A stock priced at $61 has three-month calls and puts with an exercise price of $55 available. The calls have a premium of $5.28, and the puts cost $0.56. The risk-free rate is 1.1%. If the put options are mispriced, what is the profit per option assuming no transaction costs?

Answers

Answer 1

Answer:

The Profit per option =  $1.431

Explanation:

Given that:

Current stock price S = $61

Exercise Strike price X = $55

Value of call option C = $5.28

Puts Costs = $0.56

risk-free rate = (1.1% × 3)/12

risk - free rate = 0.275%

If the put options are mispriced, what is the profit per option assuming no transaction costs

Present value of the strike price [tex]X = \dfrac{X}{(1+r)}[/tex]

[tex]X = \dfrac{55}{(1+\dfrac{0.275}{100})}[/tex]

[tex]X = \dfrac{55}{(1+0.00275)}[/tex]

[tex]X = \dfrac{55}{(1.00275)}[/tex]

X = $54.849

The formula that hold for the  put option can be expressed as:

P = Present value of  the strike price X + C - S

P = $(54.849 + 5.28 - 61)

P = $60.129 - $61

P = - $0.871

Thus, the put option = - $0.871

This implies that the Put option is out of cash since it is negative.

Now, The Profit per option = put costs - (- put option)

The Profit per option =  0.56 - ( - 0.871)

The Profit per option =  $1.431


Related Questions

1. Depreciation on the equipment for the month of January is calculated using the straight-line method. At the time the equipment was purchased, the company estimated a residual value of $4,200 and a two-year service life.
2. At the end of January, $23,000 of accounts receivable are past due, and the company estimates that 30% of these accounts will not be collected. Of the remaining accounts receivable, the company estimates that 3% will not be collected.
3. Accrued interest expense on notes payable for January.
4. Accrued income taxes at the end of January are $14,200.
5. By the end of January, $4,200 of the gift cards sold on January 2 have been redeemed
Prepare an adjusted trial balance as of January 31, 2018

Answers

Answer:

1 Depreciation expeense (Debit) $4,200

Accumulated depreciation (Credit) $4,200

2.Bad Debt expense (Dr.) $6,900

Accounts Receivables (Cr.) $6,900

3. Accrued Interest Expense (Dr.) $1,200

Notes Payable (Cr.) $1,200

4. Accrued Income Tax (Dr.) $14,200

Cash (Cr.) $14,200

5. Cash (Dr.) $4,200

Redemption of Gift Cards (Cr.) $4,200

Explanation:

Depreciation expense is considered as a tax shield. The larger the depreciation expense, the lower will be the taxable income. The adjusting entries are required before trial balance is created. There are few transaction that occur after the initial recording of the transactions. These transaction needs to be adjusted before the financial statements preparation.

When the Depreciation expense is considered as a tax shield and also The larger the depreciation expense, then the lower will be the taxable income.

What is Depreciation?

The term depreciation directs to an accounting method utilized to allocate the cost of a tangible or physical asset over its useful life.

1. Depreciation expense (Debit) $4,200

Accumulated depreciation (Credit) $4,200

2. Bad Debt expense (Dr.) $6,900

Accounts Receivables (Cr.) $6,900

3. Accrued Interest Expense (Dr.) $1,200

Notes Payable (Cr.) $1,200

4. Accrued Income Tax (Dr.) $14,200

Cash (Cr.) $14,200

5. Cash (Dr.) $4,200

Redemption of Gift Cards (Cr.) $4,200

Depreciation expense is considered a tax shield. The more considerable the depreciation expense, the lower will be the taxable income. The adjusting entries are required before the trial balance is created. Few transactions occur after the initial recording of the transactions. These transaction needs to be adjusted before the preparation of the financial statements.

Find more information about Depreciation here:

https://brainly.com/question/1553943

For its first year of operations, Tringali Corporation's reconciliation of pretax accounting income to taxable income is as follows: Pretax accounting income $ 350,000 Permanent difference (14,700 ) 335,300 Temporary difference-depreciation (19,900 ) Taxable income $ 315,400 Tringali's tax rate is 25%. Assume that no estimated taxes have been paid. What should Tringali report as its income tax expense for its first year of operations

Answers

Answer:

Tringali should report $78,850 as its income tax expense  for its first year of operation.

Explanation:

The company should use the taxable income of $305,600 to calculate it's income tax expense as it is only on it basis that the tax payable by a firm is determine

Income tax expenses = Taxable income * Tax rate

Income tax expenses = $315,400 x 25%

Income tax expenses = $78,850

A company can shorten its cash cycle by: __________

a. Reducing inventory turnover
b. Reducing account payables
c. Reducing days receivable
d. None of the above

Answers

Answer:

None of the above

Explanation:

Companies can shorten their cash cycles by turning over their inventory faster. The quicker a company sells its goods, the sooner it takes in cash from cash and credit card sales and begins its accounts receivable aging. Inventory turnover has no impact on the cash cycles of service companies with no inventory.

Answer:

C is the answer (I think)

The following accounts are from last year's books of Sharp Manufacturing: Raw Materials Bal 0 (b) 154,800 (a) 166,000 11,200 Work In Process Bal 0 (f) 513,200 (b) 132,400 (c) 168,800 (e) 212,000 0 Finished Goods Bal 0 (g) 464,000 (f) 513,200 49,200 Manufacturing Overhead (b) 22,400 (e) 212,000 (c) 26,400 (d) 156,800 6,400 Cost of Goods Sold (g) 464,000 Sharp uses job-order costing and applies manufacturing overhead to jobs based on direct labor costs. What is the amount of direct materials used for the year

Answers

Answer:

$132,400

Explanation:

Based on the information given we were told that Sharp make use of job order costing as well as applies manufacturing overhead to jobs which are often based on the direct labor costs, which simply means the amount of direct materials that is been used for the year will be a debit amount of $132,400 in the work in process .

Therefore the amount of direct materials used for the year will be $132,400

Common stock is called a hybrid security because it takes on the attributes of both preferred stock and bonds.

a. True
b. False

Answers

Answer:

false

Explanation:

examples of hybrid stocks is convertible preferred shares

A common stock is a stock that entitles owners of the stock to a fixed amount of shares and holders of the stock are owners of the company where the stock is bought.

Answer:

a. True

Explanation:

In most stocks that attributes of  both bonds and preferred stock, it is referred to as a hybrid security. Most organisations and the government recognized it as a medium of security in situations of seeking for loan.

Viral marketing describes everything from paying people to say positive things online to schemes where consumers get commissions for directing friends to specific websites.a. Trueb. False

Answers

Answer:

True

Explanation:

Viral marketing is a strategy in which companies use online networks to promote a product or service providing information to many people. This works by creating content like videos that are published on the internet and shared with a lot of people. According to that, the statement is true because viral marketing involves generating different types of online content like messages from influencers to promote your product on social media and reach a big audience.

General Electric (GE) has earnings per share of $2.98 and dividends per share of $0.35. Its return on assets (ROA) is 14.6% and its return on equity (ROE) is 18.2%. What is its sustainable rate of growth?

Answers

Answer:

g = 0.1606 or 16.06%

Explanation:

The sustainable growth rate is the growth rate in earning or dividends of a stock that will remain constant in the long run. Such a rate is calculate for an indefinite period of time. The formula to calculate the sustainable growth rate is,

g = RR * ROE

Where,

RR is the retention ratio or (1 - dividend payout ratio)ROE is the return on equity

The dividend per share as a percentage of earnings per share will give us the dividend payout ratio.

Dividend payout ratio = 0.35 / 2.98 = 0.1174 or 11.74%

g = (1 - 11.74%) * 18.2%

g = 0.1606 or 16.06%

Since the 1980s and 1990s, segmentation in global financial markets has been reduced. As a result of this, the correlation among securities markets has increased, thereby reducing, but not eliminating, the benefits of international portfolio diversification. True or Worse

Answers

Answer: True

Explanation:

With the on-going drive towards Globalization, companies took advantage to raise more capital by listing across various stock exchanges in the world. The result of this became that the securities market became more correlated.

This had the advantage of granting many companies enough capital that they became Multinational companies but it had the disadvantage of reducing the benefits of international portfolio diversification because the companies would be able to influence the movement of stock across the nations that they are listed in. Where before you could trade in Japan if there were losses in the NYSE, with a company being on both and suffering, both exchanges would feel it.

Using the one-period valuation model, assuming a year-end dividend of $1.00, an expected sales price of $100, and a required rate of return of 5%, the current price of the stock would be

Answers

Answer:

Price of stock = $96.19

Explanation:

According to the dividend valuation model , the current price of a stock is the present value of the expected future dividends discounted at the required rate of return  

This principle can be applied as follows:  

The value of cash flow the stock today is the present value of the future cash flow discounted at the required rate of return

Price of stock = D1/(1+r)   + P/(1+r)

D1= dividend in year 1

r- discount rate - 5%

P- Price in year 1

DATA

D1- 1,

r- 5%

P- 100

Price of stock = 1/(1.05) + 100/(1.05) = 96.19

Price of stock = $96.19

Problem 14-13 Calculating the WACC [LO3] Dinklage Corp. has 4 million shares of common stock outstanding. The current share price is $70, and the book value per share is $9. The company also has two bond issues outstanding. The first bond issue has a face value of $75 million, a coupon rate of 7 percent, and sells for 95 percent of par. The second issue has a face value of $60 million, a coupon rate of 6 percent, and sells for 107 percent of par. The first issue matures in 25 years, the second in 8 years. Suppose the most recent dividend was $4.30 and the dividend growth rate is 4.5 percent. Assume that the overall cost of debt is the weighted average of that implied by the two outstanding debt issues. Both bonds make semiannual payments. The tax rate is 21 percent. What is the company’s WACC? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Answers

Answer:

WACC = 8.97%

Explanation:

total value of equity = $70 x 4,000,000 = $280,000,000

cost of equity:

$70 = $4.4935 / (Re - 4.5%)

Re - 4.5% = 6.42%

Re = 10.92%

total value of debt:

$75 million x 0.95 = $71,250,000

YTM = {70 + [(1,000 - 950)/25]} / [(1,000 + 950)/2] = 72 / 975 = 7.3846%

$60 million x 1.07 = $64,200,000

YTM = {60 + [(1,000 - 1,070)/8]} / [(1,000 + 1,070)/2] = 51.25 / 1,035 = 4.9517%

weighted cost of debt = ($71,250,000 / $135,450,000 x 7.3846%) + ($64,200,000 / $135,450,000 x 4.9517%) = 3.8845% + 2.347% = 6.2315%

total value of the firm = $280,000,000 + $135,450,000 = $415,450,000

equity weight = $280,000,000 / $415,450,000 = 0.674

debt weight = 1 - 0.674 =  0.326

WACC = (0.674 x 10.92%) + (0.326 x 6.2315% x 0.79) = 7.36% + 1.605% = 8.965% = 8.97%

Richards Corporation uses the FIFO method of process costing. The following information is available for October in its Fabricating Department: Units: Beginning Inventory: 80,000 units, 60% complete as to materials and 20% complete as to conversion. Units started and completed: 250,000. Units completed and transferred out: 330,000. Ending Inventory: 30,000 units, 40% complete as to materials and 10% complete as to conversion. Costs: Costs in beginning Work in Process - Direct Materials: $37,200. Costs in beginning Work in Process - Conversion: $79,700. Costs incurred in October - Direct Materials: $646,800. Costs incurred in October - Conversion: $919,300. Calculate the cost per equivalent unit of conversion.

Answers

Answer:

$2.90 per equivalent unit of conversion

Explanation:

equivalent units of conversion (under FIFO) = [units in beginning inventory x ( 1 - previous conversion rate)] + units started and completed + (units in ending inventory x conversion rate) = [80,000 x (1 - 20%)] + 250,000 + (30,000 x 10%) = 64,000 + 250,000 + 3,000 = 317,000 units

cost per equivalent unit of conversion = total conversion costs / total equivalent units of conversion = $919,300 / 317,000 units = $2.90 per equivalent unit

A food manufacturer reports the following for two of its divisions for a recent year.
($millions) Beverage Division Cheese Division
Invested assets, beginning $ 2,662 $ 4,455
Invested assets, ending 2,593 4,400
Sales 2,681 3,925
Operating income 349 634
1. Compute return on investment.
2. Compute profit margin.
3. Compute investment turnover for the year.A food manufacturer reports the following for two of its divisions for a recent year.

Answers

Answer and Explanation:

1. Return on investment is

= Operating Income ÷ Average invested Assets

here, average invested assets is

= (Invested assets, beginning + Invested assets, ending) ÷ 2

For Beverage Division

= $349 ÷ (($2,662 + $2,593) ÷ 2)

= $349 ÷ $2,628

= 13.28%

For Cheese Division

= $634 ÷ (($4,455 + $4,400) ÷ 2)

= $634 ÷ $4,428

= 14.32%

2. Profit margin = (Operating income ÷ sales) × 100

For Beverage Division

= ($349 ÷ $2,681) × 100

= 13.02%

For Cheese Division

= ($634 ÷ $3,925) × 100

= 16.15%

3. Investment turnover = Sales ÷ Average Operating Assets

For Beverage Division

= $2,681 ÷ (($2,662 + $2,593) ÷ 2)

= $2,681 ÷ $2,628

= 1.02 times

For Cheese Division, it would be

= $3,925 ÷ (($4,455 + $4,400) ÷ 2)

= $3,925 ÷ $4,428

= 0.89 times

A 12-year capital lease specifies equal minimum annual lease payments. Part of this payment represents interest and part represents a reduction in the net lease liability. The portion of the minimum lease payment in Year 10 applicable to the reduction of the net lease liability should be:

Answers

Answer:

More than in year 8

Explanation:

A capital lease is a type of lease in which the lesser financed only the asset and all other ownership rights would be transferred to the lessee

In the given situation, the 12-year capital lease is equivalent to the annual lease payment at minimum cost

This payment involves the interest and the reduction amount

Now in the year 10 the reduction made to the lease liability should be more than in the year 8

You buy a stock for $55 today, and sell the stock one year later for $54, during which time a $2 dividend is paid. What is your return on this stock

Answers

Answer:

1.82%

Explanation:

Calculation for the return on the stock

Using this formula

Return=(Sales of stock - Stock bought today+Dividend)/Sales of stock

Let plug in the formula

Return = (54 - 55 + 2)/55

Return =1/55

Return = 0.0182×100

Return=1.82%

Therefore the return on the stock will be 1.82%

Match the Appropriate Items to the numbers associated with them Question 69 options: Federal Reserve Banks OPEC Oil Embargo begins in 19xx Federal Deposit Insurance Corporation is founded in 19xx Effective Reserve Requirement Ratio Unemployment during the Great Depression reached a height of xx% NAFTA was signed in 19xx Board of Governor's members The stock market crash that was a leading cause of the Great Depression occurs in 19xx
1. 7
2. 71
3. 79
4. 10
5. 29
6. 94
7. 12
8. 33
9. 20
10. 3
11. 8
12. 30
13. 36
14. 73
15. 25
16. 98

Answers

Answer:

1. 12

2. 73

3. 33

4. 10

5. 25

6. 94

7. 7

8. 29

Explanation:

1. Federal Reserve Banks is made up of 12 banks.

2. OPEC Oil Embargo begins in 1973.

3. Federal Deposit Insurance Corporation is founded in 1933.

4. Effective Reserve Requirement Ratio is 10

5. Unemployment during the Great Depression reached a height of 25%

6. NAFTA was signed in 1994.

7. Board of Governor's members is 7.

8. The stock market crash that was a leading cause of the Great Depression occurs in 1929.

All firms, no matter the type of firm structure in which they are producing, make their production decisions based on the point where their: Group of answer choices

Answers

Answer:

The answer is B.

Explanation:

The profit maximisation point is the point where marginal revenue equals marginal cost(MR = MC). At this point, total revenue is maximized.

Marginal revenue is the change in total revenue when additional units is sold or made while marginal cost is the change in total cost when additional unit of output is made.

When MR > MC, the firm is not manufacturing or producing enough goods and when MC > MR, it means the firm is manufacturing or producing too much and it is making loss with each additional production.

A(n) ________ is designed to build customer goodwill, collect customer feedback, and supplement other sales channels rather than sell the company's products directly.

Answers

Answer: a corporate website

Explanation: A corporate website is one that is designed to build customer goodwill, collect customer feedback, and supplement other sales channels rather than sell the company's products directly.  It is also known as a brand website. However, a marketing website will engage consumers in interactions that will move them closer to a direct purchase or some other marketing outcome .

If interest rates rise, which of the following U.S. Government debt instruments would show the greatest percentage drop in value?
a. treasury bills.
b. treasury notes.
c. treasury bonds.
d. savings bonds.

Answers

Answer: treasury bonds

Explanation:

The treasury bonds are typically debt securities for the government that have a long maturity period e.g ten years ane above.

If interest rates rise, the U.S. Government debt instruments that would show the greatest percentage drop in value is the treasury bonds because of its longer maturity period.

What is the yield to maturity of a ​-year, bond with a ​% coupon rate and semiannual coupons if this bond is currently trading for a price of ​?

Answers

What is the yield to maturity of a five-year, $5000 bond with a 4.5% coupon rate and semi-annual coupons if this bond is currently trading for a price of $4876?

A) 6.30%

B) 4.50%

C) 4.30%

D) 5.07%

E) 8.60%

Answer:

5.07%

Explanation:

Given the following parameters from the question:

Number of years = 5

N => Number of compounding periods = 5 * 2 = 10

FV => Face Value = $5,000

PV => Present Value = $4876

Percentage rate = 4.5%

PMT => Annuity Payment = Face Value * percentage

=> 5,000 * 0.045 = 225

Given that, it is semi annual rate, we have 225 / 2 = 112.5

CPT YTM or I/Y => Yield to Maturity = 2.53 * 2 = 5.07%

Hence, the final answer is 5.07%

Sarah takes out a loan today for $26,000 at an interest rate of 2 percent a year. She plans to repay the loan after 5 years. How much will he have to pay?
Sarah will have to pay:__________

Answers

Answer:

$28,706.10

Explanation:

The computation of the amount of pay is shown below:

Here we have to find the future value by using the following formula

Future value = Present value × (1 + interest rate)^number of years

= $26,000 × (1 + 0.02)^5

= $28,706.10

We simply applied the above formula so that the amount of pay could be come and the same is to be considered

If own price elasticity of demand for your market is -1.2, and your marginal cost is flat at 10, what is the optimal price for your monopoly firm

Answers

Answer: $60

Explanation:

The optimal price for a monopoly firm is expressed by;

Price = Marginal Cost * ( Own Price Elasticity/ (1 + Own Price Elasticity))

Price = 10 * ( -1.2 /( 1 - 1.2)

Price = 10 * (-1.2/-0.2)

Price = 10 * 6

Price = $60

The manager of a commercial building has many responsibilities in connection with the operation and maintenance of the structure. The manager would normally be considered the agent of

Answers

Answer:

agent of the building's owner

Explanation:

In such a scenario, the manager would normally be considered the agent of the building's owner. This is because the manager acts on behalf of the building owner since all of the tasks that they are responsible for have been specified by the owner and benefit the owner. Also, the manager deals with the building's tenants on behalf of the owner so that he does not have to take time out of his day to do so.

a company bought a piece of equipment for A200 and expects to use it for eight years. The company that plans to

Answers

Answer:

The correct option b. $2,567.

Explanation:

Note: This question is not complete. The complete question is therefore provided before answering the question as follows:

A company bought a piece of equipment for $49,200 and expects to use it for eight years. The company then plans to sell it for $4,000. The company has already recorded depreciation of $42,632.60. Using the double-declining-balance method, what is the company's annual depreciation expense for the upcoming year? (Round your answer to the nearest whole dollar amount.)

a. $11,300.

b. $2,567.

c. $19,200.

d. $1,642.

The explanation to the answer is now given as follows:

Note: See the attached excel file for the calculation of the annual depreciation expenses.

Double declining depreciation method is an accelerated depreciation technique due to the fact the depreciation expenses are charged faster under it than under straight-line depreciation method.

The depreciation of double declining method is calculated by by multiplying the rate of straight-line depreciation method by 2.

From the question, the already recorded depreciation of $42,632.60 is the accumulated depreciation expenses for the 7th year.

Since the upcoming year is the 8th year which is the last year, the depreciation expense for it can be calculated as by adjusting for the residual value of $4,000 follows:

Equipment cost = $49,200

Accumulated Depreciation = $42,632.60

Residual value = $4,000

Estimated useful life = 8 years

Therefore, we have:

Straight line method depreciation rate = 1 / Estimated useful life = 1 / 8 = 0.125, or 12.50%

Double declining depreciation rate = Straight line method depreciation rate * 2 = 12.50% * 2 = 25%

Beginning book value of the equipment in the upcoming year or in the 8th year = Equipment cost - Accumulated Depreciation = $49,200 - $42,632.60 = $6,567.40

Annual depreciation expense for the upcoming year or for the 8th year = Beginning book value of the equipment - Residual value = $6,567.40 - $4,000 = $2,567

Therefore, the correct option b. $2,567.

Uber's guidance that if a driver's "rating over the most recent 100 trips is below a 4.6, your profile may be at risk of deactivation" represents which step in the control process?

a. take corrective action, if necessary
b. compare performance to standards
c. recognize success
d. measure performance
e. establish standards

Answers

Answer:

e. establish standards

Explanation:

-Take corrective action, if necessary is when managers decide strategies to implement when the results are not meeting the standards that were established.

-Compare performance to standards is the step that determines if there is a difference between the company's performance and the standards.

-Recognize success is not a step in the control process.

-Measure performance refers to gather and analyze data to determine if the company is meeting the goals set.

-Establish standards refers to establishing goals that are specific, attainable and clear to be able to evaluate the company's performance.

According to this, the answer is that Uber's guidance that if a driver's "rating over the most recent 100 trips is below a 4.6, your profile may be at risk of deactivation" represents establish standards because Uber established a rating that driver's need to achieve which represents the standard that would be use to evaluate them.

Consider the following five scenarios related to wage inequality. Please label each with the correct source of the identified wage difference.

HUMAN CAPITAL

COMPENSANTING DIFFERENTIALS

TALEN/ABILTY

1. Both Riley and his twin brother, Roland, work for a package delivery company. Riley delivers cookies and cakes to local grocery stores and makes $18/hour. Roland, who is responsible for the transport of chemicals to and from the local university, earns $25/hour.

2. Bert works for the county animal shelter and is ranked consistently as the top dog catcher in the state. When asked how he is able to convince so many stray dogs to answer to him, Bert says it just comes naturally. As a result, Bert earns a salary about 15% higher than most other dog catchers.

3. Rosalie and Henry work at a nursery where they grow sunflowers. Rosalie works all day in the hot sun, planting and harvesting sunflowers, where she earns $34/hour. Henry, on the other hand, works inside the air conditioned warehouse, drying and roasting sunflower seeds, and earns $22/hour.

4. Simon and Denise both work as 3rd grade teachers at Riverbend Elementary School. Simon, who has a Master\'s Degree, earns $45,000 a year while Denise, who has only a Bachelor\'s Degree, earns $39,000 a year.

5. Bernice is an avid baseball fan and during a recent trip to watch her favorite team, the California Stars, she is selected to throw out the opening pitch as part of a fan appreciation event. Surprisingly, she throws an amazing 110mph pitch, which she says is easy to do, and is signed to a $15 million contract the next week.

Answers

Answer and Explanation:

1. Compensating differentials: Riley works a less risky job and is therefore paid less than his twin Rowland who drives Chemicals to and fro and is considered to do a more risky make job

2.talent/ability: Bert has a a natural talent and ability

3.Compensating differentials: Rosalie works harder than Henry and so earns more than him

4.Human Capital: Simon is paid more as he is considered to have more knowledge and experience. He is a masters degree while Denise has a bachelor's degree which is considered lower in valuing human capital in an organization.

5.Talent/ability:Bernice has a natural talent and ability

Consider the case of a good with external benefits. If you plant trees in front of your house, the neighborhood is more attractive, and trees create shade, provide oxygen, and a home for birds and squirrels. Thus the benefits to society are greater than the benefits to you. If the planting of trees is a private choice, you will plant too few trees relative to the socially optimal quantity, because the private value to you is less than the social value.
1. Which of the following would not help to correct this problem?
a. Subsidize consumer purchases of trees to plant.
b. Tax homeowners who plant trees.
c. Subsidize nurseries that sell trees for planting.
d. Have the government provide trees to homeowners.
e. All of the above would help to correct the problem.
2. If the government pays for a program to increase the planting of trees, who will win and lose from the program?
Winners will be:_________.
a. producers
b. society as a whole
c. taxpayers
d. consumers
Losers will be:_________.
a. producers
b. society as a whole
c. consumers
d. taxpayers
3. The gains to the winners will be ___________ the losses to the losers.
greater than - equal to - less than

Answers

Answer:

b. Tax homeowners who plant trees.

b. society as a whole

d. taxpayers

greater than

Explanation:

A good has positive externality if the benefits to third parties not involved in production is greater than the cost. an example of an activity that generates positive externality is research and development. Due to the high cost of R & D, they are usually under-produced. Government can encourage the production of activities that generate positive externality by granting subsidies.

Taxing homeowners who plant trees would increase the cost of planting and thus discourage planting

Everyone would benefit from a project that generates positive externality.

If the government pays for a program to increase the planting of trees, the cost would be borne by taxpayers. So, they lose

g If the risk-free rate is 5%, return on the market is 8%, and beta is 0.5, a stock with a return of 7% is likely: Group of answer choices Correctly valued Undervalued None of the options Overvalued

Answers

Answer:

The stock is undervalued. As the required rate of return (6.5%) on market is less than the actual return (7%), the stock is said to be undervalued as it provides an actual return greater than the required rate of return.

Explanation:

To check if a stock is over valued, undervalued or correctly valued, we simply compare the required rate of return on a stock as measured by CAPM with the actual return on the stock.

We can calculate the required rate of return using CAPM equation. The formula for required rate of return under CAPM is,

r = rRf + Beta * (rM - rRF)

Where,

rRf is the risk free raterM is the return on market

r = 0.05 + 0.5 * (0.08 - 0.05)

r = 0.065 or 6.5%

As the required rate of return on market is less than the actual return, the stock is said to be undervalued as it provides an actual return greater than the required rate of return.

Answer:

Undervalued

Explanation:

to determine if the stock is overvalued or undervalued, we have to determine the expected rate of return using the CAPM and compare it with the return of the stock

Expected rate of return = risk free + beta x (market rate of return - risk free rate of return)

5% + 0.5(8% - 5%) = 6.5%

the stock is undervalued because 6.5% is less than 7%

The Marketing Control Statement is a valuable statement for marketers because it only utilizes costs that the marketer can control. True False

Answers

Answer: True

Explanation:

The Marketing Control Statement is quite beneficial to marketers as it avoids fixed costs and shows them the variable and programmed costs both of which can be controlled. This enables them to know what they need to and can change in a way that they can come up with an optimal marketing mix to ensure profitability.

It is also a very uncomplicated statement to prepare which further ingratiates it to marketers who would like to avoid all the jargon of income statements.

The given statement is true.

The following information should be considered:

The Marketing Control Statement should be beneficial for marketers as in this the fixed cost are ignored and the variable & other cost should be controlled. Due to this, the profitability should increased

Therefore we can conclude that The given statement is true.

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"customer's long margin account shows the following: Market Value: $100,000 Debit Balance: $60,000 SMA: $5,000 If the customer wishes to eliminate the restriction in the account, he can do which of the following? I Deposit $10,000 of fully paid marginable securities II Deposit $20,000 of fully paid marginable securities III Deposit $5,000 of cash IV Deposit $10,000 of cash"

Answers

Answer:

I Deposit $10,000 of fully paid marginable securities

II Deposit $20,000 of fully paid marginable securities

Explanation:

Marginable securities refers to stock, bonds and other securities which are capable to be traded on margin. These facilities are marketed by financial institution and brokerage. SMA cannot be used to pay a loan, when SMA is withdrawn it increases the loan balance which in turn increases restrictions.

If an investor put away $3000 at age 23 rather than age 31, how much more money would he or she have at age 63, assuming a 9 percent compound rate of return?

Answers

Answer:

FV= $94,228.26

Explanation:

Giving the following information:

Present Value= $3,000

Interest rate= 9% compounded annually

Number of years= 63 - 23= 40 years

To calculate the future value, we need to use the following formula:

FV= PV*(1+i)^n

FV= 3,000*(1.09^40)

FV= $94,228.26

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