how we can calculate it:
total available working time = 8 hours = 8 hours * 60 minutes/hour = 480 minutesnumber of transactions = 1600
number of team members = 11
takt time (in minutes) = total available working time / number of transactions
takt time = 480 minutes / 1600 transactionstakt time = 0.3 minutes/transaction this means that, on average, each transaction should be completed within 0.3 minutes or approximately 18 seconds to meet the demand within the given timeframe and with the available resources.
Learn more about demand here:
https://brainly.com/question/30402955
#SPJ11