Available Options Are:
A. Become riskier over time, but its intrinsic value will be maximized.
B. Become less risky over time, and this will maximize its intrinsic value.
C. Accept too many low-risk projects and too few high-risk projects.
D. Become more risky and also have an increasing WACC. Its intrinsic value will not be maximized.
E. Continue as before, because there is no reason to expect its risk position or value to change over time as a result of its use of a single cost of capital.
Answer:
Option D. Become more risky and also have an increasing WACC. Its intrinsic value will not be maximized.
Explanation:
The reason is that different projects require different level of funding. If we are not increasing Debt and Equity at the same proportion for funding all the projects then we are actually increasing our WACC which means that the acceptability of the projects will not be appropriate here. The risk profile of all individual projects also matter because we use Ke cost of equity to calculate the WACC, which is calculated using the CAPM formula. And Beta Asset is the risk of the individual project industry which is used in the CAPM formula. All this increases the WACC which shows that the risk profile of the company has grown upwards.
Furthermore, if the WACC is higher then the intrinsic value of the projects can not be maximized and that's the reason why most firms try to have optimal level of capital structure (Percentage of equity and debt that gives lowest WACC).
Hence the option D is correct.
The weighted average cost of capital for a company: Group of answer choices should be used as the required return when analyzing a potential acquisition in an unrelated business. is unaffected by changes in corporate tax rates. is equivalent to the after-tax cost of the firm's liabilities. is the return investors require on the total assets of the firm. remains constant when the debt-equity ratio changes.
Answer:
is the return investors require on the total assets of the firm
Explanation:
The weighted average cost of capital (WACC) is the rate of return in which the company predicted to pay for holding the security in order to finance the assets
The formula to compute the WACC is shown below:
= Weightage of debt × cost of debt × ( 1- tax rate) + (Weightage of preferred stock) × (cost of preferred stock) + (Weightage of common stock) × (cost of common stock)
Hence, fourth option is correct
A woman owns 50 acres of land with 500 feet of frontage on a desirable recreational lake. She wishes to subdivide the parcel into salable lots, but she wants to retain control over the lake frontage while allowing lot owners to have access to the lake. Which of the following types of access rights would provide the greatest protection for a prospective lot purchaser?a. Appurtenant easementb. Easement in grossc. Easement by necessityd. License
Answer:
Appurtenant easement
Explanation:
An appurtenant easement grants the dominant tenement the right to use any adjoining property that transfers with the land through the servient tenement.
While the servient tenement provides the easement . the dominant tenement benefits the easement
In the scenario given , the lots are dominant tenement being the beneficiary of the right to use the land while the lake frontage is the servient tenement as it provides the easement for the lots
Mika has borrowed $5,000 from her cousin Jun and not repaid it. Now, Mika is selling her house to Jun’s nephew, Cheong. As Mika writes up the contract, Jun tells her that if she doesn’t sell the house at a steeply discounted price, Jun will take the matter of the $5,000 to court. What is true about this situation?
Answer:
Jun's pressure and influence has invalidated Mika's consent.
Explanation:
By threatening Mika with prosecution if she doesn't set a discount for the sale of her house on the grounds of her debt to her, she has influenced Jun's consent or rather coerced it and therefore Mika's consent is invalidated in the agreement. Consent is free under law if contract and should be given under undue influence, duress or any other vitiating factor that will render the contract null and void such as the example above
A small publishing company is planning to publish a new book. The production costs will include one-time fixed costs (such as editing) and variable costs (such as printing). The one-time fixed costs will total 49982. The variable costs will be $8.50 per book. The publisher will sell the finished product to bookstores at a price of 25.25 per book. How many books must the publisher produce and sell so that the production costs will equal the money from sales
Answer:
Break-even point in units= 2,984 units
Explanation:
Giving the following information:
The one-time fixed costs will total 49982. The variable costs will be $8.50 per book. The publisher will sell the finished product to bookstores for 25.25 per book
To calculate the break-even point in units, we need to use the following formula:
Break-even point in units= fixed costs/ contribution margin per unit
Break-even point in units= 49,982/ (25.25 - 8.5)
Break-even point in units= 2,984 units
wants to use the capital retention approach to determine how much life insurance to purchase. Robert would like to provide $35,000 per year to his family, forever, if he dies. The assets he owns today will provide $25,000 in annual income without the liquidation of these assets. If life insurance proceeds can be invested to earn a 5 percent annual return, how much life insurance should Robert purchase (if any) to fund the additional income needed to meet his $35,000 annual income goal
Answer: $200,000
Explanation:
Robert's wants to provide $35,000 per year to his family after he dies
Amount which will be catered for by the asset he owns today = $25,000
Life insurance earns 5% annual return
The amount of life insurance which should be purchased ;
Amount required from insurance proceed:
$35, 000 - $25000 = $10000
If insurance earns 5% per annum;
Let Amount of life insurance bought = y
y * 5% = required amount from insurance
y * 0.05 = 10,000
0.05y = 10,000
y = 10000 ÷ 0.05
y = $200,000
The Housing Financial Discrimination Act (Holden Act) prohibits all financial institutions from discriminating in real estate loan approvals based on the geographic location, the neighborhood, or any other characteristic of the property, known as:
Answer:
Redlining
Explanation:
Redlining stems from discrimination that consists denial of services, maybe financial based on the group one may fall under such as race, ethnicity or location. The Holden act(1977) is a real estate act of California meant to protect individuals from discriminations such as ones that involve denial of mortgage loan on the basis of something other than the credit worthiness of the individual . These discriminations could take the form of mortgage loan and, insurance loan denials or other financial services based on creditworthiness history of the group the person may fall under and not necessarily the individual's qualifications on his own
Lewis works in a marketing firm and is assigned a very energetic team however lately has not experienced much growth in his career what can he do to boost his career growth? A. always ask for more resources during difficult times. B. ask for a different team to work with. C. offer creative solutions to problems during team discussions. D. post derogatory messages about the company on social media.
Answer:
C
Explanation:
The correct option would be to be offering creative solutions to problems during team discussions.
Offering creative solutions to problems will raise the general performance of the marketing team which will eventually rub off on the career of Lewis himself. The higher the performance of the marketing team, the more growth the career of Lewis would experience.
Asking for more resources or different teams to work with might not solve any problem and worse still, might not be sustainable. Posting derogatory messages about the company on social media is definitely a good way to go down career-wise.
Correct option: C.
The controller compares the bank deposit to the journal entry for cash receipts to ensure that the bank deposit matches the accounting records for the _______ account.
Answer:
Cash account
Explanation:
The controller compares the bank deposit to the journal entry for cash receipts to ensure that the bank deposit matches the accounting records for the Cash account.
The comparisms of the bank deposit to the journal by the controller who is the organization's lead accountant
in banking or financial institution is necessary so that accounting record are in order, by making sure that bank deposits are placed into a deposit account, so that it can matches accounting record for cash account. It should be noted that cash account are controlled by Federal Reserve's Regulation.
3. What does the segment suggest to guard against employee misuse of workplace technology? *
Answer:
Economics
Explanation:
Sue, a secretary goes to the storeroom to get a box of paper for her department. This is a task she's performed without problem hundreds of times. This time however, she slips and hurts her back lifting the box of paper. She requires treatment and cannot sit for long periods of time so she cannot do her job. A. Sue can sue her employer in court for her injuries.B. Sue is entitled to Workers' Compensation even though her employer was not negligent.C. Sue is entitled to Workers' Compensation only if she can show that her employer was negligent.D. Sue is not entitled to anything because she assumed the risk.
Answer:
B. Sue is entitled to Workers' Compensation even though her employer was not negligent.
Explanation:
Sue is performing her normal duties that is required by her being a secretary when she was injured. So the employer cannot be said to be negligent in allowing her carry paper for her unit.
She will not be able to sue for employer for her injuries.
However when an employee is injured they are entitled to Worker's compensation and paid time off work.
This is given to employees even when the employer is not negligent.
Sue can get the Worker's compensation for her back treatment.
The investment approach of one of T. Rowe Price's mutual funds is: "Reflecting a value approach to investing, the fund will seek the stocks of companies whose current stock prices do not appear to adequately reflect their underlying value as measured by assets, earnings, cash flow, or business franchises." This fund is a(n):
Answer:
Active fund
Explanation:
Active funds refer to the fund in which the expertise and a lot of research are required with respect to whether the investment should be hold or not. It could be changed in terms of performance, and the market conditions
Therefore according to the given situation, since the current stock price do not display the underlying value with respect to the assets, earnings, cash flow, etc
So this represents the active fund
Shannon and Rene are sisters who enter into a contract to buy an income property. The sisters get into a dispute, and Shannon wants out of the deal. However, their uncle Jerry wants to replace Shannon on the contract. Shannon agrees to the substitution so they go ahead and do it. This is an example of ________.
Answer:
Novation.
Explanation:
In this scenario, Shannon and Rene are sisters who enter into a contract to buy an income property. The sisters get into a dispute, and Shannon wants out of the deal. However, their uncle Jerry wants to replace Shannon on the contract. Shannon agrees to the substitution so they go ahead and do it. This is an example of novation.
Novation can be defined as the process or an act of legally replacing a party in a contract with another, adding an obligation to engage or replacing a contractual obligation to perform with another based on the consent of all involved parties.
The condition where Shannon wishes to get out of the deal and Jerry is replacing Shannon to a contract with Rene, such a contract is referred to as a contract by novation.
A novation contract is dependent on the willingness of both the parties for such replacement as a matter that only the person will replace another and the conditions of the contract do not change.
A contract by novation refers to replacement of undertaking the liabilities and benefits of an already entered contract by one or more person with respect to contract being valid.An illegal contract created without the knowledge of such person who replaces the concerned person for the benefits and liabilities will constitute as a contract viod ab initioThe person who replaces the concerned person will have the sole responsibility of the conditions arising out of entering such contract and hence there will be a direct and unlimited liability.Hence, the correct statement will be that Jerry will be responsible for the benefits and liabilities arising out of such contract which will be shared by Rene as it is a contract by novation.
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"A customer places an order to buy 100 shares of ABC at the market. The broker enters the order and receives a report of execution shortly thereafter. Ten minutes later, the customer telephones, and states that he placed the order in error and wishes to cancel the order. The appropriate procedure is to:"
Answer:
Explanation:
In this situation , the order has been placed and executed . Cancelling the order is impossible . The execution of an order is the completion of a buy or sell order for a security ,hence it is irrevocable and biding on both the seller and the buyer and none of the two parties can cancel it at such time.
The best and appropriate procedure to handle the situation is to explain the procedures and guiding rules in buying stock to the customer and make him to realize that the order has been executed and biding on them.
This client has just been informed that he has been promoted and will be earning $190,000 per year instead of $140,000 per year. The customer intends to use this extra income to fund his 13-year old child's college education. Based on the customer's existing asset mix, the best recommendation would be for the customer to invest the extra $50,000 per year into a(n):
Complete question:
Customer Name: John Doe
Age: 41
Marital Status: Married
Dependents: 1 Child, Age 13
Occupation: Engineer
Household Income: $140,000
Net Worth: $240,000 (excluding residence)
Own Home: Yes
Investment Objectives: Total Return / Tax Advantaged
Investment Experience: 12 years
Current Portfolio Composition: 8% Common Stocks
62% Corporate Bonds
30% Money Market Fund
This client has just been informed that he has been promoted and will be earning $190,000 per year instead of $140,000 per year. The customer intends to use this extra income to fund his 13-year old child's college education. Based on the customer's existing asset mix, the best recommendation would be for the customer to invest the extra $50,000 per year into a(n):
A. money market fund
B. income fund
C. growth fund
D. inflation protected fund
Answer:
C.) Growth fund
Explanation: With the help of a growth fund which the client may be able to achieve his aim, the growth fund is mainly fo used on multiplication and expansion of investment which aid the rapid increase in invested capital. With a growth fund, rather than being paid dividends on investment, they are added to the capital and reinvested which will aid the capital outlay of the investor within the specified period.
Also, previous investment in equities is significantly low at 8%, so investing the pay rise in a growth fund is a very good idea.
roker Bill takes his broker course and passes it. He applies and receives his license on time. He pays all the appropriate fees and he begins his work. (He does not have a four-year degree in real estate.) He is not sure which course or courses he must take to renew his license the first time. What must Broker Bill do?
Answer: Broker Bill must complete the two 30 hour courses which will be equal to 60 hours post license course
Explanation:
From the question, we are informed that Bill takes his broker course and passes it and that he applies and receives his license on time and then pays all the appropriate fees and he begins his work even though he does not have a four-year degree in real estate.
We are further told that he is not sure which course or courses he must take to renew his license the first time. Broker Bill must complete the two 30 hour courses which will be equal to 60 hours post license course
Monty Boyd, an account manager, travels frequently on West Coast Airlines. Monty earns points for every mile he flies, and he will soon have enough points to receive a free airline ticket. West Coast Airlines is attempting to build a strong customer relationship with Monty through a ________.
Answer:
frequency marketing program
Explanation:
A frequency marketing program is a strategy that companies use to increase loyalty, maintain their customers in the long term and get them to keep buying the products or services by generating connections giving them information that is adjusted to their specific needs. According to this, the answer is that West Coast Airlines is attempting to build a strong customer relationship with Monty through a frequency marketing program because this program tries to generate a long term relationship with the customers so they keep using the service as in this case where the customer gets points by using the service that can be exhanged for rewards.
ADAP Advisers is offered a large block of ACME stock (a NYSE-listed issue) by an institutional investor at a 20% discount to the current market price, if ADAP Advisers is willing to buy the block that day. Which statement is TRUE if ADAP purchases the block for its own account rather than for its customers
Options :
A. This action is prohibited without exception, since ADAP Advisers is benefiting at the expense of its customers
B. This action is permitted if ADAP Advisers rebates any profit that it earns to its customers when it sells the block
C. This action is permitted if the purchased stock is not a suitable investment for ADAP's customers
D. This action is permitted if the block is purchased in the Third Market during the hours that the NYSE is closed
Answer: C.) This action is permitted if the purchased stock is not a suitable investment for ADAP's customers
Explanation: ADAP being a professional in the aspect of advisory investment, have a legal and ethical responsibility or obligation called fiduciary duties to their clients, both buyers and sellers. Therefore it is always very important to keep this at the forefront of their dealings in other to avoid soiling their reputation and integrity. Therefore, even though the stock offered to ADAP advisers is at substantial discount, ADAP advisers must ensure that the stock is a suitable investment for it's customers before offering it to them.
The fact that ADAP purchased the stick on it's own account may reasonably infer that the stick is not a suitable investment for it's customers.
The Federal Reserve Board foresees the probability of an overheated economy and the resumption of double-digit inflation. Therefore, the FRB takes actions to slow down the economy, including increasing the discount rate. Which of the following are likely effects of these moves?i An increase in the prime rate.ii An increase in bond yields and an accompanying decrease in bond prices.iii A slowdown in corporate growth.iv A decrease in corporate earnings.A) III and IV.B) I, II, III and IV.C) I and II.D) I, III and IV.
Answer: B. I, II, III and IV
Explanation:
From the question, we are informed that The Federal Reserve Board foresees the probability of an overheated economy and the resumption of double-digit inflation and that the FRB takes actions to slow down the economy, including increasing the discount rate.
The effect of this is that there will be a rise in prime rate, a rise in the bond yields and an accompanying decrease in bond prices, a slowdown in corporate growth and also reduction in corporate earnings. Therefore, option B is the right answer.
Blue Nile is an online retailer of diamonds that has used responsive transportation to ship diamonds to customers in the United States, Canada, and several countries in Europe and Asia. Which is the mode of transportation used with this strategy
Answer:
Air transportation.
Explanation:
Responsive transportation is a form of shared transportation system where regular public transit or a personalized taxi that are frequent on a particular route are used to enhance a speedy and economical delivery of items and passengers en - route different destinations but in the same direction.
Looking at the three major modes of transportation which are road , air and sea, the one that suits this scenario is the Air system.
Being an international route , the road system does not fit in , and the ship on the sea is not a good option for responsive transportation considering its speed.
Father Christmas is a retail store that sells a unique Santa made from fur, wool, and tapestry. Of 150 customers wish to buy a Santa from this store, and it sells 120 before running out of stock, what is its service level
Answer:
80%
Explanation:
Calculation for the service level
Using this formula
Service level=Sales/Numbers of customers
Let plug in the formula
Service level=120/150
Service level=0.8*100
Service level=80%
Therefore the service level will be 80%
In an inert organizational culture, poor working relationships frequently develop between the organization and its employees. the organization tries to avoid layoffs. the organization emphasizes long-term employment. employees regularly receive rewards for their performance. values and norms help the organization build momentum.
Answer:
The correct answer is: the organization emphasizes long-term employment.
Explanation:
An inert organizational culture is one that does not seek to adapt to new work processes and trends whose objective is to innovate and facilitate work and processes.
They are usually organizations whose culture is focused on more inflexible and rigid internal policies, whose focus is on the establishment of processes and does not focus on the relationships and integration of workers.
This type of organization focuses on long-term employment, which can culminate in the lack of innovation in personnel, ideas, processes and the improvement of total quality.
In an inert organizational culture, poor working relationships frequently develop between the organization and its employees the organization emphasizes long-term employment. Thus, option B is correct.
An organizational culture that is inert does not attempt to change in response to emerging trends and work processes with the aim of innovating and streamlining work and procedures.
They are often businesses whose internal rules are more strict and inflexible, whose emphasis is on establishing procedures rather than on fostering connections and worker integration.
Long-term employment is the main focus of this kind of organization, which can lead to a lack of innovation in staff, concepts, procedures, and overall quality.
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Mortgage loan originator Carol is in a hurry to leave on her vacation, and she leaves a customer's file that contains his Social Security number and bank account numbers on her desk. Carol's carelessness is violating what federal law
Answer: Fair and Accurate Credit Transaction Act
Explanation:
From the question, we are informed that Mortgage loan originator Carol is in a hurry to leave on her vacation, and she leaves a customer's file that contains his Social Security number and bank account numbers on her desk.
Carol is violating the Fair and Accurate Credit Transaction Act. The Act was put in place to detect and also hinder Identity theft.
Phillippe invested $1,000 ten years ago and expected to have $1,800 today. He has not added or withdrawn any money from this account since his initial investment. All interest was reinvested in the account. As it turns out, he only has $1,680 in his account today. Which one of the following must be true?a) He earned simple interest rather than compound interest.b) He did not earn any interest on interest as he expected.c) He ignored the Rule of 72 which caused his account to decrease in value.d) He earned a lower interest rate than he expected.e) The future value interest factor turned out to be higher than he expected.
Answer:
d) He earned a lower interest rate than he expected
Explanation:
Data provided in the question
Invested amount ten years ago = $1,000
Expected amount = $1,800
Today amount = $1,680
Based on the above information,
Since the bond is based on the floating rate not the fixed rate that results in the value of the investment to $1,800
And, the today amount is $1,680 i.e. less than the expected amount so the internet rate should be less as compared with the expected rate
hence, correct option is d.
Tariffs Group of answer choices may be imposed either to raise revenue (revenue tariffs) or to shield domestic producers from foreign competition (protective tariffs). are per-unit subsidies designed to promote exports. are excise taxes on goods exported abroad. are also called import quotas.
Answer:
imposed either to raise revenue (revenue tariffs) or to shield domestic producers from foreign competition (protective tariffs).
Explanation:
A tariff is a compulsory sum levied on the importation of goods. the purpose of tariffs is either to raise revenue (revenue tariffs) or to shield domestic producers from foreign competition (protective tariffs). by imposing tariffs, imported goods become more expensive. this discourages importation and encourages individuals to patronise locally produced goods.
A company is considering replacing an old machine, which has a market value of $75,000 and a tax basis of $50,000. The new machine would cost $145,000 and would require an additional $12,000 in working capital for spare parts. If the company’s tax rate is 34%, what would be the initial cash outlay for this replacement project?
Answer:
$90,500
Explanation:
The computation of initial cash outlay is shown below:-
initial cash outlay = New machine cost + Increase in working capital - After tax salvage value
= $145,000 + $12,000 - (($75,000 - ($75,000 - $50,000) × 0.34
= $145,000 + $12,000 - $66,500
= $90,500
Therefore for computing the initial cash outlay we simply applied the above formula.
The marketing manager from a heavy-equipment manufacturer in Dallas,Texas was attending an international trade show in Japan.There were many prospective customers from different countries who seemed interested in the firm's product.However,they had difficulty following the manager's explanations of product features due to his heavy Texas drawl.In this case,the accent would be considered:__________.
A) an encoding error
B) a decoding error
C) culture shock
D) noise
E) distortion
Answer:
D) noise
Explanation:
Since it is mentioned in the question that there were many possible customers who belong from different countries are seemed interested in the firm product but at the time when the manager explained the features of the product, there was difficulty due to heavy Texas drawl.
So this situation represents the noise and hence the same is to be considered
If a manager believes there are too many pay levels and would like to reduce the number of pay levels from 30 to 20 by combining multiple pay levels, it will engage in ______.
Answer: Broadbanding
Explanation:
Broadbanding is a strategy employed in Human Resources when it is believed that there are too many pay levels. Broadbanding will change this as it involves the banding together of various smaller levels into Broad level so that the pay levels are less in number but wider in range.
Broadbanding gives a business the opportunity to become flatter in hierarchy thereby allowing for pay increases without having to promote a person as they will still be in the same band but get more salary.
Your customer purchases FYZ 4% convertible preferred stock at $60 per share. The conversion price is $10. With the common stock now trading 1 point below parity, you know that the common shares of FYZ are trading at
Answer:
$9
Explanation:
Calculation for how much the common shares of FYZ are trading
First step is to find the conversion ratio
Using this formula
Conversion ratio =Market price of the convertible+Conversion price)/Conversion price
Let plug in the formula
Conversion ratio=$70/$10
Conversion ratio=7
Second step is to calculate for the Parity price of the common stock
Using this formula
Parity price=Market price of the convertible / conversion ratio
Let plug in the formula
Parity price=$70/7
Parity price=$10
Last step is to calculate how much the common shares of FYZ are trading
Using this formula
Common shares =Parity price-Common stock trading point
Let plug in the formula
Common shares =$10-1
Common shares=$9
Therefore the common shares of FYZ are trading at $9
"Let's assume that the government decides to regulate a natural monopoly by forcing them to produce at a point where the natural monopoly's demand curve intersects average cost. In this case, the price will __________ and the quantity will ________ when compared to the natural monopoly if it were allowed to operate unregulated."
Answer: fall; rise
Explanation:
A natural monopoly is a form of monopoly that has a high cost, huge capital base and also a strong economies of scale.
If the government decides to regulate a natural monopoly by forcing them to produce at a point where the natural monopoly's demand curve intersects average cost.
This will lead to a fall in price and there will be a rise in quantity when compared to the natural monopoly if it were allowed to operate unregulated."
A federal bank examiner came to a bank in Jacksonville. He audited the books and he checked out the staff and the office facilities. He checked the public rooms and the lunch room. Everything was thoroughly examined. Later, he charged the branch manager with a violation of the Federal Fair Housing Act because he did not see:
Answer:
Eminent domain for the public good.
Explanation:
He charged the branch manager because he didn't see eminent domain for public use.
In eminent domain the government, the government the government has the power to take private property for public use.
The bank is a public place and as such are required to have a public domain that is members of the public or for civic use. Such a party is likely going to be for public use or it could be delegated to third parties.
