The forecasted sales for may use the 3-period moving averages method is 124.
Forecast for May =(120+136+116)/3 = 124
A forecast of sales allow each enterprise to make better commercial enterprise choices. It allows in usual commercial enterprise making plans, budgeting, and risk control. sales forecasting lets in companies to efficaciously allocate resources for future boom and control their cash float.
Forecast of a period with n period moving average = average of last n periods demand
Forecast for May =(120+136+116)/3 = 124
Answer 2: Forecast for May= 120
Period, t At, Demand Ft, Forecast
February, 1 120 116
March, 2 134 118.0
April, 3 114 126.0
May, 4 83 120.0
the formula to be used in Simple Exponential smoothing is
Ft+1= alpha*At + (1-alpha) Ft
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In the strategy-making, strategy-executing process, effective corporate governance requires a company's board of directors to?
In the strategy-making, strategy-executing process, effective corporate governance requires a company's board of directors to oversee the corporative strategy, functional strategy, business level strategy.
Strategy is defined ad long range of blueprint which provides direction, destination for the fulfilment of the goals and objectives.
It is formulated by the top management members and designed to achieve long term goals.
Success of the company depends upon the competence and character of the management.
Strategy defines the vision , mission , objective of the company.
Once the strategy formulated does not means the work is over , but it has to be timely reviewed that everything is going as per it or not . If any deviation take place , corrective actions should be taken because strategy can never be perfect and flawless.
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preparing an unadjusted trial balance using the following t-accounts, prepare an unadjusted trial balance for perry inc. assume that the trial balance is dated january 31. ignore account numbers. cash 7,200 3,600 1,440 accounts receivable 1,800 1,440 1,080 equipment 1,980 accounts payable 3,600 5,400 810 note payable 1,980 common stock 3,600
The opening balance is the balance at the start of a period. The closing balance is the balance remaining at the end of the period.
Add the balances in the debit and credit columns individually to complete the unadjusted trial balance. On the last line of the table, in the relevant column, write each corresponding total. The total debit balance and total credit balance should be equal.
We must first finish, or "balance off," the ledger accounts before we can create a trial balance. Then, we list each closing amount from the ledger accounts as a debit or a credit balance to create the trial balance. The nominal ledger's T-accounts.
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suppose janet is currently using combination d, producing one train per day. her opportunity cost of producing a second train per day is
Disclaimer: Here's the Missing part of the Question
Janet is a skilled toy maker who is able to produce both cars and balls. She has 8 hours a day to produce toys. The following table shows the daily output resulting from various possible combinations of her time.
Choice Hours Producing Produced
(Cars) (Balls) (Cars) (Balls)
A 8 0 4 0
B 6 2 3 11
C 4 4 2 16
D 2 6 1 19
E 0 8 0 20
On the following graph, use the blue points (circle symbol) to plot Janet's initial production possibilities frontier (PPF).
CHART
1. Suppose Janet is currently using combination D, producing one car per day. Her opportunity cost of producing a second car per day is per day.
The answer is 3 balls
Opportunity cost is that the forgone benefit that will are derived from an option not chosen.
To properly evaluate opportunity costs, the prices and benefits of each option available must be considered and weighed against the others.
Considering the worth of opportunity costs can guide individuals and organizations to more profitable decision-making.
Opportunity cost may be a strictly internal cost used for strategic contemplation; it's not included in accounting profit and is excluded from external financial reporting.
Examples of cost include investing in a very new factory in New York. as opposition to Mexico, deciding to not upgrade company equipment, or choosing the foremost expensive product packaging option over cheaper options.
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It's focus is the efficient and effective delivery of information and administration of information resources, while infosec's primary focus is the __________ of all information assets.
It's focus is the efficient and effective delivery of information and administration of information resources, while infoSec's primary focus is the protection of all information assets.
Information Security, or InfoSec, is what?Information security, often known as InfoSec, refers to the methods and devices that businesses employ to safeguard their data. This includes setting up the appropriate policies to bar unauthorized users from accessing either personal or professional data. Network and infrastructure security, testing, and auditing are just a few of the many areas that infosec, a rapidly expanding and dynamic profession, encompasses.
Sensitive data is protected by information security from unauthorized actions such interruption, destruction, change, scrutiny, and recording. It is important to protect the security and privacy of sensitive data, including financial information, intellectual property, and account information for customers.
Private information theft, data tampering, and data erasure are all effects of security events. Attacks have a real cost as well as the potential to interfere with business operations and harm a company's reputation.
Organizations need to set aside money for security, make sure they're prepared for attacks like phishing, malware, viruses, malicious insiders, and ransomware, and make sure they can respond to them quickly.
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a business maintains subsidiary accounts for each of its customers. on may 15, the business provides services on account: to customer j. anthony; to customer a. martin; and to customer s. lee. which journal entry is needed to record these transactions? question content area bottom part 1 a. may 15 accounts receivable control sales revenue b. may 15 accounts receivable j. anthony accounts receivable a. martin accounts receivable s. lee service revenue c. may 15 accounts receivable service revenue d. may 15 service revenue accounts receivable
TRUE, This entry is correct under the subsidiary accounts method.
Debit to Accounts Receivable = $7800
Credit to Service Revenue = $7800
The parent firms' non-consolidated income statements include the revenue from their subsidiary company (or subsidiaries) that is recorded using the equity method. The original cost of the parent company's investment is reported. Consider a scenario in which the parent business owns 58% of the subsidiary and the latter generates a net income of $1,000,000. $580,000 would be reported by the parent business as a credit to the Investment Income Account and a debit (increase) to the Investment in Subsidiary Asset Account.
Following that, the carrying amount is modified every fiscal quarter to reflect the investor's proportional part of the investment's change. Furthermore, the subsidiary's value might rise significantly if its net worth grows.
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these are medical expenses that are tax-free with an individual's health account, these can include physicals, eye glasses, and/or dentures:
these are medical expenses that are tax-free with an individual's health account, these can include physicals, eye glasses, and/or dentures Covered or Eligible Expenses,
What is tax?
A tax is a mandatory fee or financial charge that a government imposes on a person or a business in order to raise money for public projects like building the greatest infrastructure and services. Different public expenditure programs are then funded with the funds that have been raised.
Therefore,
these are medical expenses that are tax-free with an individual's health account, these can include physicals, eye glasses, and/or dentures Covered or Eligible Expenses,
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What did new york state do in response to the public outrage expressed here over the triangle fire tragedy?
Appointed a factory commission that developed labor reform.
A factory commission may be a major ad-hoc formal public inquiry into a defined issue in some monarchies. they need been held in the United Kingdom, Australia, Canada, New Zealand, Norway, Malaysia, Mauritiusand Saudi Arabia . A factory commission is analogous in function to a commission of inquiry (or, less commonly, enquiry) found in other countries like Ireland, South Africa , and Hong Kong . it's considerable powers, generally greater even than those of a judge but restricted to the terms of reference of the commission. These powers include subpoenaing witnesses, taking evidence under oath and requesting documents.
The commission is made by the head of state (the sovereign, or their representative within the form of a governor-general or governor) on the advice of the government and formally appointed by letters patent. In practice—unlike lesser sorts of inquiry—once a commission has started the government cannot stop it. Consequently, governments are usually very careful about framing the terms of reference and usually include in them a date by which the commission must finish.
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from the following list, select all the ways in which management information systems (mis) have changed the management of organizations.
All the ways in which management information systems (MIS) have changed the management of organizations are:
Managers (and employees) can communicate different types of information in a greater variety of ways.Managers (and employees) can communicate different types of information in a greater variety of ways, Managers can have more information and data about the organization to help them make smarter decisionsThis has helped to improve communication between managers and employees as this has led to making smarter and well-informed decisions,
What is Management?This refers to the process of overseeing the activities of a group of people on a day to day basis.
Hence, we can see that All the ways in which management information systems (MIS) have changed the management of organizations are:
Managers (and employees) can communicate different types of information in a greater variety of ways.Managers (and employees) can communicate different types of information in a greater variety of ways, Managers can have more information and data about the organization to help them make smarter decisionsThis has helped to improve communication between managers and employees as this has led to making smarter and well-informed decisions,
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a company's year end was tuesday, december 31. on friday, january 3 the entire payroll for the week was recorded as an expense. this is an example of a(n)
A company's year end was Tuesday, December 31. On Friday, January 3 the entire payroll for the week was recorded as an expense. This is an example of a payroll expense.
What is payroll expense?
The expenditures incurred by a company while hiring independent contractors and employees are known as payroll expenses. Start with the gross pay for the employee, then subtract any withholdings to arrive at the net pay. You must collect and maintain data in order to process payroll, and your payroll costs may fluctuate regularly.
The accrual method of accounting, which aligns revenue with costs, should be used by every company. Regardless of when you make the payment, the accrual method captures payroll costs in the month you incur them.
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What is the minimum number of domain controllers that ahmad should add to the marketing domain?
TWO
A domain must have at least two domain controllers. Each of the two new domains should have two domain controllers. If one domain controller fails, the other can continue to provide domain authentication.What is Domain Controller?Domains are used in network infrastructure to group computers and other network devices for ease of administration.
Within a domain, the Domain Controller is used to centrally authenticate and authorize users as well as store account information rather than separately on each machine.
A Domain Controller is a computer server that handles security authentication requests within a computer network domain.
It is a network server that is in charge of granting hosts access to domain resources. It authenticates users, saves user account information, and enforces a domain's security policies.
Domain Controllers limit access to domain resources by verifying user identity via login credentials and preventing illegal access to those resources.
Domain Controllers enforce security restrictions on requests for domain resource access.
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Matsumoto training has sales of $705,000, depreciation of $17,600, interest expense of $2,090, costs of $144,000, and a tax rate of 21 percent. what is the operating cash flow for the year?
The operating cash flow if the tax rate is 21% is $445,234.90
What is operating cash flow?
Operating cash flow is the amount of Matsumoto training generates from its operations, it is determined as the net income plus the depreciation.
Net income=(sales-costs-depreciation-interest)*(1-tax rate)
sales=$705,000
costs=$144,000
depreciation=$17,600
interest paid =$2,090
tax rate=21%
net income=($705,000-$144,000- $17,600-$2,090,)*(1-21%)
net income=$427,634.90
operating cash flow=net income+depreciation
operating cash flow=$427,634.90+$17,600
operating cash flow=$445,234.90
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N the united states, the control of the money supply is the responsibility of the:____.
N the united states, the control of the money supply is the responsibility of the Federal Reserve System.
The Federal Reserve System is the central banking system of the United States. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, after a series of financial crises led to a desire for centralized control of the monetary system to alleviate crises. financial crisis.
The Federal Reserve System provides the country with a secure, flexible, and stable monetary and financial system. The main functions of the Fed include conducting national monetary policy, supervising and regulating banks, maintaining financial stability, and providing banking services.
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a modernist city planning concept that proposed creating condensed, vertical living space to create more open space for mobility and light across the city is which of the following?
A modernist city planning concept proposed creating condensed, vertical living spaces to create more open spaces for mobility and light.
Le Corbusier's approach to modern city planning showed that research activities such as theoretical thinking and production activities, that is practice, are linked methodically. Urban planning should be understood not only as a projection of the possibilities of architecture but as a multidisciplinary process.
Le Corbusier's innovative design ideas resulted from industrialization changes and motorization accelerating progress, which gave the foundation to a new urban array. This array is based on strict geometric forms, regularity, and repetition determining standard.
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What do you see as your future engineering professional responsibility to both being loyal to management and protecting the public welfare?
Engineering is a valuable and sophisticated job. Engineers are required to uphold the highest standards of honesty and integrity as members of this profession.
The quality of life for every individual is directly and significantly impacted by engineering. As a result, engineers must provide services with integrity, objectivity, fairness, and equity, Engineers are held to a professional code of conduct that mandates adherence to the highest standards of moral behavior.
What obligations do engineers have to society?
Engineers must prioritize the public's safety, health, and welfare when performing their professional duties. only provide services in the fields in which they are skilled. Only make sincere, unbiased statements to the public. Human safety and environmental protection in engineering designs are among engineers' societal duties.
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The market for mobile phones contains only a few major producers. if more mobile phone producers enter the market, what will happen?
If more mobile phone producers enter the market, the market will become more competitive and there will be a greater quantity of the good available in the market.
A hypothetical market system is referred to as perfect competition. Perfect competition offers a valuable model for illustrating how supply and demand influence pricing and behavior in a market economy, despite perfect competition seldom occurring in actual markets. There are numerous buyers and sellers in a market with perfect competition, and prices always reflect supply and demand. Producers only make as much money as is necessary to stay in operation. Other businesses would enter the market and reduce revenues if they were to make excessive profits.
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ryan is assisting with his organization's annual business impact analysis effort. he's been asked to assign quantitative values to assets as part of the priority identification exercise. what unit of measure should he use?
The quantitative portion of the priority identification must assign asset values in monetary units.
What is business impact analysis?The results of a business impact analysis (BIA) are used to forecast the effects of a business function or process interruption and to gather data for the creation of recovery plans. During a risk assessment, potential loss scenarios should be noted. The failure of a provider of products or services or a delay in supplies can also stop operations. There are a variety of events that could occur.
Investment in recovery plans as well as investment in prevention and mitigation strategies can be made on the basis of identifying and analyzing the effects of catastrophes on business.
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During a wave of labor activism in the late nineteenth century, most strikes were carefully organized by union leaders. True or false
During a wave of labor activism in the late nineteenth century, most strikes were carefully organized by union leaders.
The answer is false.
In this document, the term union leaders refer to individuals who are assigned, credentialed, and elected to a position of responsibility in carrying out activities on behalf of the union membership, whether employed by the represented firm or the union.
In the history of America's trade and labor unions, the most famous union remains the American Federation of Labor (AFL), founded in 1886 by Samuel Gompers.
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keith takes classes at both westside community college and pinewood community college. at westside, class fees are per credit hour, and at pinewood, class fees are per credit hour. keith is taking a combined total of credit hours at the two schools. suppose that he is taking credit hours at westside. write an expression for the combined total dollar amount he paid for his class fees.
$98 for each credit hour, and $115 for classes at Pinewood
per hour of credit. Keith will be taking a total of 20 credits between the two institutions.
What are credit hours?A fixed number of credits, which can be converted into credit hours, are assigned to each college course you take. Programs typically specify the minimum number of credits that must be earned in a particular field and the minimum number of credits that must be earned overall in order for students to graduate.
A course's credit value often corresponds to the number of hours you will need to dedicate to it, whether in class or outside of it.
In the United States, colleges frequently count the number of credit hours as the number of hours spent in class.
For instance, a 3-credit class would entail 3 hours of lecture time, while a 5-credit course might entail an hour of class per day for a total of 5 hours. However, it does not imply that you would limit your class time to only five hours per week. One credit typically entails one hour of in-class instruction and two hours of outside study, as indicated below.
Thus, every student must know about credit hours.
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what action would you take to ensure you still have a completed proposal for friday? rate the effectiveness of each response below.
The categorization by the level of effectiveness
Ineffective
Move forward with the proposal as-is to ensure you meet the deadline.
slightly effective
Look at similar past product proposals to develop better estimates.
very effective
Meet with your financial partners to refine cost estimates.
Highly Effective
Ask your team leader for their estimate of what the cost should be.
This is further explained below.
What action would you take to ensure you still have a completed proposal for Friday?Generally, The proposal will be viewed as unfinished and ineffective if you move it as-is in order to meet the deadline since there is still work to be done on it and because it is not the final proposal.
Although one cannot entirely depend on the prior product proposals, looking at comparable historical product proposals to generate better estimations offers a decent concept and estimate of the market trend. It will thus only be somewhat effective.
An excellent way to get a sense of the ultimate cost is to meet with the finance partners to revise cost estimates. Therefore, we shall refer to this arrangement as being extremely effective.
You may get a thorough analysis of the product costs and a price quote by asking the team leader for the product estimate. As a result, Highly Effective is the best choice for this agreement.
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complete question
What action would you take to ensure you still have a completed proposal for Friday? Rat effectiveness of each response option by dragging the item into the bins below.
Each bin ca multiple items.
A Move forward with the proposal as-is to ensure you meet the deadline.
B Look at similar past product proposals to develop better estimates.
C Meet with your finance partners to refine cost estimates.
D Ask your team lead for their estimate of what the cost should be. you can move your selection to other bins should you change your mind ? ?Highly Effective
Very Effective
Slightly Effective
Ineffective
Moderately Effective
Suppose that garner had filed his action in an illinois state court. could an illinois state court have exercised personal jurisdiction over foreman or his manager?
The Illinois Court System's Organization the Illinois Constitution of 1970's Article VI, the Judicial Article, establishes a unified, three-tiered judiciary consisting of the Circuit Court, Appellate Court, and Supreme Court.
The High Court
The highest court in the State of Illinois is the Supreme Court. The Supreme Court typically receives cases from the Appellate Court, but when a Circuit Court has sentenced someone to death, the law permits a direct appeal to the Supreme Court, skipping the Appellate Court. In other circumstances, the Supreme Court may enact rules allowing direct appeals Judicial Article.
Legislative redistricting and evaluating the Governor's eligibility to hold office are subjects of original and exclusive jurisdiction of the Supreme Court. Additionally, the Supreme Court has discretionary original jurisdiction over writs of mandamus, prohibition, and habeas corpus as well as issues involving State income.
The First Appellate Judicial District (Cook County) is represented by 3 Justices on the Illinois State Supreme Court, while the following 4 Appellate Judicial Districts are each represented by 1 Justice. For a case to be decided, four votes must be cast in favor.
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bryan gets reduced fees for his daughter's piano lessons by maintaining her teacher's website. bryan is practicing the central tenet of marketing called .
Bryan gets reduced fees for his daughter's piano lessons by maintaining her teacher's website. Bryan is practicing the central tenet of marketing called Exchange.
A marketing transaction occurs whenever two or more parties exchange goods or services. According to marketing theory, every exchange should result in "utility," which means that the value of what you trade must be lower than the value of the benefit you receive.
According to the exchange theory in social marketing, social behavior is a byproduct and process of exchange. This exchange mechanism aims to reduce expenses while increasing benefits. The exchange theory states that people balance the advantages and disadvantages of social relationships.
Since marketing is fundamentally a value-based notion, contemporary marketers are compelled to use value-exchange models. Understanding value exchange requires looking beyond a product's competitive features like price, quality, or performance.
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the helper company’s customer service representatives received new computers and training on how to utilize them best. in regards to measuring productivity, these new computers and updated technology knowledge have
The helper company’s customer service representatives received new computers and training on how to utilize them best. in regards to measuring productivity, these new computers and updated technology knowledge have increased capital deepening for the helper company.
A customer is the recipient of an amazing, carrier, product or an idea - received from a dealer, vendor, or supplier through a monetary transaction or trade for money or some different valuable consideration
A purchaser is a person or business that purchases another employer's goods or offerings. customers are crucial due to the fact they drive revenues; with out them, agencies can't live on.
The definition of a consumer is someone who buys services or products from a store, eating place or different retail supplier.
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Assuming that wine is a normal good, an increase in consumer income, other things being equal, will?
Assuming that wine is a normal good, an increase in consumer income, other things being equal, will shift the demand curve for wine to the right.
Assuming that hamburger is an inferior desirable, an increase in client profits, different matters being the same will cause a leftward shift in the call for curve for a hamburger. a downsloping call for curve and an upsloping supply curve for a product a boom in consumer income will A. increase equilibrium charge and amount if the product is a regular true.
An alternate in charge causes supply curves to increase or contract. If the charges boom, different factors are stored consistent, and there's a boom in the quantity supplied that is referred to as a selection in delivery. Graphically, that is represented as an upward motion along the same supply curve. The law of supply and call for is a keystone of current economics. in line with this concept the price of an excellent is inversely related to the amount supplied.
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Dake corporation's relevant range of activity is 2200 units to 5000 units. when it p for financial reporting purposes, the total amount of product costs incurred to make 3,600 units is closest to:______.
When Dake Corporation makes 3,600 units, the total amount of product costs is closest to $50,940.
What is the product cost?The product cost to Dake Corporation can be found as:
= Direct materials + Direct labor + Variable manufacturing overhead + Fixed manufacturing overhead
Solving gives:
= (3,600 x 6.85) + (3,600 x 2.80) + (3,600 x 1.50) + (3,600 x 3)
= 24,660 + 10,080 + 5,400 + 10,800
= $50,940
In conclusion, the total product cost is closest to $50,940.
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A customer has a long margin accoutn witha market value of 30000 and a debit balance of 20000...how much cash may hte customer withdraw from the account?
A purchaser has an extended margin account with a market value of 30000 and a debit balance of 20000. coins might also the customer withdraw from the account = 50000
market value =30000
debit balance =20000
withdraw account =( 30000+20000)=50000
Market value is the fee an asset fetches within the marketplace and is usually used to consult market capitalization. marketplace values are dynamic in nature because they depend upon an assortment of things, from physical operating conditions to financial climate to the dynamics of call for and supply.
Market value or OMV is the price at which an asset could change in an aggressive public sale putting. market cost is frequently used interchangeably with open market value, honest price, or fair market price, although those terms have distinct definitions in specific requirements, and vary on some occasions.
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Find+the+convexity+of+a+seven-year+maturity,+6.6%+coupon+bond+selling+at+a+yield+to+maturity+of+8.4%.+the+bond+pays+its+coupons+annually
We need three pieces of information to calculate convexity:
(1) The price of the bond is currently (P0)
(2) The price of the bond if the YTM increases by 100 basis points (P+)
(3) The price of the bond if the YTM decreases by 100 basis points (P-)
[tex]Price = Coupon * \frac{1-(1/(1+r)t)}{r} + \frac{Face value}{(1+r)t} \\P0 = 66 * \frac{1-(1/1.084)7)}{0.084} + \frac{1000}{(1.084)7} = 907.55\\P+ = 66 * \frac{1-(1/1.094)7}{0.094} + \frac{1000}{(1.094)7} = 860.95\\P- = 66 * \frac{1-(1/(1.074)7}{0.074} + \frac{1000}{(1.074)7} = 957.48\\[/tex]
Now we can compute convexity. Note that the change in the yield (Delta y) was 100 basis points.
[tex]Convexity =\frac{P++ P- - 2 * P0 }{2* P0 *(△y)2 } \\Convexity = \frac{860.95 + 956.48 - (2 * 907.55)}{2 * 907.55 * (0.01)2 } = 12.84[/tex]
The curve in the relationship between bond prices and bond yields is measured by convexity. Convexity illustrates how a bond's duration alters when the interest rate does. A bond is considered to have negative convexity if its duration rises as yields do.
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brian is developing continuity plan provisions and processes for his organization. what resource should he protect as the highest priority in those plans?
Brian is developing continuity plan provisions and processes for his organization. The safety of human life should he protect as the highest priority in those plans.
What do you understand by business continuity plan?
BCP involves stating any and all risks that can affect the company's operating, making it a crucial part of the organization's risk management strategy. Risks may include natural disasters—fire, flood, or weather-related events—and cyber-attacks.
BCPs are an inseparable part of any business. Threats and disruptions mean a loss of revenue and higher costs, which leads to a decline in profitability.
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The ending inventory of finished goods has a total cost of $10,000 and consists of 500 units. If the overhead applied to these goods is $2,000, and the overhead rate is 50% of direct labor, how much direct materials cost was incurred in producing these units?.
Direct Materials cost of $4,000 was incurred in producing these 500 units.
Direct Material + Direct Labour + Overhead =Total Cost
Direct Material + ($2,000/0.50) + $2,000=$10,000
Direct Material cost =$4,000
The price of the raw materials and parts needed to make a product is known as the direct material cost. With the finished product, the materials must be clearly visible (otherwise they are considered to be joint costs). Since the direct material cost is one of the few variables in the manufacturing process, it is taken into account while determining throughput from the production processes. Sales minus all completely variable costs equals throughput.
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A+person+invests+$100,000+at+a+nominal+12%+interest+per+year+compounded+continuously.+what+will+be+the+value+of+the+investment+in+30+years?
The value of investment in 30 years is $3,659,823.
Compound Interest continuously Formula
A=[tex]Pe^r^t[/tex]
Here A→ Amount
P→ Principal
r→ Rate of Interest
t→ Time in years
From the given information,
P=$100,000
r=12%=0.12
t=30 years
Now, A=[tex]Pe^r^t[/tex]=100000[tex]e^0^.^1^2[/tex]×30
A=100000×[tex]e^3^.^6[/tex]
A=100000×36.5982344
A=3659823.44
Correct to nearest dollar, then
A=$3659823
Compound interest on a deposit or loan is computed on the initial principle as well as all of the accrued interest from earlier periods.
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the associated income effecf of a decrease in the price of one good may increase or decrease the quantity of that good
The following statement is correct: "The associated income effect of a fall in the price of one good may increase the quantity of that good."
In microeconomics, the income effect is the change in demand for a good or service produced by a change in a consumer's purchasing power as a result of a change in real income. This shift can be the result of a pay increase, or it can be the result of existing revenue being freed up by a fall or increase in the price of a good on which money is spent.In consumer choice theory, the income effect and substitution effect are related economic concepts. The income effect illustrates how changes in purchasing power affect consumption, whereas the substitution effect discusses how changes in relative prices affect the consumption pattern of related commodities that can substitute for one another.Thus, this is meant by income effect.
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