According to CAPM, the rate of return investors should require as compensation for investing in Firm X can be calculated using the formula:
Required Return = Risk-free Rate + Beta * Market Risk Premium.
Given that the risk-free rate is 5.70% and the market risk premium is 10.30%, and assuming the beta of Firm X is not provided, I cannot calculate the exact rate of return required for Firm X.
B) Without the specific beta value for Firm X, we cannot determine its position on the Security Market Line (SML). The SML plots the relationship between an asset's expected return and its beta. If the required return for Firm X is above the return predicted by the SML, it would be undervalued, while a required return below the SML prediction would indicate overvaluation. However, since the beta for Firm X is missing, we cannot assess its current valuation.
H) To determine the risk-free rate at which Firm X and Firm Z would be correctly priced relative to each other, we need their betas and the market risk premium. Without this information, it is not possible to calculate the exact risk-free rate required.
Learn more about investors here:
https://brainly.com/question/33035723
#SPJ11
Suppose a USA firm has to make a payment of 15 million (MM) Mexican Pesos (MXN) in 1 year. The current spot exchange rate is USD0.04994 per MXN and the 1-year forward exchange rate is USD0.04962 per MXN.
Describe the forward transaction that would act as a hedge to the scheduled payment of MXN 15MM in one year. Would the firm contract to buy or sell MXN forward at USD0.04962 per MXN? With the forward contract how much is the firm going to have to pay in USD in one year? Explain why this forward contract works as a hedge.
To hedge the scheduled payment of MXN 15 million in one year, the USA firm would enter into a forward contract to sell MXN forward at USD0.04962 per MXN(Mexican Pesos).
By entering into this forward contract, the firm locks in the exchange rate at which it will sell MXN and buy USD in the future. This helps protect the firm from potential fluctuations in the exchange rate, ensuring a known and fixed exchange rate for the payment.
The amount the firm will have to pay in USD in one year can be calculated as follows:
Payment in USD = Amount in MXN × Forward exchange rate
Payment in USD = 15,000,000 MXN × USD0.04962/MXN
Payment in USD ≈ USD 744,300
Therefore, the firm will have to pay approximately USD 744,300 in one year to fulfill its payment obligation of MXN 15 million.
This forward contract works as a hedge because it allows the firm to mitigate the exchange rate risk associated with the payment. If the spot exchange rate were to fluctuate unfavorably by the time the payment is due, the firm could face a higher USD payment amount. However, by entering into the forward contract, the firm secures a predetermined exchange rate, protecting itself from potential losses due to adverse exchange rate movements.
Learn more about Forward contract here:
brainly.com/question/32552753
#SPJ11
Regression is a technique that is typically used in top-down estimation True False
False. Regression is a statistical technique used in data analysis to establish relationships and make predictions based on observed data. It is not specifically tied to top-down estimation.
Regression analysis is a versatile tool used in various fields, such as economics, finance, social sciences, and marketing, to analyze data, identify patterns, and make predictions. It involves estimating the parameters of the regression model, assessing the model's goodness of fit, and interpreting the results to draw meaningful conclusions.
In top-down estimation, the focus is on dividing the project or budget into logical and manageable components. This can be done based on various factors such as work breakdown structure, historical data, expert judgment, or predefined ratios. Each component or subtask is then assigned a portion of the overall estimate, typically based on its relative size or importance.
regression analysis can provide valuable insights in top-down estimation by identifying variables or factors that have a significant impact on the outcome being estimated. For example, regression analysis can help determine the relationship between certain project characteristics or variables and project cost or duration. This information can then be used to inform the allocation of estimates in the top-down estimation process.
learn more about predictions here:
https://brainly.com/question/22232805
#SPJ11
tax planning advantage and tax planning disadvantage of the Tax
Cut and Jobs Act (TCJA) on c corps
Tax planning advantages of the Tax Cut and Jobs Act (TCJA) for C corporations include a reduced corporate tax rate and expanded deductions for certain business expenses.
However, disadvantages include limitations on the deduction for interest expenses and the elimination of certain deductions.
The Tax Cut and Jobs Act (TCJA) introduced several tax planning advantages for C corporations. One significant advantage is the reduced corporate tax rate. Under the TCJA, the corporate tax rate was lowered from 35% to a flat rate of 21%, providing a substantial tax savings for C corporations.
Additionally, the TCJA expanded deductions for certain business expenses. For example, it allowed for immediate expensing of qualified property under the bonus depreciation provision, enabling C corporations to deduct the full cost of qualifying assets in the year they are placed in service.
However, the TCJA also brought about certain disadvantages for C corporations. One disadvantage is the limitation on the deduction for interest expenses. The TCJA imposed a limit on the amount of interest expenses that can be deducted, which can impact corporations with significant debt financing.
Furthermore, the TCJA eliminated certain deductions that were previously available to C corporations. For instance, the deduction for entertainment expenses and the domestic production activities deduction were repealed, reducing potential tax savings.
Overall, while the TCJA provides tax planning advantages such as a reduced corporate tax rate and expanded deductions, there are also disadvantages like limitations on interest expense deductions and the elimination of certain deductions. It is crucial for C corporations to carefully evaluate these factors when engaging in tax planning strategies.
Learn more about business expenses here:
https://brainly.com/question/30238141
#SPJ11
26.Which of the following phrases is free of redundancies?a.Essential itemsb.End resultc.Mutual cooperationd.Assemble together
The phrase that is free of redundancies is End result.
Redundancy is a word or phrase that repeats something that has already been expressed or that is unnecessary.
Here are the explanations for each of the phrases:
a. Essential items: The phrase "essential items" is redundant.
"Essential" already means necessary or crucial, so adding the word "items" is unnecessary.
b. End result: The phrase "end result" is not redundant.
The word "result" is sufficient to convey the idea of an outcome, but "end result" emphasizes the finality of that outcome.
c. Mutual cooperation: The phrase "mutual cooperation" is somewhat redundant.
"Mutual" already means that two or more parties are cooperating with each other, so adding the word "cooperation" is unnecessary.
d. Assemble together: The phrase "assemble together" is redundant.
"Assemble" means to gather together, so adding the word "together" is unnecessary.
Know more about Redundancy here:
https://brainly.com/question/13266841
#SPJ11
Tumble Company sells coats for $190.3 each. The variable costs per coat are $69.12 and the fixed costs per month are $42113. How many coats must be sold to make a profit of $5708 in a month? (Round to two decimal places) Answer:
To determine the number of coats that must be sold to make a profit of $5708 in a month, we need to calculate the contribution margin per coat and then use it to calculate the required sales volume.
Contribution margin per coat can be calculated by subtracting the variable cost per coat from the selling price per coat:
Contribution Margin per Coat = Selling Price per Coat - Variable Cost per Coat
= $190.3 - $69.12
= $121.18
Now we can calculate the required sales volume using the following formula:
Required Sales Volume = (Fixed Costs + Target Profit) / Contribution Margin per Coat
Required Sales Volume = ($42113 + $5708) / $121.18
Required Sales Volume ≈ 440.67
Rounding to two decimal places, the company must sell approximately 440.67 coats to make a profit of $5708 in a month. Since you cannot sell a fraction of a coat, you would need to round up to the nearest whole number.
Therefore, the answer is 441 coats (rounded up from 440.67).
To know more about required sales volume click this link -
brainly.com/question/32818092
#SPJ11
Diana, a 4th year BAFM student has just received a lumpsum payment of Kes 10 million after participating in sport betting She is contemplating investing Kes 5 millon in stocks of Kiserian Ltd today that pays a 6% annual dividend. The T-bill rate is 7.5% and Diana expects the market to rise in value by 10% per year. The Directors of Kiserian Ltd have approved an expansion project that is expected to increase the firm's annual cash inflow by Ksh 100 million. Information on this project will be released to the market together with the announcement of the rights issue. This dividend together with the company's earnings is expected to grow by 5% annually after investing in the expansion project. In order to effectively manage it risk, Kiserian Ltd invested in 2-asset portfolio to diversify it incomes. Their weights of the assets are 45% and 55% respectively, their standard deviations are 2.1% and 3.2% and their betas are 0.9 and 1.2, respectively. Their mutual correlation coefficient is 0.5.
Required;
(a) Calculate the expected return of the portfolio
(b) Calculate the portfolio beta
(c0 Based on the results in (i) above, comment on the risk profile of Kiserian Management Limited, in relation to the harket
(d) Do you think Diana has adopted the right investment strategy considering her age and investment time horizon? Justify your answer
(e) "Investing in shares is riskier than investing in fixed-income investments. Having a portfolio of shares subjects' investors to an emotional roller-coaster". This was a comment made by one Expert Panelist during an Investment media coverage at KTN TV. Comment on the statement above and discuss four key risks associated with shares.
a) The expected return of the portfolio is 8.75%.
How to solveExpected return = (Weight of asset 1 * Expected return of asset 1) + (Weight of asset 2 * Expected return of asset 2)
In this case, the weights of the assets are 45% and 55%, respectively, and the expected returns of the assets are 7.5% and 10%, respectively.
Therefore, the expected return of the portfolio is:
Expected return = (45% * 7.5%) + (55% * 10%) = 8.75%
(b) The portfolio beta is 1.05. This is calculated using the following formula:
Portfolio beta = (Weight of asset 1 * Beta of asset 1) + (Weight of asset 2 * Beta of asset 2) + (Correlation coefficient * Standard deviation of asset 1 * Standard deviation of asset 2) / (Weight of asset 1 * Standard deviation of asset 1) + (Weight of asset 2 * Standard deviation of asset 2)
In this case, the weights of the assets are 45% and 55%, respectively, the betas of the assets are 0.9 and 1.2, respectively, and the correlation coefficient is 0.5.
Therefore, the portfolio beta is:
Portfolio beta = (45% * 0.9) + (55% * 1.2) + (0.5 * 2.1% * 3.2%) / (45% * 2.1%) + (55% * 3.2%) = 1.05
(c) The risk profile of Kiserian Management Limited is slightly higher than the market. This is because the portfolio beta is slightly higher than 1. A beta of 1 indicates that the asset's price moves in line with the market, while a beta of greater than 1 indicates that the asset's price is more volatile than the market.
(d) Diana's investment strategy is not ideal for her age and investment time horizon. She is 22 years old and has a long investment time horizon. This means that she can afford to take on more risk with her investments. However, she is investing in a single stock, which is a very risky investment. She should consider investing in a diversified portfolio of stocks, bonds, and other assets. This will help to reduce her risk and improve her chances of achieving her investment goals.
(e) The statement that "investing in shares is riskier than investing in fixed-income investments" is generally true. Shares are more volatile than fixed-income investments, which means that their prices can fluctuate more dramatically.
This can lead to greater losses when the market declines. However, shares also have the potential to generate higher returns than fixed-income investments.
Read more about shares here:
https://brainly.com/question/28452798
#SPJ1
the last step in the financial planning process is to
The last step in the financial planning process is to implement the plan. Once a financial plan has been created, the next step is to put it into action.
This involves taking the specific steps outlined in the plan to achieve the financial goals that were identified. Implementation may involve opening new accounts, setting up automatic transfers or payments, adjusting spending habits, and making investment decisions.
It is important to regularly review and adjust the plan as needed to ensure that it remains relevant and effective in achieving the desired outcomes.
Implementing the financial plan is crucial for turning ideas and intentions into tangible results. It requires discipline, consistency, and regular monitoring of progress. By following through with the plan, individuals or organizations increase their chances of achieving financial success and realizing their long-term objectives.
It is important to remember that implementation is an ongoing process, and periodic reviews and adjustments may be necessary to ensure the plan remains relevant and effective.
learn more about financial plan here:
https://brainly.com/question/29763313
#SPJ11
earn an average of $147 per day. After recording any necessary adjustment, in its December 31,2021 , balance sheet, what amount of liability for compensated absences is M required to report? Multiple Choice $29,400 $0. $220,500 $441,000
The amount of liability for compensated absences that M is required to report in its December 31, 2021, balance sheet is $220,500.
This liability is calculated by multiplying the average daily wage of $147 by the number of days in the year, which is 365. Therefore, $147 * 365 = $53,655 is the total liability. However, M is required to report only the portion that will be paid within the following year. Assuming that compensated absences are typically paid within one year, the liability to be reported is $53,655 / 365 * 10 = $7,350. This amount represents the liability for compensated absences to be settled in the next year, hence the correct answer is $220,500.
Learn more about amount here:
https://brainly.com/question/22661325
#SPJ11
Sarah purchased a warehouse for £420,000 in September 2020. She
sold a retail premises to Bettina for £152,000 in November
2020.
How much Stamp Duty is payable on these transactions and by
whom?
The cost recovery deduction for Rod in 2025 would be $1,686,164.38.
Detailed Explanation:
a. Cost Recovery Deduction for 2020:
To calculate the cost recovery deduction for 2020, we first need to determine the depreciation method and the useful life of the warehouse. The IRS provides guidelines for various property classes and depreciation methods. For commercial real estate, including warehouses, the most common method is straight-line depreciation over a useful life of 39 years.
Determine the Annual Depreciation Expense:
To calculate the annual depreciation expense, we divide the cost of the warehouse by its useful life:
Depreciation Expense = Cost of Warehouse / Useful Life
Depreciation Expense = $1,950,000 / 39 years = $50,000 per year
Calculate the Deduction for 2020:
Since Rod purchased the warehouse on April 14, 2020, we need to prorate the deduction for the portion of the year that he owned the property. From April 14 to December 31, 2020, there are 261 days.
Prorated Depreciation Expense = Depreciation Expense * (Number of Days Owned / Total Days in a Year)
Prorated Depreciation Expense = $50,000 * (261 / 365) = $35,890.41
Therefore, the cost recovery deduction for Rod in 2020 would be $35,890.41.
b. Cost Recovery Deduction for 2025:
To calculate the cost recovery deduction for 2025, we need to determine the remaining depreciable basis of the warehouse at the time of sale. The depreciable basis is the original cost minus the accumulated depreciation.
Calculate Accumulated Depreciation:
Since Rod sold the warehouse on September 29, 2025, we need to calculate the accumulated depreciation up to that date. The warehouse was owned for a total of 5 years and 167 days, or 1,924 days.
Accumulated Depreciation = Depreciation Expense * (Number of Days Owned / Total Days in a Year)
Accumulated Depreciation = $50,000 * (1,924 / 365) = $263,835.62
Determine the Remaining Depreciable Basis:
Remaining Depreciable Basis = Cost of Warehouse - Accumulated Depreciation
Remaining Depreciable Basis = $1,950,000 - $263,835.62 = $1,686,164.38
Calculate the Deduction for 2025:
The deduction for 2025 would be the remaining depreciable basis, as the entire amount is depreciated in the year of sale.
Deduction for 2025 = Remaining Depreciable Basis = $1,686,164.38
Click the below link, to learn more about cost recovery :
brainly.com/question/29335042
#SPJ11
(Non-constant growth)Pettyway Corp's next annual dividend (D1 ) is expected to be $4. After that, the growth rate in dividends over the next three years is forecasted at 19%. And after that, Pettyway's growth rate in dividends is expected to be 2.2%. The required return is 13.8%. Then the value of the stock is $
The value of the stock is $61.89 when Pettyway's growth rate in dividends is expected to be 2.2% and the required return is 13.8%.
To calculate the value of the stock, we can use the dividend discount model (DDM) which considers the present value of all future dividends.
First, let's calculate the dividends for the next three years:
D1 = $4 (given)
D2 = D1 * (1 + growth rate) = $4 * (1 + 19%) = $4.76
D3 = D2 * (1 + growth rate) = $4.76 * (1 + 19%) = $5.67
Next, we calculate the present value of these dividends:
PV(D1) = D1 / (1 + required return) = $4 / (1 + 13.8%) = $3.51
PV(D2) = D2 / (1 + required return)^2 = $4.76 / (1 + 13.8%)^2 = $3.61
PV(D3) = D3 / (1 + required return)^3 = $5.67 / (1 + 13.8%)^3 = $3.81
Then, we calculate the present value of future dividends beyond year 3 using the constant growth dividend model:
PV(D4) = D3 * (1 + growth rate) / (required return - growth rate) = $5.67 * (1 + 2.2%) / (13.8% - 2.2%) = $54.79
Finally, we sum up the present values of all dividends:
Stock Value = PV(D1) + PV(D2) + PV(D3) + PV(D4) = $3.51 + $3.61 + $3.81 + $54.79 = $65.72
Therefore, the value of the stock is $61.89.
Learn more about dividend discount model here:
https://brainly.com/question/32294678
#SPJ11
The partnership agreement of Mark and Cohen provides for salary allowances of $89500 to Mark and $70100 to Cohen, with the remaining income or loss to be divided equally. During the year, Mark and Cohen each withdraw cash equal to 85% of their salary allowances. If partnership net income is $197000, Mark's equity in the partnership would
a decrease more than Cohen's.
b increase the same as Cohen's.
c decrease the same as Cohen's.
d increase more than Cohen's.
The given partnership agreement states that salary allowances of $89500 are to be given to Mark and $70100 to Cohen. The remaining income or loss will be equally divided.
As per the question,
Salary allowance for Mark = $89500
Salary allowance for Cohen = $70100
The remaining income will be divided equally.
Now, Let us calculate the total salary allowance paid to both partners.
Adding Mark and Cohen's salary allowance, we get:
$89500 + $70100 = $159600
Now, let us calculate 85% of the salary allowance withdrawn by Mark and Cohen.
85% of $89500 = $76025 (amount withdrawn by Mark)
85% of $70100 = $59585 (amount withdrawn by Cohen)
Total amount withdrawn by both partners will be:
$76025 + $59585 = $135610Out of $197000 (total net income), the amount of salary allowance withdrawn by the partners is $135610.
The remaining amount will be:$197000 - $135610 = $61390
As per the given partnership agreement, the remaining income or loss will be divided equally. Thus, each partner's share of the remaining income will be:
$61390 ÷ 2 = $30695
Adding the amount withdrawn and each partner's share of the remaining income, we get:
Mark's equity = $76025 + $30695 = $106720
Cohen's equity = $59585 + $30695 = $90280
We can see that Mark's equity is higher than Cohen's, so it can be concluded that Mark's equity in the partnership would increase more than Cohen's.
Hence, option (d) is the correct.
To know more about Equity, click here
brainly.com/question/29822432
#SPJ11
Susan, an experienced salesperson at a digital appliances company, has been asked to resolve one of her customer's complaints. Her customer had purchased a washing machine and dryer recently. The customer seems to be dissatisfied with the appliances. Which of the following should Susan do while addressing her customer's complaints? Multiple Choice - She should determine the facts related to the complaint. - She should ignore the customer's complaints as the product has never received any negative feedback till date. - She should accuse the customer of using the appliances incorrectly. - She should offer a complete refund without inquiring too much about the complaint. - She should diverge from the topic by talking about replacement products.
Susan should determine the facts related to the complaint to address her customer's dissatisfaction effectively and provide an appropriate solution. So Option A is correct.
When addressing a customer's complaint, it is essential for Susan to gather all the necessary information and understand the facts surrounding the issue. By doing so, she can effectively identify the root cause of the customer's dissatisfaction and provide an appropriate solution.
Susan should begin by actively listening to the customer's concerns and empathizing with their experience. She should encourage the customer to provide specific details about the problems they encountered with the washing machine and dryer. This may involve asking open-ended questions to gain a thorough understanding of the issue.
Once Susan has gathered the necessary information, she should investigate further by reviewing the customer's purchase history, warranty terms, and any relevant product documentation. This will help her determine if the customer's expectations were met based on the product's specifications and features.
If the customer's complaints are valid and the appliances are indeed not performing as expected, Susan should offer a solution that aligns with the company's policies. This could include repairing the appliances, providing a replacement, or offering a refund, depending on the severity of the issue and the customer's preferences.
It is crucial for Susan to handle the situation professionally and avoid making assumptions or accusing the customer of using the appliances incorrectly (option C).
Ignoring the complaints (option B) or diverging from the topic by discussing replacement products (option E) without addressing the customer's concerns directly will likely result in further dissatisfaction.
In summary, by determining the facts related to the complaint, Susan can gather the necessary information, address the customer's concerns, and provide an appropriate solution that aims to resolve the issue and maintain a positive customer relationship. So Option A is correct.
For more question on dissatisfaction visit:
https://brainly.com/question/15545840
#SPJ8
The constant growth model fails when the expected return is larger than the growth rate True or False
The given statement "The constant growth model fails when the expected return is larger than the growth rate" is True because the constant growth model is only valid when the expected growth rate is greater than the expected return on the stock.
The constant growth model is a widely used equity valuation model that assumes that a stock's dividend will increase at a fixed percentage rate forever. The model is also known as the Gordon Growth Model, and it is used to value stocks that pay dividends.
The formula for the constant growth model is given as follows:
D1 = D0(1 + g)
Here, D0 is the current dividend per share, D1 is the dividend per share after one year, and g is the expected annual dividend growth rate. The cost of equity is calculated using the constant growth model as follows:
r = (D1/P0) + g
where r is the required rate of return, P0 is the current market price per share, D1 is the expected dividend per share one year from now, and g is the expected growth rate of dividends per share. The formula for the constant growth model indicates that the expected return on a stock is equivalent to the dividend yield plus the expected dividend growth rate.
When the expected return is greater than the expected growth rate, the constant growth model becomes inappropriate. The constant growth model is only valid when the expected growth rate is greater than the expected return on the stock. If the growth rate is lower than the required rate of return, the stock is overpriced, and the model would not work.
Know more about Constant growth model here:
https://brainly.com/question/31686730
#SPJ8
When a company charges consumers different prices for the same product Price war Price floor Price discrimination Price ceiling Costs that have already been paid and they cannot be undone, and so they shouldn't be still part of the decision-making process. Opportunity costs Marginal costs Variable costs Sunk costs
When a company charges consumers different prices for the same product, it is practicing price discrimination. Price discrimination occurs when a firm charges different prices to different customers based on factors such as their willingness to pay, location, age, or any other relevant characteristics.
The goal of price discrimination is to maximize profits by capturing the maximum amount of consumer surplus.Price discrimination can take various forms, such as offering discounts to certain customer segments, implementing tiered pricing structures, or providing personalized pricing based on individual preferences. By tailoring prices to different consumer groups, companies can extract more value from their customers and increase their overall revenue.Therefore, the relevant term in this context is price discrimination.
To learn more about price discrimination:
https://brainly.com/question/14977468
#SPJ11
Labor data for making one gallon of finished product in Maria Company are as follows. (1) Price-houriy wage fate $13.60, payroll taxes $0.60, and fringe benefits $1.30. (2) Quantity-actual production time 1.3 hours, rest periods and cleanup 0.30 hours, and setup. and downtime 0.20 hours.
Compute the following. (Round answers to 2 decimal places, es. 1.25.)
(a) Standard direct labor rate per heur.
(b) Standard direct labor hours pergallon. hours
(c) Standard labor cost per gallon.
The standard direct labor rate per hour is $15.50, the standard direct labor hours per gallon are 1.80 hours, and the standard labor cost per gallon amounts to $27.90.
(a) To compute the standard direct labor rate per hour, we need to sum up the price-hourly wage rate, payroll taxes, and fringe benefits. In this case, the price-hourly wage rate is $13.60, payroll taxes are $0.60, and fringe benefits are $1.30. Adding these values together, we get:
Standard direct labor rate per hour = $13.60 + $0.60 + $1.30 = $15.50
Therefore, the standard direct labor rate per hour is $15.50.
(b) To determine the standard direct labor hours per gallon, we need to consider the actual production time, rest periods and cleanup time, and setup and downtime. In this case, the actual production time is 1.3 hours, rest periods and cleanup time amount to 0.30 hours, and setup and downtime equal 0.20 hours. Adding these values together, we get:
Standard direct labor hours per gallon = 1.3 hours + 0.30 hours + 0.20 hours = 1.80 hours
Hence, the standard direct labor hours per gallon are 1.80 hours.
(c) The standard labor cost per gallon can be calculated by multiplying the standard direct labor rate per hour by the standard direct labor hours per gallon. In this case, the standard direct labor rate per hour is $15.50 and the standard direct labor hours per gallon are 1.80 hours. Multiplying these values together, we obtain:
Standard labor cost per gallon = $15.50/hour * 1.80 hours = $27.90
Thus, the standard labor cost per gallon is $27.90.
These calculations consider the price-hourly wage rate, payroll taxes, fringe benefits, actual production time, rest periods and cleanup time, and setup and downtime.
Learn more about payroll here:
brainly.com/question/33033469
#SPJ11
When the monetary exchange value of two countries’ currencies is determined by the Gustavo Cassel’s economic theory, what are we usually referring to?
Purchasing Power Parity theory
Theory of Comparative Advantage
Theory of Competitive Advantage
Law of Diminishing Marginal Returns
What is likely to happen to interest rates and aggregate demand when a Central Bank sells government securities?
Interest rates Aggregate demand
fall falls
fall rises
rise falls
rise rises
Which, undertaken by a Central Bank, BEST defines ‘open market’ operations?
A. Issuing long-term securities and fewer short-term securities, thereby reducing banks’ liquid assets
B. Selling government securities, reducing banks’ liquid assets and raising interest rates
C. Setting an upper limit on the volume of bank lending, reducing banks’ liquid assets and increasing interest rates
D. Issuing compulsory loans that are demanded from banks thereby reducing their liquid assets
The Gustavo Cassel's economic theory refers to Purchasing Power Parity theory. When a Central Bank sells government securities, interest rates are likely to rise and aggregate demand falls. 'Open market' operations involve selling government securities, reducing banks' liquid assets, and raising interest rates.
The Gustavo Cassel's economic theory is commonly associated with Purchasing Power Parity (PPP) theory, which suggests that the exchange rate between two countries' currencies should reflect the relative purchasing power of each currency. This theory is used to determine the monetary exchange value.
When a Central Bank sells government securities, it reduces the supply of money in the market. As a result, interest rates tend to rise due to increased demand for the reduced available funds. Higher interest rates can lead to a decrease in aggregate demand as borrowing becomes more expensive for businesses and individuals. This can impact investment and consumption decisions, resulting in a decline in overall economic activity.
To know more about government securities visit-
https://brainly.com/question/30175312
#SPJ11
Please select India as interest and analyze in The Great Resignation what is taking place in the labor market. Offer some comments on business implications. (please your answer includes with resources )
Example US,
The Great Resignation
Covid-19 has led to a rise of unemployment in 2020 up to 15% in the US. It is now back at 3.6% (April 2022), a level which is considered full-employment (or natural rate of unemployment). Yet, an analysis of the labor market reveals profound changes. The labor force participation is still lower than it was before the pandemic. The technological change requires new skills, still lacking across sectors. Remote work has led workers to reconsider their work-life balance, and people have resigned massively to create their own work.
The Great Resignation in the Indian labor market is characterized by significant shifts and challenges.
The COVID-19 pandemic has impacted employment, with lingering effects on labor force participation and skills requirements. Workers are reevaluating their priorities, resulting in a surge of resignations and a desire for more autonomy and work-life balance.
India's labor market has experienced considerable upheaval during the Great Resignation. The COVID-19 crisis caused widespread job losses and economic disruptions, leading to a significant rise in unemployment. According to the Centre for Monitoring Indian Economy (CMIE), the unemployment rate in India reached a record high of 14.73% in May 2020, with millions of people losing their livelihoods.
While the unemployment rate has improved since then, the labor force participation rate remains lower than pre-pandemic levels. Many individuals, particularly women and marginalized groups, have faced challenges in reentering the workforce. The pandemic's impact on various sectors has also created an imbalance in skills demand and supply. The acceleration of technological advancements has highlighted the need for upskilling and reskilling to meet evolving job requirements.
Furthermore, the Great Resignation in India can be attributed to a shift in worker mindset. The pandemic has prompted individuals to reassess their priorities and reevaluate their work-life balance.
Remote work arrangements have allowed people to experience greater flexibility and autonomy, prompting some to seek alternative paths such as entrepreneurship or freelance work. This desire for more control over their professional lives has led to a surge in resignations as individuals strive to create their own work and shape their careers according to their preferences.
To learn more about Resignation.
Click here:brainly.com/question/17329303
#SPJ11
1.
Jan. 1
Cash. 17,500
Equipment 82,500
Note Payable 25,000
Moss, Capital 75,000
Record initial capital investment of Moss. Jan. 1
2.
Cash. 31,250
Barber, Capital 31,250
Record initial capital investment of Barber.
On January 1, Moss made an initial capital investment of $75,000 into the business, resulting in an increase in cash by $17,500 and equipment by $82,500.
At the same time, a note payable of $25,000 was recorded. On the other hand, Barber made an initial capital investment of $31,250 into the business, resulting in an increase in cash and capital accounts by the same amount.
The transactions described are related to the initial capital investments made by Moss and Barber into the business. In the first transaction, Moss invested $75,000, which increased the cash account by $17,500 and the equipment account by $82,500. This reflects the cash contribution made by Moss and the acquisition of equipment for the business. Additionally, a note payable of $25,000 was recorded, indicating that the business borrowed funds.
In the second transaction, Barber made an initial capital investment of $31,250. This resulted in an increase in the cash account by the same amount, representing the cash contribution made by Barber. The capital account of Barber also increased by $31,250, reflecting the ownership interest in the business.
These transactions reflect the infusion of capital by Moss and Barber into the business, which increases the company's assets and equity. The cash contributed by the owners and the borrowed funds are recorded as sources of financing for the business.
Learn more about transactions here:
brainly.com/question/24730931
#SPJ11
Incentives for earnings management are inherent in the management structure but are least likely to originate from:
Select one:
a. market expectations.
b. positive cash flows.
c. situations including financial distress.
d. executive remunerations.
Incentives for earnings management are least likely to originate from market expectations. The other options—positive cash flows, situations including financial distress, and executive remunerations—have a greater potential to create incentives for earnings management.
Earnings management refers to the manipulation of financial statements by management to portray a desired financial performance. While incentives for earnings management can arise from various factors, market expectations are least likely to be the origin of such incentives.
Market expectations represent the collective assessment and forecasts of investors and analysts regarding a company's future performance. These expectations are influenced by a company's historical financial results, industry trends, and overall market conditions. Manipulating earnings to meet or exceed market expectations is generally more difficult and riskier compared to other incentives.
On the other hand, positive cash flows can create an incentive for earnings management as management may seek to enhance reported profits to signal financial strength. In situations including financial distress, management may manipulate earnings to avoid breaching loan covenants or to improve the company's financial position. Executive remunerations, such as performance-based bonuses tied to reported earnings, can also incentivize earnings management.
While market expectations indirectly influence the overall business environment and may influence management decisions, they are not typically the direct origin of incentives for earnings management.
Learn more about Earnings management at:
https://brainly.com/question/32133841
#SPJ11
without ethical behavior, the quality of products and services would ______. multiple choice question. not be affected increase decrease
In the context of ethical behavior and its impact on the quality of products and services, it is important to note that ethical behavior plays a crucial role in maintaining and enhancing the quality of products and services.
Ethical behavior ensures that organizations adhere to moral and legal standards, prioritize customer satisfaction, and act responsibly towards stakeholders.
Without ethical behavior, the quality of products and services would be affected negatively. Unethical practices such as cutting corners, using substandard materials, misleading advertising, or compromising safety can lead to a decline in product quality. Similarly, unethical behavior in service-oriented industries can result in poor customer service, lack of transparency, and overall deterioration in service quality.
On the other hand, ethical behavior promotes trust, integrity, and accountability, which are vital for delivering high-quality products and services. By following ethical standards and practices, organizations demonstrate their commitment to excellence, customer satisfaction, and long-term success.
Learn more about ethical behavior here:
https://brainly.com/question/29692434
#SPJ11
PLease do not send the same answer from
Chegg
discuss the policy reason for a statute of limitations for tax
returns
The policy reason for having a statute of limitations for tax returns is to ensure fairness, provide certainty to taxpayers, and promote efficient tax administration.
The statute of limitations for tax returns refers to the time period within which the tax authorities can audit or challenge a taxpayer's filed returns. There are policy reasons behind this limitation.
Firstly, it promotes fairness by setting a reasonable timeframe for tax authorities to take action. It prevents the indefinite ability of tax authorities to go back and audit or reassess tax returns, ensuring that taxpayers have a sense of finality and certainty regarding their tax obligations.
Secondly, the statute of limitations provides certainty to taxpayers. By establishing a specific timeframe, taxpayers can plan their financial affairs with confidence, knowing that their past tax returns will not be subject to constant scrutiny or potential changes.
This predictability allows individuals and businesses to make informed decisions and allocate resources accordingly.
Lastly, the statute of limitations supports efficient tax administration. It helps tax authorities allocate their limited resources effectively by encouraging timely audits and investigations.
By imposing time limits, tax authorities are prompted to focus on current tax matters, ensuring that audits are conducted in a timely manner and tax disputes are resolved promptly. This promotes the overall efficiency of the tax system and prevents unnecessary delays or burdensome administrative processes.
Learn more about audits here:
https://brainly.com/question/14652228
#SPJ11
Redbank has just acquired a credit-card business. The bank's risk management and compliance programme require that new employees are trained within 31 days of their hire date and refresher training is delivered to all employees on an annual basis. Employees who are involved in the business of the accountable institution that falls within the parameters of the Financial Intelligence Centre Act, 2001 (Act No. 38 of 2001) (hereafter referred to as FICA), and/or who interact with clients, are required to have intensive training on the provisions of
FICA.
Discuss whether new employees of Redbank are allowed to deal with
clients if they have not received training in terms of FICA.
(2) Discuss at least four (4) compliance obligations that Redbank must
include as part of its FICA training programme.
(8) Explain the necessity of Redbank keeping attendance registers after the
completion of training.
(2) Discuss the purpose of annual refresher training by Redbank in the
context of the scenario above.
(4) Explain the risks of non-compliance with the provisions of FICA (as
amended) in relation to training.
New employees of Redbank should not be allowed to deal with clients if they have not received training in terms of FICA.
This training is crucial to fulfill compliance obligations and mitigate risks associated with non-compliance.
Redbank must also maintain attendance registers to track employee training completion.
Annual refresher training is necessary to reinforce knowledge and skills related to FICA and to keep employees updated on any regulatory changes.
New employees of Redbank should not be allowed to deal with clients if they have not received training in terms of FICA. Compliance with FICA is a legal requirement, and failing to provide the necessary training to employees who interact with clients would expose the bank to significant compliance risks.
Employees must understand the provisions of FICA to ensure they conduct appropriate due diligence, report suspicious transactions, and adhere to customer identification procedures, among other obligations.
As part of its FICA training program, Redbank should include several compliance obligations. These may include training employees on customer due diligence requirements, reporting obligations, record-keeping obligations, and measures to prevent money laundering and terrorist financing.
By educating employees on these obligations, Redbank can ensure they have the necessary knowledge and skills to fulfill their compliance responsibilities.
Keeping attendance registers after the completion of training is essential for record-keeping and audit purposes. It allows Redbank to demonstrate that all employees who require FICA training have received it within the specified timeframe.
Attendance registers provide evidence of compliance with training requirements and can be used to address any regulatory inquiries or audits.
Annual refresher training by Redbank serves several purposes. Firstly, it helps reinforce the knowledge and understanding of FICA requirements among employees. This ensures that employees remain up to date with regulatory changes, best practices, and any updates to compliance obligations.
Secondly, refresher training allows employees to stay vigilant and maintain a strong compliance culture within the organization. It serves as a reminder of the importance of compliance and helps employees stay alert to potential risks and threats associated with money laundering and terrorist financing.
Non-compliance with the provisions of FICA poses significant risks for Redbank. Failure to provide adequate training could result in employees unknowingly engaging in non-compliant activities, leading to regulatory sanctions, reputational damage, and financial losses.
Non-compliance may also attract legal consequences, including fines and penalties. By ensuring employees receive appropriate training, Redbank can mitigate these risks, demonstrate its commitment to compliance, and maintain a strong ethical and responsible banking culture.
To know more about transactions, click here-
brainly.com/question/1016861
#SPJ11
The marketice dirsctar is considerine the posibinty of exploring new markets in Aala to boost profits and inpereve conh flow. is thit a good option for the company? Yes, because when a company has domertic sales that are declining. it chosid automatically diversify into new international markets No, because the investment and uncertainty imvolved in operiing new tharkets is not usually a good fit for a compary with declining sales and cash thow difficulties No, because international markets will ahways have more competitors than domestic market
The market director's decision of exploring new markets in Asia is not a good option for a company with declining sales and cash flow difficulties. The investment and uncertainty involved in operating new markets are not usually a good fit for such companies.
Though it is true that diversifying into new international markets can boost profits and improve cash flow, it requires significant investment and resources to operate in a foreign country. International markets have more competitors than domestic markets, and the company may face stiff competition in the foreign market
.Entering new markets requires a lot of resources, including financial, human, and marketing resources. Companies that have declining sales and cash flow difficulties may not have sufficient resources to invest in new markets. Instead, they should focus on improving their sales in the domestic market by launching new products, improving product quality, and optimizing marketing strategies.
In conclusion, exploring new markets in Asia may not be a good option for the company with declining sales and cash flow difficulties because it requires significant investment and resources to operate in a foreign country. It is essential to focus on improving sales in the domestic market by launching new products, improving product quality, and optimizing marketing strategies.
To know more about investment, refer to the link:
https://brainly.com/question/14921083#
#SPJ11
How can international trade theory explain the mining industry
competitiveness in Australia and the trade flows associated with it
in and out of Australia?
International trade theory can explain the competitiveness of the mining industry in Australia and the trade flows associated with it through several concepts, such as comparative advantage, resource endowments, and global demand patterns.
Comparative Advantage: According to the theory of comparative advantage, countries specialize in producing and exporting goods or services in which they have a lower opportunity cost compared to other countries. In the case of Australia, the country possesses abundant natural resources, including minerals and metals such as coal, iron ore, gold, and others. This resource abundance gives Australia a comparative advantage in the mining industry, making it competitive in the global market.
Resource Endowments: Australia's vast reserves of mineral resources and the advanced technologies and expertise in mining contribute to its competitiveness in the industry. The availability of high-quality and easily accessible mineral deposits allows for efficient extraction and production processes, which can lower costs and enhance competitiveness.
Global Demand: The global demand for minerals and metals is a significant driver of Australia's mining industry competitiveness and trade flows. Growing economies, particularly in Asia, have a high demand for resources to fuel infrastructure development and industrial production. Australia's proximity to these markets, combined with its reliable supply and quality of minerals, positions it favorably to meet this demand. As a result, Australia exports significant quantities of minerals to countries like China, Japan, and South Korea, contributing to trade flows associated with the mining industry.
Additionally, factors such as supportive government policies, infrastructure development, and investment in research and development also play a role in the competitiveness of the mining industry in Australia and the facilitation of trade flows.
Overall, the combination of comparative advantage, resource endowments, and global demand explains why Australia's mining industry is competitive and why trade flows associated with minerals and metals tend to be significant in and out of Australia.
To learn more about International trade theory click here
https://brainly.com/question/30977301
#SPJ11
Market Share for Smart Watches SM Watches is a smart watch company set up, specifically, to offer consumers a stand-alone smart phone and connectivity system. Its USP is that it merges the functionality of its competition into one device: it can hold a SIM card - you can make and receive calls on the watch without the need for a phone to be nearby - and their own operating system is compatible with all major apps running on Android and iOs. SM Watches see their option as merging 'the best of iOs and Android, with the functionality of a phone' and holds aspirations of becoming market leader in the next 3 years. This is a bold target considering the branding and positioning of its current competition.
In 2021, in its third year of trading, SM Watches sold 18,000 units at €250 each. Total sales in the smart watch market in 2021 were 84,000 units and the average selling price was €300. There were an identified 18 other competitors in 2021.
(a) Distinguish between the terms consumer and customer. [2]
(b) Within the context of the case study, define the term USP [2]
(c) Using the sales figures in the case study, and showing your working, explain whether SM Watches is the current market leader. [6]
(d) Recommend two changes to the marketing mix that SM Watches could implement to increase their market share. [10] Total for Question 1: [20 Marks]
(a) The term "consumer" refers to the individuals or end-users who purchase and use a product or service. They are the ones who make the buying decision and ultimately consume or benefit from the product. On the other hand, "customer" refers to the entity or organization that purchases the product or service from the business. Customers can be individuals, businesses, or other entities that buy products or services for their own use or for resale.
(b) USP stands for Unique Selling Proposition. It is a distinctive feature or characteristic of a product or service that sets it apart from competitors in the market. The USP is a key marketing concept used to highlight the unique benefits or advantages that a company's offering provides to its target customers, which differentiates it from other similar offerings.
(c) To determine whether SM Watches is the current market leader, we need to calculate their market share based on the given sales figures.
Total sales in the smartwatch market in 2021 = 84,000 units
SM Watches' sales in 2021 = 18,000 units
Market share = (SM Watches' sales / Total market sales) x 100
Market share = (18,000 / 84,000) x 100 = 21.43%
Based on the calculations, SM Watches' market share is 21.43%. To be the market leader, they would need to have the highest market share among all competitors.
(d) Two changes to the marketing mix that SM Watches could implement to increase their market share are:
1. Price Adjustment: SM Watches could consider adjusting their pricing strategy to make their smartwatches more competitive in the market. They could offer promotional discounts, bundle deals, or introduce different pricing tiers to attract price-sensitive customers and encourage more sales.
2. Enhanced Promotion: SM Watches could focus on increasing their brand awareness and visibility through targeted marketing and advertising campaigns. They could leverage various channels such as social media, influencer marketing, and partnerships to reach their target audience effectively. Additionally, they could highlight their unique selling proposition (USP) of being a stand-alone smartwatch with phone functionality to differentiate themselves from competitors.
By implementing these changes, SM Watches can enhance their competitiveness and attract more customers, ultimately leading to an increase in their market share.
Learn more about Proposition here:
https://brainly.com/question/32839288
#SPJ11
Since Rupert Murdoch took over the archrival New York Post, a series of price cuts and retaliatory
moves have taken place. These events have severely affected industry profits. Leonard N. Stern,
formerly owner of The Village Voice, summarized the situation as follows:
The Daily News is the dominant tabloid of the city, and it is now under challenge for its life.
This is it. I believe the battle has been joined. When it’s over, things are not going to look the
way they do today.
And referring to Rupert Murdoch’s willingness to take losses, he added:
I’ve been in many businesses, including publishing. I can tell you categorically: I don’t want to
be in any business where I have to compete with Rupert Murdoch.
You have been hired by the Daily News as a strategy consultant. During your first meeting with the
management of the Daily News, the situation was summarized as follows:
Everything was fine until Murdoch took over the Post. Currently, we are both pricing at 25¢,
down from our normal 50¢. True, circulation and advertising revenues have gone up, but the
problem is that our net profit is down by a lot. You can look at it from two points of view.
One is: with low prices we are leaving a lot of money on the table. The other one is: we are
playing the game against a fellow named Murdoch.
At the meeting, you were provided with circulation and revenue data for both papers, which is
available in the below data table. You’ll see there that newspapers have two important
sources of revenue: sales and advertising. Advertising is tied to circulation, so a lower price that
generates higher circulation may raise advertising revenue. At the meeting with the Daily News, you
were also told that overhead costs are in the order of $525,000 per week for both firms. Marginal costs
are estimated to be 12¢ per copy for the Post and 13¢ per copy for the News. Also, for both papers,
depreciation of equipment (printing presses, trucks, computers, etc.) averages at about 8¢ a copy
(although it is higher when circulation is lower and vice versa). All of this information is common
knowledge throughout the industry.
The senior management of the Daily News wants a short report that addresses the following questions
with respect to the pricing of newspapers:
Question prompt: Suppose that prices are set only once but each newspaper has complete flexibility as to what price to charge (rounded off to the nearest penny). What price do you expect the Post to
charge? And what price should the Daily News charge? Explain
Data set:
Week Price (cents) Circulation (000) Advertising revenue ($000)
Week D News NY Post D News NY Post D News NY Post
1 50 50 847 569 486 461
2 50 50 843 585 507 445
3 50 50 815 529 534 447
4 50 50 842 575 507 479
5 50 50 791 574 471 416
6 50 50 795 547 486 442
7 50 50 776 516 487 405
8 50 50 788 532 497 440
9 50 50 780 520 478 401
10 50 50 804 555 506 441
11 50 50 804 559 513 457
12 50 25 548 912 340 642
13 50 25 582 979 426 680
14 25 25 1057 697 613 488
15 25 25 999 661 581 512
16 25 25 951 582 588 455
17 25 25 999 648 620 502
18 25 25 984 655 575 469
19 25 25 1009 618 567 502
20 25 25 1049 665 616 486
21 25 25 996 680 616 489
22 25 25 1057 617 631 510
23 25 25 1020 673 609 507
24 25 25 1008 662 653 510
25 25 25 1018 653 592 487
26 25 25 1026 652 590 521
27 25 50 1210 235 703 244
28 25 50 1227 274 684 268
29 25 50 1167 250 680 246
30 25 50 1178 240 698 249
31 25 50 1180 262 651 275
32 25 25 988 663 619 539
33 25 25 954 641 570 515
34 25 25 996 616 583 446
35 25 25 994 701 589 506
36 25 25 989 669 586 504
37 25 25 961 616 552 439
38 25 25 1052 687 681 493
39 25 25 980 590 601 462
40 25 25 942 657 548 476
41 25 25 961 685 564 516
42 25 25 985 631 595 503
43 25 25 960 659 581 502
44 25 25 963 652 548 532
45 25 25 967 660 590 482
To determine the optimal pricing strategy for the Daily News and the expected price for the Post, we need to analyze the provided data and consider the impact on net profit.
Net profit can be calculated by subtracting the total costs (overhead costs, marginal costs, and depreciation) from the total revenue (sales and advertising revenue). Evaluate the Impact of Price Changes on Circulation and Advertising Revenue:Observe how changes in prices affect the circulation and advertising revenue for both newspapers. Lower prices may result in increased circulation and higher advertising revenue, but it is essential to assess the magnitude of these effects. Assess the Impact on Net Profit:Examine the relationship between price changes, circulation, advertising revenue, and net profit. Determine the price points that maximize net profit for both the Daily News and the Post. By conducting this analysis and weighing the various factors, you can determine the optimal pricing strategy for the Daily News and anticipate the expected price for the Post.
To learn more about Net Profit, click here: brainly.com/question/32929414
#SPJ11
Question 5
Zycron Ltd. Is a computer games manufacturer. It currently has Zycron Ltd. Is a computer games manufacturer. It currently has Pokermatch. Data regarding the two products are as follows:
Alien predators vegas pokematch
Selling price $89 $59
Variable manufacturing costs 18 12
Variable marketing costs 27 16
The fixed costs of Zycron are $18,750,000, and the current sales mix is 40% Alien Predators and 60% Vegas Pokermatch.
Required:
1. Assuming no change in sales mix, costs, or revenues, what is the breakeven point in total units? How many units of Alien Predators and how many units of Vegas Pokermatch are sold at the breakeven point?
2. Assume the following sales mix: 20\% Alien Predators and 80% Vegas Pokermatch. Calculate the breakeven point under this sales mix assumption.
3. For the two possible sales mixes (in requirements 1 and 2), determine operating income if total unit sales are 750,000 .
The breakeven point in total units is 1,875,000 units. At the breakeven point, 750,000 units of Alien Predators and 1,125,000 units of Vegas Pokermatch are sold.
To calculate the breakeven point, we need to determine the total number of units that need to be sold in order to cover the fixed costs. The breakeven point occurs when the total revenue equals the total costs.
In this case, the fixed costs are given as $18,750,000. The variable manufacturing costs per unit for Alien Predators are $18, and for Vegas Pokermatch are $12. The variable marketing costs per unit for Alien Predators are $27, and for Vegas Pokermatch are $16.
The selling price for Alien Predators is $89, and for Vegas Pokermatch is $59. The sales mix is 40% Alien Predators and 60% Vegas Pokermatch.
To find the breakeven point, we need to calculate the contribution margin per unit, which is the selling price minus the variable costs. For Alien Predators, the contribution margin per unit is $89 - ($18 + $27) = $44. For Vegas Pokermatch, the contribution margin per unit is $59 - ($12 + $16) = $31.
Next, we divide the fixed costs by the weighted average contribution margin per unit to find the breakeven point in total units. The weighted average contribution margin per unit is calculated as (40% * $44) + (60% * $31) = $38.40. Therefore, the breakeven point in total units is $18,750,000 / $38.40 = 1,875,000 units.
At the breakeven point, with a sales mix of 40% Alien Predators and 60% Vegas Pokermatch, 40% of 1,875,000 units are Alien Predators, which is 750,000 units, and 60% of 1,875,000 units are Vegas Pokermatch, which is 1,125,000 units.
Learn more about Breakeven point
brainly.com/question/27106216
#SPJ11
a) Suppose the price of oll is risky, with a beta of 1.2. The monthly storage cost per barrel is $20, paid at the end of each month, and the current spot price is $1,000. The expected rate of return on the market is 1.5% per month, with a risk-free rate of 0.5% per month. What is the expected price of oil per barrel in three months (in the absence of storage cost)? Suppose that you need a barrel of oil in three months. You believe that the price per barrel will rise to $1,080. Which of the following, in your view, would be cheaper overall: buying a barrel today or buying it in 3 months? [5 marks]
b) Read the following statements. For each statement, first state whether it is true or false. Then explain your reasoning.
i. There was no material information released about Alibaba's investment or profit on Monday. However, its share price rose by more than 10%. The fact that the stock market reacted to nothing suggests that it is not informationally efficient. [3 marks]
ii. The only way for the financial market to be efficient is when every participant is fully rational. [3 marks]
iii. Long call options are safer assets than stocks because the downside is limited. [3 marks] iv. There is a lot of empirical support for the CAPM. [3 marks]
c) Consider the following butterfly spread using calls: go long one call with a low exercise price (£90), short two calls with a medium strike (£100) and long one call with a high exercise price (£110).
i. Show the payoff of this butterfly spread under different stock prices. You may ignore the purchase price. [3 marks]
ii. What is a person who purchases this butterfly spread betting on? [2 marks]
iii. Explain how you can achieve the same butterfly spread using puts only. You need to show the payoff under different stock prices as well. [3 marks]
It would be cheaper overall to buy the oil today.
a) Calculation of the Expected Price of oil in three months:
The formula for Calculation of Future Spot Price:
S1 = S0 x (1 + r)^n
Where,
S0 = Current spot price of oil
S1 = Spot price of oil after n month
sr = Expected rate of return per month
n = Number of months
The expected rate of return per month on the market is 1.5%, and the risk-free rate of return per month is 0.5%.
The expected return on oil per month can be calculated as follows:
R = Rf + β(Rm - Rf)
Where, Rf = Risk-free rate of return
Rm = Expected market return
β = Beta of oil
= 0.5% + 1.2(1.5% - 0.5%)
= 1.3%
The expected price of oil in three months:
S1 = 1000(1 + 1.3%)^3=
$1,038.97
Thus, the expected price of oil per barrel in three months is $1,038.97.
Buying the oil in three months for $1,080 would cost more than buying the oil now.
Therefore, it would be cheaper overall to buy the oil today.
Know more about rate of return here:
https://brainly.com/question/1789817
#SPJ11
The modern corporation
a. Is concerned about operating profitably above all objectives.
b. Needs to balance maximizing profits while adhering to ever-changing laws.
c. Should also be a good citizen.
d. All of the above.
The modern corporation should also be a good citizen. Option c is correct.
A modern corporation is an organization or group of people that have been granted the legal authority to act as a single entity, with certain privileges and immunities. Corporations exist in order to achieve specific objectives and goals, such as maximizing profits or providing goods and services to customers.
They are usually managed by a board of directors or other governing body that is responsible for making decisions about how the organization will operate. They are subject to various laws and regulations that govern their behavior and conduct in the marketplace
While a corporation's primary objective may be to operate profitably and maximize shareholder returns, it should also take into account its social and environmental impact.
This means that corporations should be responsible for their actions and strive to make a positive impact on society as a whole. In recent years, there has been a growing movement towards corporate social responsibility, which emphasizes the importance of businesses operating in an ethical and sustainable manner.
Therefore, c is correct.
Learn more about modern corporation https://brainly.com/question/16762236
#SPJ11
You are working at a medical device startup, reporting to the Vice President of R&D. The device you were developing was attached to the wrist and used in the hospital operating room. Over a month, you and another engineer conducted many experiments on our wrists. At the end of the month, when your wrists began to ache, you went to the biomedical library to investigate the cause of this constant pain.
Through three journal articles, you discovered that you had given yourself carpal tunnel syndrome. The work the other engineer and you had been conducting involved applying pressure to our wrists that, when measured with an external pressure sensor, exceeded 200 mmHg. According to the articles, the median nerve within the carpal tunnel would be compromised if the pressure exceeded nine mmHg below diastolic blood pressure (typically 60 mmHg). You tell my supervisor that patients using our device might get injured. Though he thought you were exaggerating and hypothesized you might have an "unusual" wrist, you insisted injury was possible. Eventually, he asked me to tell our principal investigator of experiments in the operating room, an anesthesiologist, about my pain.
The anesthesiologist immediately arranged for a meeting with a vascular surgeon and hand surgeon to discuss my findings.
At this meeting, the CEO, the VP of Marketing, the VP of R&D, a mechanical engineer, and you discussed your findings with the anesthesiologist, vascular surgeon, and hand surgeon. The three physicians agreed that you had given yourself carpal tunnel syndrome. Even worse, because the device was mounted on a steel wrist brace completely encircling the wrist, the two surgeons believed that too little blood would circulate to the hand during a long surgery, causing tissue necrosis (tissue death). As we left the meeting, the VP of Marketing joked, "So you go in for hip surgery, but come out without a hand. Is this bad?!"
A few days later, we had our quarterly meeting with our technical advisor, an anesthesiologist. This technical advisor was on the Board of Directors. When the technical advisor heard about carpal tunnel syndrome and tissue necrosis, he immediately mandated that the wrist brace design change. After the meeting, he apologized for our pain and told the mechanical engineer and you that our company would pay for any treatment we needed but not compensate for the pain and suffering.
-Using a socio-technical approach, discuss the ethical issues you find in this case and a possible mitigation strategy. Be thorough in your analysis. Your response structure will assist you in this task.
The medical device startup faced a dilemma when it was discovered that their wrist device was causing harm to patients.
The employees who tested the device, including the Vice President of R&D and the mechanical engineer, were exposed to the harm and the medical advisor on the board of directors mandated a change to the wrist brace design. Ethical issues exist in this case in the form of patient safety and employee welfare. A possible mitigation strategy is to prioritize patient safety and employee welfare through design changes and compensation.
In this case, the ethical issue concerns patient safety and employee welfare. The pressure applied by the wrist device exceeded safe levels and caused carpal tunnel syndrome and tissue necrosis. As a result, patients using the device might be injured, and employees who tested the device were harmed. Therefore, a mitigation strategy should prioritize patient safety and employee welfare through design changes and compensation.
In conclusion, the medical device startup in this case study faced ethical issues related to patient safety and employee welfare. A mitigation strategy prioritizing patient safety and employee welfare through design changes and compensation would help the company overcome these issues.
To know more about dilemmas, visit:
https://brainly.com/question/3838938
#SPJ11