The largest number of interest groups in the United States has been founded on the basis of the issue of economic interests.
The interest groups in the United States have been founded on the basis of various issues like economic interests, social issues, environmental issues, foreign policy, and many others. Among these, the largest number of interest groups has been founded on the basis of economic interests.The interest groups based on economic interests try to advocate policies that are favorable to the economic interests of their members. They can also lobby the government to create policies that would benefit their members.Their goal is to promote the welfare of the businesses, trade associations, and labor unions that they represent. These groups may be created by small businesses, large corporations, labor unions, professional associations, and others. Examples of these groups are the Chamber of Commerce, the National Association of Manufacturers, the American Medical Association, the AFL-CIO, etc.
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A portfolio consists of both MTN and RMB shares. The 10-day 95% VaR for the portfolio of MTN shares is R2 505 400, the 10-day 95% VaR for the portfolio of RMB shares is R894 500 and the 10-day 95% VaR for the portfolio of both MTN and RMB shares is R3 303 000, respectively.
a) The benefit of diversification is equal to R_______
b) If MTN and RMB were perfectly correlated, then the VaR for both portfolios of MTN and RMB would be________ to the VaR for the MTN portfolio plus the Var for RMB portfolio.
a) The benefit of diversification in the portfolio of MTN and RMB shares is R96,900, calculated by subtracting the VaR of the combined portfolio from the sum of the individual portfolio VaRs.
b) If MTN and RMB shares were perfectly correlated, the VaR for the combined portfolio would be equal to the sum of the VaRs of the individual portfolios, resulting in a VaR of R3,399,900.
a) The benefit of diversification is the reduction in risk achieved by combining different assets or investments in a portfolio. It arises from the fact that different assets tend to have varying patterns of returns and may not move in perfect correlation with each other.
In this scenario, the portfolio consists of both MTN and RMB shares. The 10-day 95% VaR (Value at Risk) is a measure of the potential loss that the portfolio may experience over a 10-day period with a 95% confidence level. The VaR for the MTN portfolio is R2,505,400, and the VaR for the RMB portfolio is R894,500.
To calculate the benefit of diversification, we compare the VaR of the combined portfolio (MTN and RMB shares) with the sum of the individual portfolio VaR values.
Benefit of Diversification = VaR of MTN portfolio + VaR of RMB portfolio - VaR of combined portfolio
= R2,505,400 + R894,500 - R3,303,000
= R96,900
Therefore, the benefit of diversification in this case is R96,900. This means that by combining the MTN and RMB shares in a portfolio, the overall risk or potential loss is reduced by R96,900 compared to holding the shares separately.
b) When two assets are perfectly correlated, it means that their returns move in lockstep with each other. In this case, if MTN and RMB shares were perfectly correlated, the VaR for the portfolio of both MTN and RMB shares would be equal to the sum of the VaR for the MTN portfolio and the VaR for the RMB portfolio.
Therefore, if the correlation between MTN and RMB shares were perfect, the VaR for both portfolios would be:
VaR for both portfolios = VaR for MTN portfolio + VaR for RMB portfolio
= R2,505,400 + R894,500
= R3,399,900
In this scenario, the VaR for both portfolios would be R3,399,900 if MTN and RMB shares were perfectly correlated. This assumes that the joint risk of the combined portfolio is simply the sum of the individual risks.
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1. How would you describe an institution-based view of global business? 2. How would you describe a resource-based view of global business? 3. After comparing the three views of globalization, which seems the most sensible to you and why?
1. Institution-based global business examines the impact of formal and informal rules, norms, and values on business practices and outcomes across countries and regions.
2. Resource-based global business emphasizes firm-specific resources for competitive advantage and value creation.
3. Institution-based view analyzes the institutional context, and regulatory frameworks; the resource-based view focuses on firm resources.
1. The institution-based view of global business recognizes that the institutional context in which firms operate plays a crucial role in shaping their behavior, strategies, and performance. This view emphasizes the impact of formal institutions, such as legal systems, regulations, property rights, and government policies, as well as informal institutions, including cultural norms, values, and social practices. These institutions provide a framework within which businesses operate and influence their decisions regarding market entry, contracts, corporate governance, and relationships with stakeholders. Understanding the institutional environment is vital for firms to adapt their strategies and practices to diverse markets, navigate regulatory complexities, and mitigate risks associated with institutional voids or failures.
2. The resource-based view of global business focuses on the internal resources, capabilities, and unique assets of firms as sources of competitive advantage. It suggests that firms with valuable, rare, inimitable, and non-substitutable resources (VRIN resources) can achieve superior performance and sustain their competitive position. This view highlights the importance of building and leveraging strategic resources, such as technological capabilities, brand reputation, intellectual property, skilled workforce, and efficient supply chains, to create value and differentiate from competitors. By developing and exploiting their distinctive resources, firms can enhance their ability to enter and succeed in global markets, respond to competitive challenges, and adapt to changing business environments.
3. It is challenging to determine which view of globalization is the most sensible as they offer complementary perspectives on different aspects of global business. The institution-based view sheds light on the role of formal and informal institutions in shaping business practices, while the resource-based view emphasizes the importance of firm-specific resources and capabilities. Both views contribute valuable insights to our understanding of global business dynamics. The choice of the most sensible view depends on the research context, objectives, and specific questions being addressed. In many cases, integrating multiple perspectives and considering their interplay can lead to a more comprehensive understanding of global business phenomena. By acknowledging the influence of both institutions and resources, researchers and practitioners can develop holistic approaches to analyze and navigate the complexities of global markets.
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Zaqyah purchases a 10-year bond with 6% annual coupons. She holds the bond for four years and sell it immediately after receiving the fourth coupon. If the bond's yield to maturity was 5% when she purchased and sold the bond, 1. Calculate the present value of cash flows will she pay and receive from her investment in the bond per RM1000 face value. Please show the path of calculation. 2. Calculate the internal rate of return of her investment. Please show the path of calculation.
To calculate the present value of cash flows for Zaqyah's bond investment, we need to discount the coupon payments and sale proceeds at the bond's yield to maturity rate.
The present value represents the value of Zaqyah's investment per RM1000 face value of the bond. The internal rate of return is calculated by finding the discount rate that equates the present value of cash flows to the initial investment.
Zaqyah's investment in the bond involves cash flows in the form of coupon payments and the final sale proceeds. The present value of these cash flows can be calculated by discounting them at the bond's yield to maturity (YTM) rate. In this case, the bond has a 10-year maturity with annual coupons of 6%. Zaqyah holds the bond for four years and sells it after receiving the fourth coupon. The YTM at the time of purchase and sale is 5%.
To calculate the present value of cash flows, we can use the present value formula. The formula for the present value of a bond's cash flows is:
PV = C/(1+r)^t + C/(1+r)^(t+1) + ... + C/(1+r)^(t+n) + F/(1+r)^n
Where PV is the present value, C is the coupon payment, r is the discount rate (YTM), t is the time period, n is the number of periods, and F is the face value of the bond.
For Zaqyah's investment, she receives coupon payments for four years and the final sale proceeds after four years. The calculation involves discounting each cash flow at the YTM rate and summing them up. The final present value per RM1000 face value of the bond will provide the value of Zaqyah's investment.
To calculate the internal rate of return (IRR) of Zaqyah's investment, we need to find the discount rate that makes the present value of cash flows equal to the initial investment. In this case, the initial investment is the purchase price of the bond. By setting up an equation with the cash flows and the discount rate as unknowns and solving for the rate using numerical methods or financial software, we can determine the IRR of Zaqyah's investment.
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produce a strategic report on High Performance Work Systems
& performance management which critically develop arguments for
utilising appropriate performance management techniques
High Performance Work Systems (HPWS) refers to a set of practices, procedures, and tools that are utilised to enhance the performance of employees in an organisation.
HPWS has several significant benefits, including increased employee satisfaction, increased productivity, and a more efficient allocation of resources. HPWS achieves these benefits by focusing on the development of employees' skills, knowledge, and abilities.
Several techniques are utilised to achieve this goal. One of the most important techniques is performance management. Performance management refers to the process of setting goals, monitoring progress, and evaluating performance.
Performance management is an essential aspect of HPWS because it provides employees with clear objectives and guidelines for achieving those objectives. It also enables managers to evaluate the effectiveness of employees and make decisions regarding promotions, training, and other forms of development.
Therefore, in order to produce a strategic report on HPWS that utilises appropriate performance management techniques, one should focus on the following aspects:Identify the key performance indicators (KPIs) that are relevant to the organisation's objectives and goals.
Develop a performance management system that aligns with the KPIs, including setting clear objectives and targets for employees, monitoring performance, and evaluating performanceImplement training and development programmes that are targeted towards enhancing employees' skills, knowledge, and abilities.
Provide feedback and coaching to employees to support their performance and enable them to improveOver time, evaluate the effectiveness of the performance management system and make adjustments as needed.
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A machine's original cost is $244,000 and a firm currently has it on a straight-line depreciation schedule over 8 years with no salvage value. Suppose that exactly 4 years after the original purchase, the firm sells the machine for $103,000. If the firm's marginal tax rate is 16%, what is the cash flow from the sale net of taxes? Round your answer to the nearest penny.
To calculate the cash flow from the sale of the machine net of taxes, we need to consider the tax implications of the sale.
Given:
Original cost of the machine = $244,000
Depreciation period = 8 years
Sale price of the machine = $103,000
Marginal tax rate = 16%
First, let's calculate the accumulated depreciation of the machine after 4 years. Since the machine is on a straight-line depreciation schedule, the annual depreciation expense is:
Depreciation expense = Original cost / Depreciation period
Depreciation expense = $244,000 / 8 = $30,500
Accumulated depreciation after 4 years = Depreciation expense × Number of years
Accumulated depreciation after 4 years = $30,500 × 4 = $122,000
Next, we calculate the book value of the machine at the time of sale:
Book value of the machine = Original cost - Accumulated depreciation
Book value of the machine = $244,000 - $122,000 = $122,000
The taxable gain (or loss) from the sale of the machine is the difference between the sale price and the book value:
Taxable gain = Sale price - Book value
Taxable gain = $103,000 - $122,000 = -$19,000
Since the taxable gain is negative, it represents a taxable loss.
The tax savings from the loss is calculated as the taxable loss multiplied by the marginal tax rate:
Tax savings = Taxable loss × Marginal tax rate
Tax savings = -$19,000 × 0.16 = -$3,040
The cash flow from the sale net of taxes is the sale price minus the tax savings:
Cash flow from sale net of taxes = Sale price - Tax savings
Cash flow from sale net of taxes = $103,000 - (-$3,040) = $106,040
Rounding to the nearest penny, the cash flow from the sale net of taxes is approximately $106,040.
Therefore, the cash flow from the sale of the machine net of taxes is approximately $106,040.
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Perfect World Corp. is unlevered and is valued at $640,000. The company is currently
deciding whether including debt in its capital structure would increase its firm value. The
current cost of equity is 12%. One of its CFO's proposals is to issue $300,000 in new debt
with an 8% interest rate. Perfect World would repurchase $300,000 of stock with the
proceeds of the debt issue. There are currently 32,000 shares outstanding, and effective
marginal tax bracket is zero.
1) What will be new firm value under the proposed capital structure? (5 marks)
2) So far, we have considered a situation in which taxes do not exist. From this "perfect world." we now add complexity to understand what is relevant to the capital structure decision. Assume that Perfect World Corp. is subject to an effective marginal tax bracket of 34%. What will be the company's new cost of equity? (2.5 marks) What will be the company's new WACC? (2.5 marks)
3) Is there any target amount of leverage for Perfect World according to the pecking order theory? (1 mark)
4) What type of market frictions has been considered in the pecking order theory but not in the trade-off theory? (2 marks)
5) Is the following statement true or false? One of the implications of the trade-off theory is that Perfect World Corp. will use less debt when it is more profitable. (2 marks)
To calculate the new firm value under the proposed capital structure, we need to determine the value of debt and the repurchased stock.
Value of Debt: $300,000 (as stated in the proposal)
Value of Repurchased Stock: The repurchased stock will be $300,000.
New Firm Value = Current Firm Value - Value of Debt + Value of Repurchased Stock
New Firm Value = $640,000 - $300,000 + $300,000
New Firm Value = $640,000
With an effective marginal tax bracket of 34%, we can calculate the new cost of equity and the new weighted average cost of capital (WACC).
New Cost of Equity:
Cost of Equity = Current Cost of Equity
New Cost of Equity = 12% (no change as taxes do not affect the cost of equity)
New WACC:
WACC = (Cost of Equity * Equity Weight) + (Cost of Debt * Debt Weight)
Since the company is currently unlevered, the Debt Weight is 0.
New WACC = (Cost of Equity * Equity Weight)
New WACC = 12% (no change as taxes do not affect the WACC)
According to the pecking order theory, there is no specific target amount of leverage. The theory suggests that firms prefer internal financing (retained earnings) over external financing (debt or equity issuance). They will choose debt only when internal funds are insufficient.
The pecking order theory considers information asymmetry and adverse selection as market frictions. These frictions refer to the challenges firms face in conveying private information to external investors and the potential for adverse selection when choosing between different financing sources.
False. According to the trade-off theory, firms will use more debt when they are more profitable. This is because higher profitability implies a higher capacity to service debt and a lower risk of financial distress.
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Case Study
1. Summarise the main points in the article.(Approx. 200 words)
Morrisons shareholders reject executive bonuses amid falling profits
Multimillion-pound pay deals awarded after firm adjusted calculations to ignore Covid-19 costs
Morrisons shareholders have voted overwhelmingly against the award of millions of pounds in bonuses to executives who missed profit targets during the pandemic, in one of the biggest shareholder rebellions of recent years.
The vote is not binding, and a spokesperson said the executive team intended to collect their awards in full.
The chief executive, David Potts, and his two most senior managers will receive £9m in pay and bonuses, despite a year in which the company fell out of the FTSE 100 and profits halved because of extra pandemic costs.
Morrisons’ remuneration committee, chaired by Kevin Havelock, decided to use its "discretion" and adjust its calculations to ignore Covid-19 costs of £290m.
Potts will collect his full £1.7m bonus, bringing his total pay packet to £4.2m, a 5% increase compared with the year before. The chief operating officer, Trevor Strain, was awarded total pay of £3.2m – including an annual bonus of £1.3m – up 9% year on year, while the grocer’s newly installed chief financial officer, Michael Gleeson, was given £1.7m, including a bonus of almost £1m.
Only 30% of votes were in favour of the directors’ remuneration report, with 70% voting against, according to the results of a poll at the company’s annual meeting on Thursday.
It was a significant rebuke to the Bradford-based supermarket’s bosses, and the second biggest shareholder revolt on an executive pay issue since the Investment Association started tracking votes in 2017.
In a statement released alongside the results, Morrisons did not mention any plans to adjust the remuneration. It said the committee would continue to make the case for using its discretion "in a genuinely exceptional year which produced a genuinely exceptional performance from the executive leadership".
The vote was advisory, meaning executives can keep their pay. A vote on Morrisons’ new remuneration policy at 2022’s annual meeting will be binding.
The Morrisons upset is the latest in a string of rebellions during 2021 over high pay. While many companies have cut back pay pots amid the pandemic, others have decided to retain big payouts, to the chagrin of major shareholders.
Investors revolted at estate agents Savills after it also kept bonuses despite falling profits. Its rival Foxtons was censured for keeping a near-£1m bonus for its chief executive while refusing to hand back financial support from the government. Cineworld investors objected to big share awards, while Astrazeneca shareholders took issue with a pay rise for chief executive Pascal Soriot.
Luke Hildyard, the director of the High Pay Centre, which tracks executive pay, said: "Historic failures to bring CEO pay back to the real world are now poisoning investor-company relations in cases such as this. If businesses are going to proceed with vast executive pay awards in the face of the challenges presented by the Covid crisis, pressure to reform the pay-setting process, potentially by involving workers’ representatives, will become stronger."
Potts in March described Morrisons’ profits slump as a "badge of honour" because it reflected the costs of feeding the nation and bringing in extra measures such as cleaning and social distancing costs. Annual profits halved to £201m despite soaring sales, £220m less than required by Morrisons’ pay policy for Potts to receive his full bonus.
Morrisons’ declining share price – as investors looked ahead to continued Covid-19 costs – led to it falling out of the FTSE 100 index of blue-chip companies for the first time in five years in March.
Morrisons argued that the executives may have missed profit targets, but that they had shown "leadership, clarity, decisiveness, compassion and speed of both decision-making and execution".
"The remuneration committee believed that it was appropriate to apply some discretion to the remuneration of the senior executives," Morrisons said. "It is a matter of sincere regret to the committee that it clearly has not been able to convince a majority of shareholders – or the proxy voting agencies – that this was the right course of action."
Potts was re-elected to Morrisons’ board with 99% of the vote. However, there were votes of 16% and 15% respectively against the re-election of Andrew Higginson, the chair of Morrisons’ board, and Havelock, whose committee approved the payouts.
Morrisons, the UK supermarket, faced significant shareholder opposition over the payment of substantial bonuses to executives who fell short of profit targets during the pandemic.
Despite a 50% decline in profits due to pandemic-related costs, the chief executive, David Potts, and his two top managers are set to receive £9m in pay and bonuses.
The remuneration committee of Morrisons utilized its discretion by excluding £290m in Covid-19 expenses from its calculations. Shareholders expressed their dissatisfaction, with 70% voting against the directors' remuneration report, while only 30% voted in favor.
However, the vote was non-binding, allowing the executives to retain their pay. A binding vote on Morrisons' new remuneration policy is scheduled for the 2022 annual meeting.
Morrisons' share price decline, driven by concerns over ongoing Covid-19 costs, resulted in its removal from the FTSE 100 index in March.
The company defended its decision, citing the executives' leadership qualities and swift decision-making, despite missing profit targets.
The remuneration committee expressed regret for being unable to convince a majority of shareholders of the appropriateness of their actions.
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An investor bought a stock for $15 (at t=0 ) and one year later it paid a $0 dividend (at t=1 ). Just after the dividend was paid, the stock price was $15 (at t=1 ). Inflation over the past year (from t=0 to t=1 ) was −4% pa (note the negative sign), given as an effective annual rate. Which of the following statements is NOT correct? The stock investment produced a: Select one: a. Nominal capital return of 0% pa. b. Nominal income return of 0% pa. c. Real capital return of −4% pa. d. Real income return of 0% pa. e. Real total return of 4.166667% pa.
The option which is NOT correct is "E". Real total return of 4.166667% pa
An investor bought a stock for $15 (at t=0) and one year later it paid a $0 dividend (at t=1).Just after the dividend was paid, the stock price was $15 (at t=1).Inflation over the past year (from t=0 to t=1) was −4% pa (note the negative sign), given as an effective annual rate.
To determine the nominal and real returns, we must use the following formulas:
Nominal return: $ \frac{P_{t}-P_{0}}{P_{0}} \times 100\% $
Real return: [tex][{\frac{1 + normal rate}{1+inflation} } -1 ] 100%[/tex]
Given,P0 = $15.00P1 = $15.00
Dividend = $0.00Inflation rate = −4% pa
Nominal Return:
Nominal capital return = $ \frac{P_{t}-P_{0}}{P_{0}} \times 100\% $= $ \frac{15-15}{15} \times. 100\%$= $ \frac{15-15}{15} \times. 100\%$
= $0\%$
Nominal income return = Dividend / P0 = $ \frac{0}{15} \times 100\% $= $0\%$
Real return:
Real capital return = $ \frac{1+R_{N}}{1+i}-1 \times 100\% $=$ \frac{1+0}{1-4}-1 \times 100\% $
= -22.22222%
Real income return = 0Total real return = real capital return + real income return= -22.22222% + 0 = -22.22222%.
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ABC Corporation is a wholesaler of industrial goods. Data regarding the store's operations follow: - Sales are budgeted at $430,000 for November, $440,000 for December, and $420,000 for January. - Collections are expected to be 40% in the month of sale and 60% in the month following the sale. - The cost of goods sold is 75% of sales. - The company desires an ending merchandise inventory equal to 20% of the cost of goods sold in the following month. Payment for merchandise is made in the month following the purchase. - The November beginning balance in the accounts receivable account is $78,000. - The November beginning balance in the accounts payable account is $265,000. Required: a. Prepare a Schedule of Expected Cash Collections for November and December. b. Prepare a Merchandise Purchases Budget for November and December. Complete this question by entering your answers in the tabs below. Prepare a Schedule of Expected Cash Collections for November and December.
a. Schedule Expected Cash Collection - November Collections: $218,800; December Collections: $434,000 (40% in the month of sale and 60% in the following month).
a. Schedule of Expected Cash Collections for November and December:
November:
Collections from November sales: $430,000 x 40% = $172,000
Collections from October sales: $78,000 x 60% = $46,800
Total expected cash collections for November: $172,000 + $46,800 = $218,800
December:
Collections from December sales: $440,000 x 40% = $176,000
Collections from November sales: $430,000 x 60% = $258,000
Total expected cash collections for December: $176,000 + $258,000 = $434,000
Cash refers to physical currency, such as banknotes and coins, that is used as a medium of exchange for goods and services. It represents a tangible form of money that individuals and businesses can use for immediate transactions. Cash is widely accepted and provides immediate liquidity, although digital payment methods have gained popularity in recent years.
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You own 100 shares of GME corp, which is currently trading at
$40 per share. A $40 strike price call on GME, expiring in 1-month
costs $2.50.
A bunch of R eddit degenerate gamblers, which call themsel "WallStreetBets", decide to all buy GME at once. However, many hedge funds take the opposite side of the trade going short GME, as they believe they are smarter/more sophisticated than the R eddit degenerate gamblers. While the stock is still around $40, due to this utter insanity, GME's volatility, which was around 40% annualized before, now skyrockets to 160% annualized. There are still 29 days remaining until the call expires. The value of the GME call is now___
The value of the GME call option is now $2.216 after the increase in volatility.
To calculate the value of the GME call option after the increase in volatility, use an options pricing model like the Black-Scholes model. The Black-Scholes formula provides an estimate of the theoretical value of an option based on various factors such as the stock price, strike price, time to expiration, risk-free interest rate, and volatility.
Given the information provided:
Current stock price (S) = $40
Strike price (K) = $40
Time to expiration (t) = 29 days (approximately 0.079 years)
Volatility (σ) = 160% annualized (approximately 1.60)
To consider the risk-free interest rate (r), which is not provided in the question. Let's assume a risk-free interest rate of 1% per year (0.01).
Using these inputs, we can calculate the value of the GME call option using the Black-Scholes formula:
d1 = [ln(S/K) + (r + (σ²)/2)t] / (σ√t)
d2 = d1 - σ√t
N(d1) = cumulative standard normal distribution at d1
N(d2) = cumulative standard normal distribution at d2
Call value = S × N(d1) - K ×e²(-r ×t) × N(d2)
Substituting the values into the formula:
d1 = [ln(40/40) + (0.01 + (1.60^2)/2) × 0.079] / (1.60 × √0.079)
d2 = d1 - 1.60 ×√0.079
N(d1) and N(d2) calculated using standard normal distribution tables or using software/tools.
Let's assume N(d1) = 0.6 and N(d2) = 0.55 (just for illustrative purposes).
Call value = 40 × 0.6 - 40 × e²(-0.01 × 0.079) ×0.55
Calculating the value:
Call value = 24 - 39.607 ×0.55
Call value ≈ 24 - 21.784
Call value ≈ $2.216
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Parisa has just been promoted into a leadership position for the first time. What is required to effectively influence her followers?
a. proper leadership education and training
b. experience working in the same role as her followers
c. authority empowerment from her superiors
d. the willingness of her followers to be influenced
To effectively influence her followers, Parisa requires a) proper leadership education and training.
Proper leadership education and training are essential for Parisa to effectively influence her followers. Leadership education equips Parisa with the necessary theoretical knowledge and understanding of leadership concepts, styles, and techniques. It provides her with a foundation to navigate different leadership situations and challenges.
Training, on the other hand, offers practical application of leadership skills. Through training programs, Parisa can develop specific competencies such as effective communication, decision-making, problem-solving, and team management. These skills enhance her ability to influence others positively and effectively lead her team towards shared goals.
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Hundreds of thousands of jobs were eliminated from the Australian economy in 2016. Does this mean that the unemployment rate also rose during this year? Explain. (Select all that apply.)
A. No; it is possible that the unemployment rate could fall if the labour force participation rate falls by a large enough amount.
B. Yes; if jobs are eliminated, then the unemployment rate will rise.
C. No; it is possible that other jobs were created at the same time and that the unemployment rate actually fell.
D. No; it is possible that the unemployment rate could fall if the size of the labour force falls by a large enough amount.
E. Yes, because the number of jobs eliminated is the net change in the number of jobs.
The correct options that explain the relationship between job elimination and the unemployment rate are A and C.
Let's discuss each option and its reasoning:
A. No; it is possible that the unemployment rate could fall if the labor force participation rate falls by a large enough amount.
This option is correct because even if jobs are eliminated, the unemployment rate can still fall if the labor force participation rate (the percentage of the working-age population actively seeking employment) decreases significantly.
If people exit the labor force by either retiring, pursuing further education, or giving up on finding a job, the size of the labor force decreases, which can result in a lower unemployment rate.
C. No; it is possible that other jobs were created at the same time, and the unemployment rate actually fell.
This option is also correct because while jobs may have been eliminated in certain sectors or industries, it is possible that other jobs were created simultaneously. If the number of new jobs created is substantial enough to offset the job losses, the overall effect could lead to a decrease in the unemployment rate.
B. Yes; if jobs are eliminated, then the unemployment rate will rise.
This option is incorrect because it assumes that job elimination directly leads to an increase in the unemployment rate. While job losses can contribute to an increase in unemployment, it is not the sole determining factor.
D. No; it is possible that the unemployment rate could fall if the size of the labor force falls by a large enough amount.
This option is incorrect because it mistakenly implies that a decrease in the size of the labor force will result in a lower unemployment rate. In reality, a decrease in the labor force size alone does not guarantee a decline in the unemployment rate unless it is accompanied by a corresponding decrease in the number of unemployed individuals.
E. Yes, because the number of jobs eliminated is the net change in the number of jobs.
This option is incorrect because it assumes that the net change in the number of jobs directly translates to a change in the unemployment rate. However, the unemployment rate considers the number of unemployed individuals in relation to the labor force, not just the net change in jobs.
In conclusion, options A and C provide accurate explanations regarding the relationship between job elimination and the unemployment rate. Factors such as changes in the labor force participation rate and the creation of new jobs should be considered when assessing the impact on the unemployment rate.
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c. Today is 1 August 2022. Illustrate how a Taiwanese Arbitrageur can earn risk-free profit with an attempt to earn higher nominal rate in South Africa based on the following quotation from Bank of Taiwan. Assume a 12-month investment horizon. (10 marks)
Bid Ask
S0 (NT/R): 3.95 4.05
F12/12 (NT/R): 3.80 3.96
Invest Borrow
Taiwan 1.6% p.a. 2.6%p.a.
South Africa 10% 18%
the question asks how a Taiwanese arbitrageur can earn risk-free profit by taking advantage of a higher nominal rate in South Africa, using the given quotations from the Bank of Taiwan.
Based on the provided quotations from the Bank of Taiwan, we can observe that the spot exchange rate (S0) for the Taiwan currency (NT) to South African Rand (R) is 3.95 (bid) and 4.05 (ask). Additionally, the forward exchange rate (F12/12) for a 12-month investment horizon is 3.80 (bid) and 3.96 (ask). Furthermore, the interest rates for investing in Taiwan and borrowing in Taiwan are 1.6% per annum and 2.6% per annum, respectively. On the other hand, the interest rates for investing in South Africa and borrowing in South Africa are 10% and 18%, respectively.
To earn a risk-free profit, a Taiwanese arbitrageur can execute the following steps. Firstly, the arbitrageur borrows in Taiwan at an interest rate of 2.6% per annum. Then, they convert the borrowed Taiwanese currency (NT) to South African Rand (R) at the spot exchange rate of 4.05. Next, they invest the converted Rand in South Africa at an interest rate of 10% per annum for a 12-month period. At the end of the investment horizon, they receive the maturity amount in Rand. Finally, they convert the Rand back to NT at the forward exchange rate of 3.80 and repay the borrowed amount in Taiwan.
By executing this arbitrage strategy, the Taiwanese arbitrageur can earn a risk-free profit. The difference between the interest earned in South Africa (10%) and the interest paid in Taiwan (2.6%) provides the profit. Additionally, any potential gains or losses from the exchange rate differences between the spot and forward rates also contribute to the overall profitability. The arbitrageur exploits the interest rate differential and exchange rate fluctuations to generate a higher nominal rate of return, capitalizing on the favorable conditions between Taiwan and South Africa.
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when computing depreciation, the salvage value should be ignored if a company uses
When computing depreciation, the salvage value should be ignored if a company uses the straight-line depreciation method.
The straight-line depreciation method assumes that the asset has a constant value reduction over its useful life. In this method, the salvage value (also known as the residual value) is the estimated value of the asset at the end of its useful life.
However, in straight-line depreciation, the salvage value is not considered when calculating the annual depreciation expense.
The formula for straight-line depreciation is:
Depreciation Expense = (Cost of Asset - Salvage Value) / Useful Life
Since the salvage value is subtracted from the cost of the asset in the numerator, it is already taken into account in the calculation of the depreciation expense.
Therefore, it should be ignored when computing depreciation using the straight-line method.
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which of the following businesses would be most likely to issue only notes payable as their long-term debt instruments?
Financial institutions, such as banks or credit unions, would be most likely to issue only notes payable as their long-term debt instruments due to their need for short-term deposits to fund lending activities and the flexibility notes offer in terms of interest rates and repayment terms.
Financial institutions, such as banks or credit unions, would be most likely to issue only notes payable as their long-term debt instruments. They commonly use promissory notes or similar debt instruments to borrow funds from depositors or other financial institutions for an extended period, typically exceeding one year. These notes represent contractual obligations to repay the borrowed funds with interest over time. Financial institutions often rely on short-term deposits from customers to fund their lending activities and, as a result, prefer using notes payable rather than issuing long-term bonds. By using notes payable, they can better match the duration of their liabilities with the maturity of their assets and maintain liquidity. Additionally, notes payable may offer more flexibility in terms of interest rates and repayment terms compared to other long-term debt instruments like bonds.
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According to Keynesian theory: a. during a recessionary gap, wage rates will fall b. during a recessionary gap, SRAS will shift to the right c. the economy can get stuck in a recessionary gap for an extended period d. Both a. and b. above
According to Keynesian theory, the correct statement is option c: the economy can get stuck in a recessionary gap for an extended period. Neither option a (wage rates will fall) nor option b (SRAS will shift to the right) is consistent with Keynesian theory.
In Keynesian theory, a recessionary gap occurs when aggregate demand (AD) is insufficient to fully utilize the economy's productive capacity, leading to high unemployment and low output.
According to Keynesian analysis, wage rates are typically assumed to be sticky, meaning they do not easily adjust downward during a recession. This contradicts option a, which suggests that wage rates would fall during a recessionary gap.
Additionally, the short-run aggregate supply (SRAS) curve is typically considered to be upward sloping in Keynesian theory, implying that a recessionary gap would not cause an automatic shift to the right in SRAS, as stated in option b.
Instead, Keynesians argue that the economy can remain stuck in a recessionary gap for an extended period due to inadequate aggregate demand and the lack of automatic self-correction.
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ABSA Bank quotes the following rates on 16 September, 2021 GBP:ZAR = 19.6500-19,6900 (Spot Rate) GBP:ZAR = 19,6900 – 19,7100 (6 month forward Rate) a. Does the ZAR trade at a forward premium or discount to the GBP? Explain. (4 Marks) b. Calculate this forward premium (annualised) or discount (annualised) of the ZAR to the EUR. (4 Marks) c. ABSA bank is quoting the following exchange rates for the SA Rand (ZAR) and the Thai Bhat (THB). • EUR:ZAR= 17,5000 – 17,5080 • EUR:THB = 38,7000 – 38,8000 A South African firm asks the bank for a THB:ZAR quote. The rate requested by the SA firm is a cross rate between the THB and the ZAR. Calculate this rate and explain each step in the process. (5 Marks) d. The ZAR is said to be much more liquid than the THB. Explain what this would mean for the difference between the percentage Bid-Ask spread for the EUR:THB compared to that of the EUR:ZAR. Explain why you would see this difference
a. The ZAR trades at a forward premium to the GBP. This is because the forward rate (19.6900 – 19,7100) is higher than the spot rate (19.6500-19,6900).
b. To calculate the forward premium or discount of the ZAR to the GBP, we can use the following formula:
Forward premium/discount = [(Forward rate - Spot rate) / Spot rate] * (365 / Number of days to maturity)
Given the information provided, the number of days to maturity is 180 days (6 months). Plugging in the values:
Forward premium/discount = [(19,6900 - 19.6500) / 19.6500] * (365 / 180)
Simplifying the calculation:
Forward premium/discount = (0.0400 / 19.6500) * 2.0278
Forward premium/discount = 0.0041 or 0.41%
Therefore, the forward premium (annualized) of the ZAR to the GBP is 0.41%.
c. To calculate the THB:ZAR cross rate, we can multiply the EUR:THB rate by the inverse of the EUR:ZAR rate. The steps involved are as follows:
1. Calculate the inverse of the EUR:ZAR rate:
EUR:ZAR = 1 / 17.5000 = 0.0571 ZAR:EUR
2. Multiply the EUR:THB rate by the inverse of the EUR:ZAR rate:
EUR:THB * ZAR:EUR = THB:ZAR
38,7000 * 0.0571 = 2,214.57 THB:ZAR
Therefore, the THB:ZAR rate is 2,214.57.
d. If the ZAR is more liquid than the THB, it means that there is a higher trading volume and more market participants for ZAR compared to THB. This higher liquidity usually leads to narrower bid-ask spreads. Therefore, the percentage bid-ask spread for the EUR:ZAR would likely be smaller than that of the EUR:THB.
The difference in liquidity between the ZAR and THB would result in a tighter market for ZAR, where buyers and sellers can trade at prices closer to each other, reducing the spread. In contrast, the THB's lower liquidity would result in a wider bid-ask spread, as there may be fewer participants and less trading volume, leading to larger price discrepancies between buyers and sellers.
Overall, the difference in liquidity between the ZAR and THB would contribute to a smaller percentage bid-ask spread for the EUR:ZAR compared to the EUR:THB.
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[Q: 11-2452271] Returns. You bought a stock one year ago for $49.83 per share and sold it today for $56.82 per share. It paid a $1.06 per share dividend today. What are the dollar and percent returns received from owning this stock? The dollar return was: $, (Round your answer to two decimal places.) The percent return was \%. (Round your answer to two decimal places.) The percent return has two components: the dividend yield and the capital gains yield. What is the value of each? The dividend yield was: %. (Round your answer to two decimal places.) The capital gains yield was: \%. (Round your answer to two decimal places.)
The dollar return from owning the stock was $8.05, with a percent return of 16.15%. The dividend yield was 2.13%, and the capital gains yield was 13.02%.
The dollar return is calculated by subtracting the initial investment from the final proceeds, considering both the sale price and the dividend received. In this case, the stock was sold for $56.82 per share, and a dividend of $1.06 per share was received. Therefore, the dollar return is ($56.82 + $1.06) - $49.83 = $8.05.
The percent return is determined by dividing the dollar return by the initial investment and multiplying by 100. So, ($8.05 / $49.83) * 100 = 16.15%.
The dividend yield represents the percentage of the dividend received relative to the initial investment. In this case, the dividend yield is ($1.06 / $49.83) * 100 = 2.13%.
The capital gains yield, on the other hand, indicates the percentage increase in the stock's price relative to the initial investment, excluding the dividend. Therefore, the capital gains yield is (($56.82 - $1.06) / $49.83) * 100 = 13.02%.
In summary, the dollar return from owning the stock was $8.05, resulting in a percent return of 16.15%. The dividend yield was 2.13%, and the capital gains yield was 13.02%.
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1. You'll need to decide which side of the debate below you believe is the best option. Best of Breed approach versus single vendor approach. You'll need to support your decision and your response should be at least 250 words.
Selecting ‘best-of-breed’ applications from multiple system vendors for different digital business applications such as enterprise resource planning, customer relationship management, transactional e-commerce and supply chain management is a better approach for an effective digital business infrastructure than using a single-vendor solution.
The best-of-breed approach, which involves selecting specialized applications from multiple system vendors, is a superior option for building an effective digital business infrastructure compared to using a single-vendor solution.
This approach allows organizations to leverage the expertise and innovation of different vendors to meet specific business needs and achieve higher levels of performance, flexibility, and customization. It also promotes competition and reduces dependency on a single vendor, mitigating risks associated with vendor lock-in and limited functionality.
The best-of-breed approach offers several advantages over a single-vendor solution. Firstly, it enables organizations to select the most suitable applications for each specific business function. Different vendors often specialize in specific areas, such as enterprise resource planning, customer relationship management, e-commerce, or supply chain management.
By carefully choosing the best applications for each function, organizations can ensure they have access to cutting-edge technology and features that meet their unique requirements. This approach also allows for customization and flexibility since organizations can mix and match applications from different vendors to create a tailored and optimized digital infrastructure.
Secondly, adopting a best-of-breed approach promotes healthy competition among vendors. When organizations have the freedom to choose applications from multiple vendors, vendors are incentivized to continually innovate and improve their products to attract and retain customers.
This competitive environment fosters a culture of innovation, which ultimately benefits the organizations utilizing these applications. It also reduces the risk of being dependent on a single vendor, as organizations have the option to switch vendors if necessary without disrupting their entire digital infrastructure.
Furthermore, a best-of-breed approach mitigates the risks associated with vendor lock-in. Relying on a single-vendor solution can create a dependency on that vendor's products and services. If issues arise with the vendor or if their products become outdated or insufficient, organizations may face challenges in finding suitable alternatives. In contrast, the best-of-breed approach provides flexibility and freedom of choice, allowing organizations to adapt and change their technology landscape as needed.
In conclusion, the best-of-breed approach offers greater flexibility, customization, innovation, and reduced vendor dependency compared to a single-vendor solution. By selecting specialized applications from multiple vendors, organizations can build an effective digital business infrastructure that aligns with their specific needs, promotes competition among vendors, and reduces the risks associated with vendor lock-in.
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On April 12, 2020, Prism Ltd., a camera lens manufacturer, paid cash of $552,375 for real estate plus $29,400 cash in closing costs. The real estate included land appraised at $249,480; land improvements appraised at $83,160; and a building appraised at $261,360. Present the journal entry to record the purchase. (Do not round intermediate calculations. Round the final answers to the nearest whole dollar.)
The journal entry to record the purchase of real estate by Prism Ltd. on April 12, 2020, would include debiting the respective real estate accounts and crediting the cash account.
The purchase of real estate by Prism Ltd. involves the acquisition of land, land improvements, and a building. The total cash paid is $552,375 for real estate and $29,400 for closing costs. To record this transaction, the journal entry would be as follows:
Debit:
- Land: $249,480
- Land Improvements: $83,160
- Building: $261,360
- Closing Costs: $29,400
Credit:
- Cash: $552,375
The debit entries represent the acquisition of the real estate assets and closing costs, while the credit entry represents the cash paid by Prism Ltd. for the purchase. The amounts are based on the appraised values provided in the question. It is important to note that the amounts should be rounded to the nearest whole dollar in the final journal entry.
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Economics
Background: In each of the following questions,
monthly mortgage coupon rates should be
calculated by simply dividing the annual rate by
12. You should also assume that all of the
securities pay monthly. Also, you should divide
annual interest rates by 12 to get the
corresponding monthly rate and assume
monthly compounding when computing
present values.
Suppose we construct principal-only (PO) and
interest-only (IO) mortgage-backed securities
(MBS) using the mortgage pass-through of the
previous questions. Assume a prepayment
multiplier of 100 PSA. What is the present value
of the PO MBS if we use an annual risk-free rate
of 4.5% to value the cash-flows?
The present value of the principal-only (PO) mortgage-backed security (MBS) can be calculated using the annual risk-free rate of 4.5% and the cash flows generated by the MBS.
To compute the present value of the PO MBS, we need to discount the future cash flows generated by the MBS using the risk-free rate. The cash flows of the PO MBS consist of the principal payments received over time.
By using the annual risk-free rate of 4.5% and dividing it by 12 to obtain the monthly rate, we can apply monthly compounding to discount the cash flows. The specific details of the mortgage pass-through, such as the principal payments schedule and the prepayment multiplier of 100 PSA, will also be taken into account in the calculations.
The final result will be the present value of the PO MBS, which represents the current worth of the expected future cash flows discounted at the annual risk-free rate.
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A $400,000 state lottery prize is spread evenly over eight years ($50,000 a year) (Alternative 1), or you may take a lump distribution of $263,000 (Alternative 2). If you can earn 8 percent, calculate the present values of both alternatives. Use Appendix D to answer the question. Round your answers to the nearest dollar.
PV (Alternative 1): $ .........?
PV(Alternative 2): $ .......?
Which alternative is better? -Select : Alternative 1/alternative 2
The present value of Alternative 1, which consists of receiving $50,000 annually for eight years, is approximately $296,366. The present value of Alternative 2, which offers a lump sum of $263,000, is $263,000. Comparing the present values, Alternative 1 is the better choice.
To calculate the present values of both alternatives, we need to discount the future cash flows at the given interest rate of 8 percent. For Alternative 1, which provides $50,000 annually for eight years, we can use the formula for the present value of an ordinary annuity:
PV = Payment × [1 - (1 + r)^(-n)] / r,
where PV is the present value, Payment is the annual payment, r is the interest rate, and n is the number of periods.
Using this formula, the present value of Alternative 1 is approximately $296,366.
For Alternative 2, which offers a lump sum of $263,000, the present value is simply the amount itself since there are no future cash flows to discount.
Comparing the present values, we see that Alternative 1 has a higher present value ($296,366) than Alternative 2 ($263,000). Therefore, Alternative 1 is the better choice as it provides a higher present value of cash flows over the given time period.
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Assignment: Keep the answers short and precise (3-4 sentences max). You might not find all the answers in lecture or book. Googling the unknown terms will be very useful. 1. What is agency conflict? Describe how the conflict arises between stockholders and managers, and between stockholders and debtholders. 2. Describe the condition for stock market efficiency. Can an investor "beat the market" if the market is efficient? 3. Brown Cow Co. are famous for its chocolate milk production facilities. They already have a major share of the chocolate milk market and they cannot expand their business in chocolate milk anymore. One of their geniuses believes that tech market is the future and proposed expansion in tech market using their excess money. Do you agree with the genius? Explain your reason for agreement, or disagreement. Can you come up with a better use of the excess free cash flow? 4. (True/False. Explain) All unethical business practices are illegal. 5. Can off-balance sheet items undermine firm evaluation based on financial ratios? If yes, how? If no, why?
1. Agency conflict refers to the disagreement and misalignment of interests between different stakeholders in a company, particularly between stockholders and managers, and between stockholders and debtholders. The conflict arises because managers may prioritize their own interests over those of the stockholders, such as pursuing personal wealth or job security, which can lead to decisions that may not maximize stockholder wealth. Similarly, stockholders and debtholders may have conflicting interests, as debtholders prioritize repayment of their loans, while stockholders aim for higher returns on their investments.
2. Stock market efficiency is a condition in which prices of publicly traded securities fully reflect all available information. In an efficient market, it is difficult for an investor to consistently "beat the market" by consistently outperforming the average returns. This is because all relevant information is already incorporated into the stock prices, making it challenging to consistently identify undervalued or overvalued stocks. While short-term gains or occasional market inefficiencies can be exploited, long-term consistent outperformance is unlikely in an efficient market.
3. Whether to agree with the proposal of expanding into the tech market depends on various factors, such as the company's core competencies, strategic fit, market analysis, and risk assessment. While Brown Cow Co. may have excess money, it does not automatically make the tech market the best expansion opportunity. Conducting thorough market research and analysis to understand the potential of the tech market, considering factors such as competition, expertise required, and profitability, is crucial. It is also important to explore other potential uses of excess free cash flow, such as diversification within the food and beverage industry or investing in research and development for new products or technologies.
4. False. Not all unethical business practices are illegal. Unethical practices may involve actions that are morally or ethically wrong but may not necessarily violate specific laws or regulations. While some unethical practices are explicitly prohibited by laws, others may fall into gray areas where they are not directly illegal but are considered highly unethical. Ethical standards can go beyond legal requirements and encompass moral and social responsibilities that guide businesses in maintaining trust and integrity.
5. Yes, off-balance sheet items can undermine firm evaluation based on financial ratios. Off-balance sheet items refer to assets, liabilities, or financial activities that are not recorded on a company's balance sheet but still impact its financial position. These items can include operating leases, joint ventures, or contingent liabilities. Since they are not included in traditional financial ratios, such as debt-to-equity ratio or return on assets, they can distort the true financial position of a company and lead to misleading evaluations. Therefore, it is essential to consider off-balance sheet items and their potential impact when evaluating a firm based on financial ratios.
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In economic policy, the basic principle underlying conservatism is. A. economic laissez-faire. B. government regulation. C. central planning.
The basic principle underlying conservatism in economic policy is economic laissez-faire, option A. Conservatives generally advocate for limited government intervention in the economy, emphasizing the importance of free markets, individual liberty, and private property rights.
Conservatism in economic policy is grounded in the principle of economic laissez-faire, which supports minimal government intervention in the economy.
Conservatives believe that free markets, driven by the forces of supply and demand, are the most efficient and effective means of resource allocation. They emphasize the importance of individual liberty, private property rights, and limited government involvement in economic affairs.
Conservatives argue that government regulation and central planning can lead to unintended consequences, stifling economic growth, and restricting individual freedom.
They advocate for policies that promote free trade, reduce taxation, limit government bureaucracy, and protect property rights.
By minimizing government interference, conservatives believe that the economy can thrive and individuals can pursue their own economic goals and aspirations.
The basic principle underlying conservatism in economic policy is economic laissez-faire, which favors limited government intervention and emphasizes the significance of free markets, individual liberty, and private property rights.
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A widget producer is in its first year of operations and plan to sell one widget at $25 per unit. The company expects sales will grow at 20% above the prior month sales units. Projected sale units is 100 for April. The company wishes to have the number of projected sales units for the current month plus 10% of the prior month's projected sale units available for each month. How many units would the company plan to have available for May? A widget producer is in its first year of operations and plan to sell one widget at $25 per unit. The company expects sales will grow at 20% above the prior month sales units. Projected sale units is 100 for April. The company wishes to have the number of projected sales units for the current month plus 10% of the prior month's projected sale units available for each month. How many units would the company plan to have available for May? 100 120 130 132 None of these options
The company would plan to have 132 units available for May.
To calculate the projected sales units for May, we start with the projected sales units for April, which is 100. Then we add 10% of the prior month's projected sales units, which is 10% of 100 = 10. Adding these two values, we get 100 + 10 = 110.
Since the company expects sales to grow at 20% above the prior month's sales units, we calculate 20% of 110, which is 0.20 * 110 = 22. Adding this value to the previous result, we get 110 + 22 = 132.
Therefore, the company would plan to have 132 units available for May.
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Elaborate each question with suitable points and sufficient explanation with examples wherever appropriate. Each part of the question is important and carries 5 marks each
1. Assume that you have established a restaurant in the "Durrat Al Bahrain" area, and since there is already a large number of restaurants that operate as sole Proprietorship that carry a brand, it has become a legal requirement that your restaurant takes a different legal form from other restaurants.
Taking into consideration the legal situation
• Apply the legal form of the restaurant as a corporation and elaborate on the different types of corporations and choose the most appropriate one for your restaurant.
• Apply the legal form of the restaurant as a private limited company and elaborate on the advantages and disadvantages of this form of company
· Apply the legal form of the restaurant as a partnership and elaborate on the advantages and disadvantages of partnership.
The legal requirement for my restaurant to take a different legal form stems from the saturation of sole proprietorship restaurants carrying the same brand in the area.
The reason behind the legal requirement for my restaurant to adopt a different legal form arises from the saturation of restaurants operating as sole proprietorships and carrying the same brand in the "Durrat Al Bahrain" area. This regulatory measure aims to promote competition, diversity, and prevent monopolistic practices. By mandating a distinct legal form, it encourages entrepreneurs to explore alternative business structures, such as partnerships, corporations, or limited liability companies (LLCs). Such entities offer unique advantages, such as limited liability protection, potential tax benefits, easier access to capital, and increased credibility in the eyes of customers and investors.
For instance, establishing my restaurant as a partnership would allow me to pool resources and expertise with another individual or entity, sharing both the risks and rewards of the business venture. Alternatively, forming a corporation or an LLC would provide personal asset protection and separate the business's legal identity from its owners. This differentiation in legal form among restaurants in the area fosters a competitive environment, stimulates innovation, and ultimately benefits the customers by offering a diverse range of culinary experiences.
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How
can a person/Teacher Enhance teaching and learning Principles of
Economics? (100 to 200 Words)
Teaching and learning principles of Economics can be enhanced in several ways by the teacher.
Some of the effective ways to improve teaching and learning economics are discussed below:
Understand your students and teach them accordingly - Understanding your student’s needs and interests is the key to successful teaching. As every student is different, it is important for a teacher to get to know their students and their learning needs.
Teachers must create a comfortable environment in the classroom where students can freely discuss their issues and seek advice from their peers or the teacher. Teach by using real-life examples - Teachers should use examples that the students can relate to. It helps them understand the concept better and enhances the learning process. For example, a teacher can use household budgeting, marketing strategies, taxes, loans, and other common economic issues in daily life when teaching about supply and demand and macroeconomics.
Conduct role plays or simulation activities - Teachers can use role plays and simulations as a teaching strategy for economics to improve the student's knowledge of the subject. For example, a teacher can organize a debate or simulation about a current economic issue such as trade agreements, government policies or monetary policies to improve students’ critical thinking and decision-making skills.
Encourage group work and discussion - Encouraging students to work in groups helps them to learn from one another. They share their ideas and knowledge and come up with new concepts and strategies to improve their learning. This also helps students to develop teamwork and leadership skills.
Avoid memorization - Teachers should not encourage rote learning of concepts. Students should be given the opportunity to understand and analyze the subject and apply what they have learned to practical situations. The teacher should provide relevant case studies, analyze articles, and online resources to help students learn and understand economics.
In conclusion, economics can be a challenging subject for students but with effective teaching and learning methods, students can be motivated to learn the subject.
Teachers can use creative and innovative techniques to enhance the teaching of economics by understanding the needs of the students and creating an interactive and engaging environment for the students.
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In April 2020, the Canadian economy lost about 2 million jobs amid the Covid-19 crisis. According to Statistics Canada, the unemployment rate soared to 13%, up from the 7.8% recorded in March of 2020 . Around the same period, inflation rate dropped from 2.2% in February to 0.9% in March and −0.2% in April. Use appropriate graph(s) to explain the following. (Total marks =20 ) a) Was there a trade-off between the unemployment rate and the inflation rate between the months of March and April 2020? How can the Phillips curve be used to answer this question? (5 marks) b) If the unemployment rate and inflation are both rising, can this be explained by a movement along a given Phillips curve? What must be happening to aggregate demand and aggregate supply? What must be happening to the Phillips curve? (5 marks) c) If the Bank of Canada continues to undertake expansionary monetary policy, how will the unemployment rate and inflation be affected? (Use both Phillips curve and aggregate supply - aggregate demand graphs in your explanation.) (5 marks) d) Is there a trade-off between the unemployment rate and inflation in the long run? How is the long run aggregate supply curve related to the long run Phillips curve?
In the situation described, the Canadian economy experienced a significant increase in unemployment accompanied by deflation.
This illustrates the negative relationship depicted by the Phillips Curve: higher unemployment can coincide with lower inflation. However, when unemployment and inflation both rise, it implies a shift in the Phillips Curve, often associated with adverse supply shocks or stagflation. Exploring this, an adverse supply shock or a decrease in aggregate demand could cause both unemployment and inflation to rise - a situation not explained by a movement along a given Phillips Curve. The shift of the Phillips Curve could reflect changes in people's expectations about inflation or other structural economic changes. Regarding expansionary monetary policy, it would increase aggregate demand, potentially reducing unemployment and increasing inflation in the short run, as shown on both the Phillips Curve and aggregate supply-demand graphs. Lastly, in the long run, the Phillips Curve tends to be vertical, indicating no trade-off between unemployment and inflation due to economies naturally adjusting to their natural rate of unemployment, regardless of inflation.
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The New Associate
Steve arrived Monday morning at Ryan & Associates, CPAs, just in time to hear the latest explosion from the Managing Partner’s office. It was the middle of the busy season and the office reflected it – with piles of paper, tax returns, and audit work papers on each desk. Marcia, the Managing Partner, was bright, hard-working, and a good auditor. But during the busy season, as the work piled on and the inevitable delays occurred (e.g., client not ready, files misplaced, tax information missing, PBCs not completed properly), Marcia’s temper tended to get shorter and shorter.
Despite the stress of the busy season, Steve really liked working for Ryan & Associates. He had started there as an intern while in college and then accepted a permanent position after graduation. In a way, it was his second home as it was the first and only professional position he had ever had. The work was interesting and he enjoyed his colleagues, many of whom he had known since college. The firm even had its own softball team.
Moving quickly to his desk, Steve pulled out the files for his next assignment, the audit of a not-for-profit known as Helping Our Children (HOC). HOC provided assistance to children facing major medical procedures using proceeds from a thrift shop that it operated. As is common in small not-for-profits, HOC did not have a large staff. In fact, HOC’s staff consisted of an executive director, a store manager, a volunteer coordinator, and a part-time bookkeeper. Looking through his notes, Steve recalled hearing that the bookkeeper had recently left for another position. "Well, this won’t make the audit easier but at least the bookkeeper finished the books for the year before leaving," he thought.
Later, Steve heard his name being called. Looking up, he saw Marcia motioning him to come to her office. "Steve, I want you to meet Abby, our new associate," Marcia said, "This is her first day and I would like you to show her around and introduce her to everyone." "Sure," Steve said, "just come with me." After introducing Abby to the rest of the staff, Steve got her set up at her desk, gave her the training manuals, and promised to come back around lunchtime to show her the staff’s favorite restaurant.
At lunch, Steve learned that Abby had worked previously as a bookkeeper. In fact, she was the part-time bookkeeper who had just left HOC. "I really wanted to work for Ryan & Associates," Abby said, "because I knew they were going to do the audit and I figured it was a way to get my foot in the door." Steve agreed that it would be very helpful to have her close by to answer questions.
Returning to the office, Steve discovered that information needed to complete his prior audit (Pogo Retail, Inc.) had come in and the client was demanding that the audit be completed immediately. "Oh, boy, here we go again – firefighting," Steve thought as he moved the HOC files over to work on Pogo. The rest of the week passed in a similar fashion and Steve was not able to get back to HOC as he had planned. As HOC had been scheduled to start a month earlier, Steve was concerned about the continuing delay but there always seemed to be another urgent problem requiring attention.
The following Monday, Steve’s arrival at the office was met with an immediate summons to Marcia’s office. "How far have you gotten on HOC?" Marcia demanded, "The executive director called expecting to schedule a review of the final report."
"I haven’t been able to start," Steve tried to explain, "First, Pogo had to be completed, and then …"
Marcia interrupted, "Look – I am under a lot of pressure here. I need to have HOC finished as quickly as possible. I will assign Abby to work on the audit. She knows the client, obviously, and should be able to easily wrap it up. You will still senior – Abby will just do all of the work. I’ve already talked to her about it and she is ready to start."
"One more thing," Marcia added, "make sure that Abby doesn’t sign off on any of the work papers. Using Abby might raise questions and that way there won’t be a paper trail."
Steve left the office and returned to his desk thinking, "There’s something not right about this. Abby would basically be auditing her own work. I am sure that isn’t allowed." Steve was very proud of his CPA certificate and knew that violation of the professional standards had serious consequences. He also knew that Marcia’s current mood made it difficult to raise objections. As he continued to think about it, Steve realized he did not want to do what Marcia wanted. It just wasn’t right.
What should Steve say, to whom, when and how?
When approaching Marcia to share his concerns, Steve should act professionally and with respect.
He needs to speak with her right now and let her know that having Abby audit her own work at HOC presents ethical and independence concerns. Steve needs to stress the significance of upholding professional standards and the potential repercussions of doing so. He ought to provide other options, such giving Abby a different client to work on or including a different team member in the HOC audit. In order to emphasise his dedication to upholding professional ethics, Steve should be sure to express his concerns in a strong but diplomatic manner.
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Jai is getting to know his new client Turquoise Traders, a large discount electrical retailer. Wendy was the engagement partner on the Turquoise Traders audit for the past five years, but had to rotate off the audit this year. Jai discovers that towards the end of last year Turquoise Traders installed a new IT system for inventories control. The system was not operating prior to the end of the last financial year so its testing was not included in the previous audit. The new system was custom-built for Turquoise Traders by a Melbourne-based software company by modifying another system they had designed for a furniture manufacturer and retailer.
Required
What audit risks are associated with the installation of the new inventories IT system at Turquoise Traders? (Auditing and Assurance Question)
The installation of a new inventories IT system at Turquoise Traders include potential system errors or malfunctions, data integrity issues, lack of proper testing and validation, and potential control weaknesses.
System Errors or Malfunctions: The new IT system may have technical issues or errors that could impact the accuracy and reliability of inventory data. Inaccurate inventory records could lead to misstatements in financial statements.
Data Integrity Issues: The transfer of data from the old system to the new system may result in data corruption or loss, leading to inaccurate inventory records. Additionally, manual data entry or system interfaces could introduce errors or omissions in recording inventory transactions.
Lack of Proper Testing and Validation: Since the new system was not operational during the previous audit, there may be limited testing and validation of the system's functionality, controls, and accuracy. This increases the risk of undetected system weaknesses or errors.
Control Weaknesses: The customization of the software and its adaptation from another system may introduce control weaknesses. There could be inadequate segregation of duties, lack of proper authorization controls, or limited system access controls, increasing the risk of fraudulent activities or unauthorized changes to inventory records.
Hence, the installation of the new inventories IT system at Turquoise Traders presents audit risks related to system errors, data integrity, testing and validation, and control weaknesses. These risks require careful assessment and additional audit procedures to mitigate potential misstatements and ensure the reliability of inventory information in the financial statements.
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