Answer:is actually b
Explanation:
Magee Company's stock has a beta of 1.20, the risk-free rate is 4.50%, and the market risk premium is 5.00%. What is Magee's required return
Answer:
10.50%
Explanation:
Calculation for Magee's required return
Using this formula
Required return=Risk-free rate+Beta(Market risk premium)
Let plug in the formula
Required return= 4.50% + 1.20(5.00%) .
Required return=4.50%+6%
Required return= 10.50%
Therefore Magee's required return will beb10.50%
Suppose you have the following three zero-coupon bond (ZCB) available: a 1-year ZCB that costs $97, a 2-year ZCB that costs $95, and a 3-year ZCB that costs $92. Assume that the par values are $100.
a. What must the price of a 3-year coupon bond with at 8% coupon rate?
b. How would you make an arbitrage profit if the coupon bond was trading at $100?
c. How much arbitrage profit would you make per $100 of the 3-year coupon bond trade?
Answer:
Bond price = Par value / (1 + 1 year spot rate)1
$97 = $100 / (1 + 1 year spot rate)^1
(1 + 1 year spot rate)^1 = $100 / $97
(1 + 1 year spot rate) = 1.030928
1 year spot rate = 3.0928%
Bond price = Par value / (1 + 2 year spot rate)^2
$95 = $100 / (1 + 2 year spot rate)^2
(1 + 2 year spot rate)^2 = $100 / $95
(1 + 2 year spot rate)^2 = 1.052632
(1 + 2 year spot rate) = (1.052632)(1 / 2)
(1 + 2 year spot rate) = 1.025978
2 year spot rate = 2.5978%
Bond price = Par value / (1 + 3 year spot rate)^3
$92 = $100 / (1 + 3 year spot rate)^3
(1 + 3 year spot rate)^3 = $100 / $92
(1 + 3 year spot rate)^3 = 1.086957
(1 + 3 year spot rate) = (1.086957)(1 / 3)
(1 + 3 year spot rate) = 1.028184
3 year spot rate = 2.8184%
Coupon per period = (Coupon rate / No of coupon payments per year) * Par value
Coupon per period = (8% / 1) * $100
Coupon per period = $8
a) Bond price = Coupon / (1 + 1 year spot rate)^1 + Coupon / (1 + 2 year spot rate)^2 + (Coupon + Par value) / (1 + 3 year spot rate)^3
Bond price = $8 / (1 + 3.0928%)^1 + $8 / (1 + 2.5978%)^2 + ($8 + $100) / (1 + 2.8184%)^3
Bond price based on spot rates = $114.7199
b. Bond price based on spot rates is greater than traded bond price to exploit this arbitrage the following strategy must be implemented
The 3 year 8% coupon bond should be bought at $100.
Portfolio = -$100
1 year zero coupon bond with face value $8 must be sold
Portfolio = (Price of 1 year zero coupon bond / Face value) * Amount of Face value to be Sold
Portfolio = ($97 / $100) * $8
Portfolio = $7.76
2 year zero coupon bond with face value $8 must be sold
Portfolio = Price of 2 year zero coupon bond / Face value) * Amount of Face value to be Sold
Portfolio = ($95 / $100) * $8
Portfolio = $7.6
3 year zero coupon bond with face value $108 must be sold
Portfolio = Price of 3 year zero coupon bond / Face value) * Amount of Face value to be Sold
Portfolio = ($92 / $100) * $108
Portfolio = $99.36
Arbitrage profit = -$100 + $7.76 + $7.6 + $99.36
Arbitrage profit = $14.72
c) Arbitrage profit = Bond price based on spot rates - Traded Bond price
Arbitrage profit = $114.72 - $100
Arbitrage profit = $14.72
Arbitrage profit would you make per $100 = $14.72
Match each situation with the term that best describes it. Use each term only once.
a. Personal power
b. Legitimate power
c. Reward power
d. Coercive power
e. Expert power
f. Informational power
g. Referent power
h. Persuasive power
1. One of your subordinates only seems to respond to threats of punishment. What type of power should you use to motivate him?
2. You manage a difficult subordinate who only cooperates when she feels that youhave the formal authority to ask her to do something. What type of power shouldyou use to motivate her?
3. One of your subordinates looks up to you as a role model. What type of powershould you use to motivate her?
Answer:
1. One of your subordinates only seems to respond to threats of punishment. What type of power should you use to motivate him?
h. Persuasive power
2. You manage a difficult subordinate who only cooperates when she feels that you have the formal authority to ask her to do something. What type of power should you use to motivate her?
b. Legitimate power
3. One of your subordinates looks up to you as a role model. What type of power should you use to motivate her?
a. Personal power
Explanation:
In any given situations there are different incidents that would require someone to apply different power in-order to manage the situation. This could be in form of motivation or deterrent method during the application of the power.
For example, in the case of the subordinate looking up to you as a role model, you should apply personal power in-order to motivate the person. the personal power will help you to build personal relationship between the subordinate and you.
According to the condition, the following matches are as follows:
One of your employees appears to react to threats of punishment solely. This condition is a Persuasive type of power you should use to motivate him. Thus, the correct matches are 1-h, 2-b, 3-a.
A persuasive individual may persuade others to make intelligent judgments, as well as convince others to make foolish decisions.
Thus, it is beneficial for the organization when that individual has expertise as well as the judgment to recognize when they should seek the opinion of someone else.
You manage a tough subordinate who only cooperates when she believes you have the official power to request something of her. The Legitimate type of power is used to motivate.
One of your subordinates regards you as a mentor. The Personal type of power is used here.
Therefore, the correct option is 1-h, 2-b, 3-a.
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Trevor Ang holds a $400,000 portfolio consisting of the following stocks:
Stock Investment Beta
A $100,000 1.40
B $70,000 1.60
C $30,000 1.10
D $200,000 1.00
Total $400,000
What is the portfolio's beta?
Answer:
Portfolio beta = 1.2125
Explanation:
The portfolio beta is a function of the weighted average of the individual stocks' betas that form up the portfolio. To calculate the beta of a portfolio, we use the following formula,
Portfolio Beta = wA * Beta of A + wB * Beta of B + ... + wN * Beta of N
Where,
w is the weight of each stock
Portfolio Beta = 100000/400000 * 1.4 + 70000/400000 * 1.6 +
30000/400000 * 1.1 + 200000/400000 * 1
Portfolio beta = 1.2125
If you decide to take a break and go for a hike in order to focus less consciously on the creative process, which stage is the creative process are you experiencing?
Answer: Incubation
Explanation: In the incubation stage the person moves away from the problem and gives space to the mind to search for a solution. An example is going for a walk to relax your mind a bit and ideas flow better.
Jill Bower purchased 320 shares of stock for $29 a share and sold it for $35 a share. The commissions required to buy and sell her stock totaled $300 for each transaction. Assuming she received no dividends during the time she owned the stock, what is her total investment on the purchase of this stock?a. $2.140.b. $2.500.c. $1,580.d. $625.e. $1860.
Answer:
Jill Bower
Her total investment on the purchase of this stock is:
$9,880.
Explanation:
Number of shares purchased = 320
Share price at purchase = $29
Cost of the purchase = $9,280
Purchase Commission = 300
Total cost = $9,580
Sales proceeds = $11,200
Sales Commission = 300
Net proceeds = $10,900
Therefore, the total investment will be equal to the purchase cost (initial investment) + the sales commission, which is equal to $9,880.
= $9,580 + $300
= $9,880
As a vice president of a financial services company, you serve many clients, and they sometimes ask your company to contribute to their favorite charities. You recently received a letter from Elliana Larios asking for a substantial contribution to the National Court Appointed Special Advocate (CASA) Association. On visits to your office, she has told you about its programs to recruit, train, and support volunteers in their work with abused children. She herself is active in your town as a CASA volunteer, helping neglected children find safe, permanent homes. She told you that children with CASA volunteers are more likely to be adopted and are less likely to reenter the child welfare system.
You have a soft spot in your heart for children and especially for those who are mistreated. You sincerely want to support CASA and its good work. But times are tough, and you can't be as generous as you have been in the past. Ms. Larios wrote a special letter to you asking you to become a Key contributor, with a pledge of $2,000
Your Task Write a refusal letter that maintains good relations with your client. Address it to Ms. Elliana Larios, 8569 East 39th Street, Phoenix, AZ 85730.
As a vice president of a financial services company, you serve many clients, and they sometimes ask your company to contribute to their favorite charities. You recently received a letter from Elliana Larios asking for a substantial contribution to the National Court Appointed Special Advocate (CASA) Association. On visits to your office, she has told you about its programs to recruit, train, and support volunteers in their work with abused children. She herself is active in your town as a CASA volunteer, helping neglected children find safe, permanent homes. She told you that children with CASA volunteers are more likely to be adopted and are less likely to reenter the child welfare system.
You have a soft spot in your heart for children and especially for those who are mistreated. You sincerely want to support CASA and its good work. But times are tough, and you can't be as generous as you have been in the past. Ms. Larios wrote a special letter to you asking you to become a Key contributor, with a pledge of $2,000
Your Task Write a refusal letter that maintains good relations with your client. Address it to Ms. Elliana Larios, 8569 East 39th Street, Phoenix, AZ 85730.
Hiring one more worker for a station ___ design capacity and ___ utilization. (Hint: Relate to the problem set.)A. may increase or decrease, always increasesB. always increases, may increase or decreaseC. always increases, always increasesD. may increase or decrease, may increase or decrease
Answer:
B. always increases, may increase or decrease
Explanation:
Each worker being added is going to complete some job or assemble some units hence the design capacity after addition of worker will always be greater than the design capacity before addition. But utilization = actual output * 100 / theoretical design capacity.
Hence, if actual output after addition of worker increases more in proportion than that of proportional increase in number of worker, then the utilization of workstation will increase else it is likely to decrease. If both proportion are equal then the utilization is likely to remain same.
You want to invest $50,000 in a portfolio with a beta of no more than 1.4 and an expected return of 12.4%. Bay Corp. has a beta of 1.2 and an expected return of 11.2%, and City Inc. has a beta of 1.8 and an expected return of 14.8%. The risk-free rate is 4%. You can invest in Bay Corp. and City Inc. How much will you invest in each?
Answer:
Assume the weight to be invested in Bay Corp is x. That means (1 - x) will be the weight for City Inc. The expression for the expected return will be;
(x * 11.2%) + ( (1 - x) * 14.8%) = 12.4%
0.112x + 0.148 - 0.148x = 0.124
-0.036x = -0.024
x = 0.67
Portfolio beta is;
= 0.67 * 1.2 + ( 1 - 0.67) * 1.8
= 1.398 so beta condition is satisfied.
Amount in Bay Corp.;
= 0.67 * 50,000
= $33,500
Amount in City Inc.;
= 50,000 - 33,500
= $16,500
The amounts that will be invested in Bay Corp. and City Inc. will be $33500 and $16500.
Let the weight invested in Bay Corp be x.Therefore the weight invested in City Inc. will be 1 - x.
Therefore, the equation to solve the question will be:
( x × 11.2%) + [(1 - x) × 14.8%)] = 12.4%
Open the brackets
0.112x + 0.148 - 0.148x = 0.124
Collect like terms
-0.036x = -0.024
x = -0.024 / 0.036
x = 0.67
The portfolio beta will be:
= 0.67 * 1.2 + ( 1 - 0.67) × 1.8
= 1.398 .
Therefore, the amount invested in Bay Corp will be:
= 0.67 × $50,000
= $33,500
Therefore, the amount in City Inc. will be:
= $50,000 - $33,500
= $16,500
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YCD, Inc., has sales of $5,783, total assets of $2,604, and a debt-equity ratio of 0.75. If its return on equity is 11 percent, what is its net income?
Answer:Net income=$164
Explanation:
Equity multiplier = 1 + Debt-equity ratio
Equity multiplier = 1 + 0.75
Equity multiplier = 1.75
And the total asset turnover is:
Total asset turnover = Sales / Total assets
Total asset turnover = $5,783 / $2,604
Total asset turnover = 2.22 times
ROE = (Profit margin)(Total asset turnover)(Equity multiplier)
0.11 = (Profit margin)(2.22)(1.75)
Profit margin = 0.14/3.885 =0.0283
Rearranging we can find the net income as
Profit margin = Net income / Sales
Net income = profit margin x Sales
Net income =0.0283 x $5,783,= $163.6589 = $164
Tinker's cost of goods sold in the year of sale (2019) was $750,000 and 2018 cost of goods sold was $770,000. The inventory at the end of 2019 was $188,000 and at the end of 2018 the inventory was $208,000. Tinker's average number of days to sell its inventory during 2019 is closest to: (Use 365 days a year.)
Answer:
96.3 days
Explanation:
Inventory turnover is calculated as;
= ( Average inventory / cost of goods sold ) × 365
Where,
Average inventory = (Beginning inventory + Ending inventory) / 2
Average inventory = ($208,000 + $188,000) / 2
Average inventory = $198,000
Therefore,
Inventory turnover = ($198,000 / $750,000) × 365
Inventory turnover = 96.3 days
The average number of days for Tinker to sell it's inventory during 2019 is closest to 96.3 days
A firm has a machine it can sell for $40,000. The book value of the machine is currently $20,000. If the firm sells the machine, what are the net proceeds from the sale? Assume that the tax rate is 40%. Round to the nearest penny.
Answer:
the net proceeds from the sale is $32,000
Explanation:
The computation of the net proceeds from the sale is shown below:
Net Proceeds = Sale Price - Tax × (Sale price - purchase price)
= $40,000 - 40% × ($40,000 - $20,000)
= $40,000 - $8,000
= $32,000
Hence, the net proceeds from the sale is $32,000
We simply applied the above formula so that the correct value could come
And, the same is to be considered
When evaluating an investment, the MNC should consider the ____________ cash flows generated by the project.
a. total
b. variable
c. incremental
d. fixed
Answer: c. Incremental
Explanation:
Simply put incremental cashflow is the additional cashflow that accrues to a company when it takes on a new project. The Multinational company should therefore consider this when they are accepting a project.
If the new project has a positive incremental cashflow, it will add to the cashflows of the company and so should be initiated as opposed to those with negative incremental cashflows.
Four years ago your firm issued a $1,000 par bond with a 4% semi-annual coupon and 20 years to maturity. The bond is now priced at $860. What is the current yield to maturity of the bond?
Answer:
the current yield to maturity of the bond is 5.31%
Explanation:
The computation of the yield to maturity is shown below:
Given that
Future value = $1,000
Present value = $860
NPER = (20 - 4) × 2 = 16
PMT = $1,000 × 4% ÷ 2 = $20
The formula is shown below:
= RATE(NPER;PMT;-PV;FV;TYPE)
The present values comes in negative
After applying the above formula, the yield to maturity is
= 2.6548% × 2
= 5.31%
Hence, the current yield to maturity of the bond is 5.31%
Charging off the cost of a wastebasket with an estimated useful life of 10 years as an expense of the period when purchased is an example of the application of the
Answer:
E. materiality concept
Explanation:
The materiality concept refers to a concept in which it impacts the decisions of the user if there is any small impact. In other words, any small impact could change the user decisions with respect to the financial statement i.e. relevant and useful
Therefore according to the given situation, the Option E is correct
And all the other options are incorrect
Colleges often rely heavily on raising money for an "annual fund" to support operations. Alumni are typically solicited for donations to the annual fund. Studies suggest that the graduate’s annual income is a good predictor of the amount of money he or she would be willing to donate, and there is a reasonably strong, positive, linear relationship between these variables. In the studies described:
Answer: size of alum's donation to the annual fund is the response variable
Explanation:
Considering the annual income is a good predictor of the amount of money he or she would be willing to donate, and there is a reasonably strong, then the study indicated that the size of alum's donation to the annual fund is the response variable
1. How much would you pay for a share of stock paying a dividend(cash payout C) of $4 to be paid in one year, a known selling price in one year (P) of $50, and expected return (R) of similar assets of 2%?2. Compute the price of a share of stock that pays a$1.50 per year dividend and that you expect to be able to sell in one year for $20, assuming you require a 10% return.
Answer and Explanation:
The computation is shown below:
a. The willing to pay is
= (Current year price) ÷ (1 + rate) + (current year dividend) ÷ (1 + rate)\
= ($50) ÷ (1 + 0.02) + ($4) ÷ (1 + 0.02)
= $52.94
b. The price of a share is
= (Current year price) ÷ (1 + rate) + (current year dividend) ÷ (1 + rate)\
= ($20) ÷ (1 + 0.10) + ($1.50) ÷ (1 + 0.10)
= $19.55
We simply applied the above formula so that the correct value could come
And, the same is to be considered
If the current price of a stock is P=40, its β=1.25, and the expected rate of return of the market portfolio is r¯M=0.13, what does CAPM predict for the price of the stock in a year? Use rf=0.05 as the risk-free rate.
Answer:
im sorry
Explanation:
Match the word to the correct definition. 1. alignment the horizontal placement of text on the page 2. shortcut a special combination of keys that tells the computer to perform a command 3. columns using your mouse to drag across text; this causes the text and background to change color and become selected 4. highlight vertical sections of text separated by blank space
Answer:
1432 is the order
Explanation:
hope this helps
Answer: 1432 is the order.
Hope this helps you! :^}
Select the correct answer.
Restaurant supply companies handle deliveries of foods and goods to restaurants.
ОА.
True
OB.
False
Answer:
True
Explanation:
I took the test and this is the right answer. :-)
Keynes revolutionized economic theory by changing the explanation for what causes economic growth from aggregate _______ to aggregate _______.
a. demand; supply
b. supply; demand
c. cost; inflation
d. GDP; income
Answer:
b. supply; demand
Explanation:
Before Keynes, classical economists thought that aggregate supply was more important than aggregate demand in determining the overall economic level of a country. This was mainly because of the belief in say's law: the law stated that every offer creates its own deamand.
Keynes changed economics because he stated that demand and supply do not always reach equilibrium, and that demand is often insufficient, and it is the government job to stimulate demand through expansionary monetary and fiscal policy, like lowering interest rates and cutting taxes.
The following trial balance was extracted from the books of Kalekeno, a sole trader, at 31st Dec2018:
Dr Cr
Stock DEC 31st 2017 23,680
Carriage outward 2,000
Carriage inwards 3,100
Returns 2050 3,220
Purchases and sales 118,740 186,000
Salaries and wages 38,620
Rent 3040
Insurance 780
Motor expenses 6,640
Office expenses 2160
Lighting and heating expenses 1,660
General expenses 3140
Premises 50,000
Motor vehicles 18,000
Fixtures and fittings 3,500
Debtors and creditors 38,960 17,310
Cash at bank 4820
Drawings 12,000
Capital 126,360
332,890 332,890
Additional information
i) Closing stock was valued at ksh 29,460 as at 30th June 2018
ii) Mr kalekeno took part of the stock amounting to ksh 3000 for personal use
iii) Salaries and wages amounting to ksh 8,000 were pre-paid and ksh 360 of motor expenses accrued
iv) Bad debts written off amounted to 860
v) Depreciation is to be provided for as follows:
Premises at 20%
Fixtures and fittings at 15%
Motor vehicles at 25%
All of a above asset were depreciated at cost
a) The income statement for the year ended 30 th June 2018 ( 5marks)
b) The statement of financial position (5 Marks)
Answer:
do you still need help?
Explanation:
Johnson Company has current year accounts payable of $25,000 and cost of goods sold of $100,000. Compute Johnson Company’s days’ payable outstanding.
Answer:
the days payable outstanding is 91.25 days
Explanation:
The computation of the days payable outstanding is shown below:
Days' payable outstanding is
= (Accounts Payable ÷ Cost of goods sold) × total number of days in a year
= ($25,000 ÷ $100,00) × 365 days
= 91.25 days
We simply applied the above formula so that the correct value could come
And, the same is to be considered
Hence, the days payable outstanding is 91.25 days
Samuelson's has a debt–equity ratio of 43 percent, sales of $10,000, net income of $1,700, and total debt of $8,700. What is the return on equity?
Answer:
8.40%
Explanation:
Calculation for the return on equity
First step is to calculate the equity using this formula
Equity=Total debt/Debt–equity ratio
Let plug in the formula
Equity=$8,700/43%
Equity=$20,233
Last step is to calculate the return on equity
Using this formula
Return on Equity=Net income/Equity
Let plug in the formula
Return on Equity=$1,700/$20,233
Return on Equity=8.40%
Therefore the return on equity will be 8.40%
Hindelang Inc. is considering a project that has the following cash flow and WACC data. What is the project's MIRR?
WACC: 12.25%
Cash flows -
Year 0: - $850
Year 1: $300
Year 2: $320
Year 3: $340
Year 4: $360
Answer:
MIRR = 17%
Explanation:
The computation of the MIRR of a project is shown below:
Year Cash flows ( in $)
0 -850
1 300
2 320
3 340
4 360
WACC 12.25%
MIRR 17%
We simply applied the MIRR over the excel
We simply applied the attached formula so that the correct percentage could come
And, the same is to be considered
please help its due in 2 hours time will give all my points
"Explain how the development of money over time has helped to improve the way in which monetary transactions are conducted" 6 MARK QUESTION
Explanation:
First money ever made was just coins and it differed in worth compared to today. In the present, money is not only a physical object but it also an imaginary value on our bank accounts and cards. Having in mind that monetary transactions are all-in-all deposits, withdrawals and exchanges, its way easier to conduct those with not having to give and recieve money in physical form, but being, able to do it all while just transfering the numbers from one to another account. Bankers have less responsibility due to not having to stock all the money in safes and secure boxes, but just checking if all the numbers are adding up. So, shall we say, the development of money over time has improved the way in which monetary transactions are conducted because this way, it's safer, faster and much more trustworthy.
A snack manufacturer discovers that they must increase the salt content of chips by 14 milligrams before about 50 percent of their consumers notice the change. A clever intern points out that this is an example of:
Answer:
difference threshold
Explanation:
Difference threshold is use by businesses or effectively reduce cost without affecting their profit margin .
It is the minimum amount of change that is required to make consumers of a product to notice the change 50% of the time.
In the given scenario the snack manufacturer discovers that they must increase the salt content of chips by 14 milligrams before about 50 percent of their consumers notice the change.
A US Multi National Corporation has a contract for a relatively predictable long-term inflow of Japanese yen. The firm decides to hedge the yen exposure by finding a supplier in Japan and paying for these imports in yen. This hedging strategy is known as ________.
Answer: a natural hedge
Explanation:
Natural hedge is simply a strategy that is used by a company in order to reduce risk and this is done through the investment in the assets that their performance is not positively correlated.
Such companies typically makes revenue in the currency of another country. Since the firm decides to hedge the yen exposure by finding a supplier in Japan and paying for these imports in yen, this hedging strategy is known as natural hedge.
Deal or No Deal. You are a contestant with 5 suitcases left: $1 $30,000 $100,000 $300,000 $750,000 The bank offers you $250,000 to walk away from the game. Based on EXPECTED VALUE, explain whether or not you choose the deal.
Answer:
Deal
Explanation:
Amount of cash left in the 5 Suitcase = $1 , $30000, $100000, $300000, $750000
The probability of selecting each bad is equal and it is 1/5
Thus, the expected value of prize = 0.2(1+30000+100000+300000+750000)
= 0.2 * 1180001
= $236,000.2 0
Since the bank is offering amount of $250,000 which is greater than the expected value, then it is considered as a deal.
(2-3 statements answer only) I'll give brainliesr.
•What market/s do we consider when it comes to raw materials?
Answer:
factor market
Explanation
Lemme know if I'm wrong :/