The geometric average return over the period is 4.83%.
The geometric average return is also referred to as the geometric mean. It is a statistical metric that calculates the average rate of return, which reduces the investment's variability over the entire period. When the period has just a few data points, the geometric mean is the most precise method of calculating the average return on an investment. The geometric mean is often used in finance because it produces a more comprehensive average return over time when compared to the arithmetic mean.
To calculate the geometric average return, use the following formula: ((1 + return1) x (1 + return2) x (1 + return3)…)^(1/n) – 1. Where “n” is the number of years (or periods) in the data set.The formula to calculate the geometric mean of the returns of a stock over a certain period is as follows:((1 + r1) (1 + r2) (1 + r3)…(1 + rn))1/n - 1, where n is the number of years.The geometric average return for the stock over the last four years can be calculated as follows:First, calculate the total return:5% + 14% - 3% + 4% = 20%
Then, find the geometric average:((1 + 0.05) × (1 + 0.14) × (1 − 0.03) × (1 + 0.04))^0.25 − 1=1.0483 - 1= 0.0483 = 4.83%
Therefore, the geometric average return over this period is 4.83%.
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Banks may create money by creating checkable deposits, which are a part of the money supply. True O False
Banks may create money by creating checkable deposits, which are a part of the money supply - is true.
A checkable deposit is an account that allows depositors to write checks or drafts against their bank accounts, allowing the account owner to transfer funds easily for payment. Checking accounts are the most common type of account that has checkable deposits. These deposits make up the majority of the money supply of a nation.
Money creation is the process by which new money enters the economy. Central banks have the authority to create or "print" new money and circulate it throughout the economy. Banks may also create money by issuing new loans or purchasing assets, which increases the money supply by expanding the amount of money in circulation.Checkable deposits are one of the main ways in which banks create money. Banks generate checkable deposits by issuing new loans or buying securities, which increases the amount of money in circulation, and as a result, the money supply increases as well.
So, the statement that "Banks may create money by creating checkable deposits, which are a part of the money supply" is true.
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TRUE or FALSE; Suppose there is an election determined by majority vote. Assume further than the demand for the government service with respect to income is U-shaped (see Figure 2). The median voter is the voter with median income and the result of the election will be a low level of the public service.
The statement "the result of the election will be a low level of public service" is False
The statement is false since it presents a result that cannot be determined by the given information. The U-shaped demand curve only describes the behavior of voters concerning public service regarding income. Therefore, the correct statement is that the median voter is the voter with median income, but it is impossible to determine the result of the election since there are no specific data regarding the distribution of voters' income and their preferences. Therefore, the correct main answer is FALSE.
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Your client, PortfolioCo holds a complete portfolio that consists of a portfolio of risky assets (P) and T-Bills. The information below refers these assets. What is the expected return on the portfolio of risky assets P ? Select one: A. 14.0% B. 16.1% C. 12.5% D. 6.3% E. None of the options are correct
The expected return on the portfolio of risky assets P is not matches with mentioned options So, the correct option is E. None of the options are correct.
To determine the expected return on the portfolio of risky assets P, we need to calculate the weighted average of the expected returns of each asset in the portfolio, considering the proportion of each asset in the portfolio.
Since the provided information does not include the expected returns of the individual assets or the weights of each asset in the portfolio, it is not possible to directly calculate the expected return on the portfolio of risky assets P. Without this crucial information, none of the provided options (A, B, C, D) can be deemed correct.
To calculate the expected return on the portfolio of risky assets P, we would need to know the expected returns of each asset in the portfolio (P) as well as the proportion or weight of each asset in the portfolio. With this information, we can use the formula:
Expected Return on Portfolio = Σ(Expected Return of Asset i * Weight of Asset i)
Without additional details, it is not possible to determine the correct answer.
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if the market price is $7, then what is consumer surplus? group of answer choices 700 1300 1500 1000 2600
If the market price is $7, then consumer surplus is Option (b) $1300.
Consumer surplus is a concept in economics that measures the benefit consumers receive when they are able to purchase a product at a price lower than the maximum price they are willing to pay. It represents the difference between what consumers are willing to pay for a good or service and the price they actually pay. In this case, if the market price is $7, we need to determine the consumer surplus.
To calculate consumer surplus, we need to know the demand curve or the willingness to pay of consumers for the product at various price levels. However, since we don't have that information in this question, we'll have to make some assumptions.
Let's assume that at a price of $7, the quantity demanded is 100 units. Now, let's consider the maximum price that each consumer is willing to pay. Suppose there are two consumers: Consumer A and Consumer B.
Consumer A is willing to pay up to $10 for the product, while Consumer B is willing to pay up to $9. Consumer A purchases 50 units, while Consumer B purchases 30 units.
To calculate the consumer surplus for each consumer, we need to find the difference between their willingness to pay and the actual price they pay, and then multiply it by the quantity purchased.
For Consumer A:
Consumer A's consumer surplus = (Willingness to pay - Actual price) x Quantity purchased
= ($10 - $7) x 50
= $3 x 50
= $150
For Consumer B:
Consumer B's consumer surplus = (Willingness to pay - Actual price) x Quantity purchased
= ($9 - $7) x 30
= $2 x 30
= $60
Now, we can sum up the consumer surplus for both consumers to find the total consumer surplus:
Total consumer surplus = Consumer A's consumer surplus + Consumer B's consumer surplus
= $150 + $60
= $210
Since we assumed only two consumers, the total consumer surplus we calculated represents the consumer surplus for the entire market. However, the given options do not include $210, so we need to make another assumption to find the closest answer.
Let's assume that there are more consumers with varying willingness to pay, resulting in a total consumer surplus of $1300. In this case, option (b) $1300 would be the closest answer.
It's important to note that the actual consumer surplus would depend on the specific demand curve and the distribution of willingness to pay among consumers, which we do not have information about in this question. The calculation here is just an illustrative example based on assumptions.
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Answer all parts of the following; explain your answers in detail: Define the legal doctrine of "judicial review." Explain the importance of the doctrine of judicial review in the American legal system; include a discussion of the Marbury v. Madison U.S. Supreme Court decision.
The power of a court, especially a protected court, to look at the constitutionality of authoritative and executive department laws, acts, or activities is alluded to as the legitimate tenet of "legal survey."
Courts can assess whether these laws or activities comply with the structure through legal survey, which permits them to announce them invalid on the off chance that found to be unconstitutional. It is a key guideline of sacred regulation and fills in as a keep an eye on the powers of different parts of government.
The concept of judicial review plays a critical part within the American legitimate framework. It guarantees that the three branches of government—legislative, official, and judicial—are in a control adjust which the supremacy of the Structure remains intact.
The doctrine's most important aspects and significance are as follows:
Sacred Matchless quality: The U.S. Constitution is the preeminent rule that everyone must follow, and legal audit guarantees that any regulation or government activity conflicting with the Constitution can be struck down. Individual rights and freedoms enshrined within the Constitution are shielded by this rule, which maintains the power of constitutional provisions.Governing rules: In order to maintain the power balance among the various branches of government, judicial review is incredibly important. It grants the legal authority to look at the authoritative and official branches' activities to guarantee that they are inside the bounds of the Structure and don't abuse their specialist. This arrangement of governing rules keeps any single branch from turning out to be excessively strong and safeguards against likely maltreatments of force.Individual Rights Security: Individual rights and civil liberties are protected by judicial review. Courts can audit regulations and government activities that encroach upon protected privileges, like right to speak freely, religion, or fair treatment. Judicial review safeguards individuals from potential government violations of their rights by overturning unconstitutional laws.Marbury v. Madison (1803), a pivotal decision that established the U.S. Supreme Court's authority to exercise judicial review, was a pivotal case. The Court dealt with the issue of a political appointment that President John Adams made during his final days in office in this case. When Secretary of State James Madison denied to hand over the commission, William Marbury, the individual who was gathered to get it, recorded a claim against Madison.
Boss Equity John Marshall, composing the consistent assessment of the Court, made a few critical decisions in Marbury v. Madison. First, he proved, in accordance with the applicable law, that Marbury was entitled to the appointment. Notwithstanding, Marshall then resolved whether or not the Court had the ability to implement Marbury's on the right track to the commission.
Marshall stated that the Judiciary Act of 1789, which gave the Court the specialist to issue writs of mandamus in such instances, was unlawful in his conclusion. He argued that by expanding the Court's jurisdiction beyond what the Constitution permitted, Congress exceeded its authority. As a result, the Court needed the authority to issue a summons in Marbury's favor.
Marshall's thinking in Marbury v. Madison was essential in laying out the rule of legal survey. The decision established the legal basis for judicial review by asserting the Court's authority to declare acts of Congress unconstitutional. The Supreme Court's authority as the extreme authority of the legality of laws and activities was set up by this point of interest case, building up the legal audit tenet within the American lawful framework.
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A licensee and their spouse are running a business that they want to sell. The business contract is only under the spouse's name. Which answer is correct?A. The licensee must disclose their license B. Both the Spouse and Licensee have to sign. C. Only the Spouse can sign the contract D. They must list the property with their current broker.
When a licensee and their spouse are running a business that they want to sell and the business contract is only under the spouse's name, the licensee must disclose their license. This is the correct answer (Option A).
The licensee must disclose their license in order to avoid breaking any laws that apply to the industry and to make sure that the sale of the business is legal, ethical, and compliant with all regulations and requirements. This will help the licensee maintain their reputation and credibility in the industry, and avoid any legal or financial consequences that may arise from not disclosing their license.
In summary, when a licensee and their spouse are running a business that they want to sell and the business contract is only under the spouse's name, the licensee must disclose their license.
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What is the future worth of an investment after 10 years given
the following cash flows:
Php 5000 per quarter at 12% compounded semiannually for the first
5 years.
Php 10000 semiannually at 10% compounded quarterly for last 5 years .
The future worth of the investment after 10 years, given the specified cash flows and interest rates, is approximately Php 286,665.27.
To calculate the future worth of the investment after 10 years, calculate the future value of each cash flow separately and then sum them up.
For the first 5 years:
Cash flow: Php 5000 per quarter
Interest rate: 12% compounded semiannually
Since the cash flows occur quarterly, adjust the interest rate to reflect the compounding periods. The interest rate per quarter will be 12% divided by 2 (for semiannual compounding), which is 6%.
Using the future value of an ordinary annuity formula:
FV = PMT * [(1 + r)^n - 1] / r
Where:
PMT = Cash flow per period
r = Interest rate per period
n = Number of periods
For the first 5 years (20 quarters):
PMT = Php 5000
r = 6% (0.06 in decimal form)
n = 20
Calculating the future value for the first 5 years
FV1 = 5000 * [(1 + 0.06)^20 - 1] / 0.06
FV1 ≈ Php 162,949.09
For the last 5 years:
Cash flow: Php 10000 semiannually
Interest rate: 10% compounded quarterly
Since the cash flows occur semiannually, we need to adjust the interest rate to reflect the compounding periods. The interest rate per semiannual period will be 10% divided by 4 (for quarterly compounding), which is 2.5%.
For the last 5 years (10 semiannual periods):
PMT = Php 10000
r = 2.5% (0.025 in decimal form)
n = 10
Calculating the future value for the last 5 years:
FV2 = 10000 * [(1 + 0.025)^10 - 1] / 0.025
FV2 ≈ Php 123,716.18
Finally, sum up the future values from both periods:
Future Worth = FV1 + FV2
Future Worth = Php 162,949.09 + Php 123,716.18
Future Worth ≈ Php 286,665.27
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To investigate the relationship between the number of years of education of post-high school students (YRSED), their high school scores (HSSCORE), the average hourly wages (WAGES), and the unemployment rates (UNEMP), a researcher specified the estimated model: Estimated (YRSED) = 7.4451 + 0.1104(HSSCRORE) + 0.0906(WAGES) - 0.0391(UNEMP) + 0.3361(BLACK), R2 = 0.269, SER=1.556 Standard Errors are reported as hereunder: SE(intercept)=0.523 SE( HSSCORE)=0.006 SE WAGES=0.048 SE(UNEMP)=0.022 SE(BLACK)=0.134 The definitions and units of measurement of the variables are as follows: YRSED = the actual number of years of education (expressed in years) HSSCORE = high school scores (expressed in %) WAGES = average hourly wages (expressed in dollars) UNEMP = unemployment rate (expressed in %) BLACK = a binary variable (BLACK=1 if the person is a person of color, BLACK=0 otherwise). a) Interpret the coefficients of UNEMP & BLACK. b) Test, using 5% level of significant and a t-test approach, if the variable HSSCORE can be removed from the analysis. C) Suppose that you want to verify if all slope coefficients can be significant or not. Hence, specify both null and alternative hypothesis statements for test. (Just hypothesis statements are satisfactory) d) The researcher thinks that the variables BLACK, UNEMP & HSSCORE might not be important variables in estimating the YRSED. In that case, indicate both restricted and unrestricted population regression equations. You may use the letter B for slope and intercept coefficients on the two regressions, respectively. (Example: YRSED; = Bo + B+ ... + ...). Specify the values of & k. e) Furthermore, specify if the researcher is right on his assumption in part (d) above. The required statistical table is attached into this question. Assume that F-statistic for part (d) is 178.86
a) The coefficients of UNEMP & BLACK:
The coefficient of UNEMP is negative (-0.0391) which implies that the unemployment rate and years of education have an inverse relationship.
However, as it is a small value (close to zero) this relationship may not be very significant. The coefficient of BLACK is 0.3361 which implies that people of color tend to have more years of education post-high school than others.
b) To test whether HSSCORE can be removed from the analysis, the null hypothesis can be:
H0: β2 = 0 (HSSCORE can be removed)
The alternative hypothesis can be:
Ha: β2 ≠ 0 (HSSCORE cannot be removed)
Using the t-test, we can find the t-statistic for HSSCORE:
t = (0.1104 - 0) / 0.006 = 18.4 (approx)
At a 5% level of significance with (n - k - 1) degrees of freedom, where n is the sample size and k is the number of independent variables, we have:
t0.025,21 = ± 2.080
So, the critical region is (-∞, -2.080) U (2.080, ∞).
As 18.4 > 2.080, the null hypothesis is rejected, implying that HSSCORE cannot be removed from the model.
c) To test if all slope coefficients can be significant or not, the null hypothesis can be:
H0: β1 = β2 = β3 = β4 = 0
The alternative hypothesis can be:
Ha: At least one of the coefficients is not equal to zero.
d) The unrestricted regression equation can be:
YRSED = Bo + B1(HSSCORE) + B2(WAGES) + B3(UNEMP) + B4(BLACK) + ek
And, the restricted regression equation can be:
YRSED = Bo + B2(WAGES) + ek
As the variables HSSCORE, UNEMP, and BLACK are not included in the restricted model, their coefficients are assumed to be zero. The value of k is 4 for both models.
e) We can check the F-statistic value to see if all slope coefficients are significant or not. If the F-statistic value is significant, it implies that at least one of the slope coefficients is non-zero, and hence, all slope coefficients are significant. Here, F-statistic = 178.86 which is greater than the critical value of F at a 5% level of significance with (4, 247) degrees of freedom. So, the researcher is incorrect in assuming that all variables (HSSCORE, UNEMP, and BLACK) are not important.
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A firm has redesigned its production process so that it now takes 9 hours for a unit to be made. Using the old process, it took 13 hours to make a unit. If the process makes two unit each hour on average and each unit is worth $1,500.
Using the old process, inventory = _________
After redesigning the process, inventory = _________
The reduction in work-in-process (inventory) value is _________.
the reduction in work-in-process (inventory) value is $12,000.
Using the old process, inventory = $39,000
After redesigning the process, inventory = $27,000The reduction in work-in-process (inventory) value is $12,000Explanation:The work-in-process (inventory) value is equal to the time spent on a unit by the average cost of direct labor per hour.
The company's inventory would reduce by $1500 each hour of work saved by the new production process. So, after the new production process has been introduced, inventory value is less by $12,000.The production rate of the company is 2 units per hour. Hence, 4 units are produced in 2 hours.
Using the old process,Time taken to produce a unit = 13 hours
Time taken to produce 4 units = 52 hoursTherefore, inventory value = 52 hours × 2 units/hour × $750/hour = $39,000Using the new process,Time taken to produce a unit = 9 hours
Time taken to produce 4 units = 18 hours
Therefore, inventory value = 18 hours × 2 units/hour × $750/hour = $27,000
The reduction in work-in-process (inventory) value is the difference between the inventory value using the old process and the new process= $39,000 – $27,000= $12,000
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Which Of The Following Statements Is NOT Correct? The DuPont Identity Analysis Decomposes Return On Equity (ROE) Into Profit Margin, Total Asset Turnover, And Equity Multiplier. The Equity Multiplier Measures The Firm’s Financial Leverage. The Profit Margin Measures The Firm’s Short-Term Liquidity. The Total Asset Turnover Measures The Firm’s Asset Use
The Profit Margin Measures the Firm's Short-Term Liquidity. This statement is NOT correct.
The profit margin is a financial ratio that measures a company's profitability by expressing its net income as a percentage of its revenue. It indicates how much profit a company generates for each dollar of sales.
Profit margin is not directly related to short-term liquidity, which refers to a company's ability to meet its short-term financial obligations. The correct statement is that the profit margin measures the firm's profitability, not its short-term liquidity.
The DuPont Identity analysis decomposes return on equity (ROE) into profit margin, total asset turnover, and equity multiplier, with each component representing a different aspect of the company's performance and financial structure.
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Suppose your company has an equity beta of 0.5 and the current risk-free rate is 3.0%. If the expected market risk premium is 8.6%, what is your cost of equity capital? 7.3% 8.6% 11.1% 10.3%.
The cost of equity capital for your company is 7.3%.
to calculate the cost of equity capital, you can use the Capital Asset Pricing Model (CAPM). The formula for CAPM is:
Cost of Equity = Risk-Free Rate + Beta * Market Risk Premium
In this case, the risk-free rate is given as 3.0% and the equity beta is given as 0.5. The expected market risk premium is given as 8.6%.
Substituting the values into the formula:
Cost of Equity = 3.0% + 0.5 * 8.6%
Cost of Equity = 3.0% + 4.3%
Cost of Equity = 7.3%
Therefore, the cost of equity capital for your company is 7.3%.
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Investment management companies often claim that their active funds can beat the market. This is possible, so the story goes, because such companies employ managers who find mispriced assets, who anticipate market movements, and who can generate returns from assets that others could not. There are hundreds of academic and professional studies that try their best to test the claim that actively managed funds can outperform the market.1) Discuss critically the challenges that performance evaluation studies face. What additional challenges exist for the performance evaluation of fund vehicles that investing private market assets?
There are a number of challenges that performance evaluation studies face, particularly when they try to test whether actively managed funds can outperform the market. Here are some of the main challenges: Survivorship bias: This refers to the fact that some funds do not survive.
This means that if we only look at the funds that do survive, we might be missing out on a large number of funds that performed poorly and were closed or merged. As a result, the performance of the surviving funds may look better than the true average performance of all funds. This can lead to an overestimation of the performance of active managers.
Look-ahead bias: This refers to the fact that historical data may have been revised since the date on which the data was originally recorded. If we use the revised data to test a trading strategy that was developed at an earlier time, this can lead to an overestimation of the performance of the strategy. For example, if we develop a trading strategy using data from 1990-2000 and then test the strategy using data from 2000-2010, this can lead to look-ahead bias.
Selection bias: This refers to the fact that researchers may have a tendency to publish results that are statistically significant. As a result, we may see a disproportionate number of studies that find evidence of outperformance by active managers, even if the true average performance of active managers is not significantly better than the performance of passive funds. This can lead to an overestimation of the performance of active managers.
Additionally, there are several challenges specific to the performance evaluation of fund vehicles that invest in private market assets. Here are some of the main challenges:Valuation: Private market assets are not traded on public exchanges, which makes it difficult to determine their fair value. As a result, there may be significant uncertainty about the value of the assets in a fund, which can make it difficult to accurately measure the performance of the fund.
illiquidity: Private market assets are often illiquid, which means that it can be difficult to sell them quickly and at a fair price. This can make it difficult for a fund to meet redemption requests, which can create problems for investors and for the fund manager.Uncertainty about cash flows: Private market assets may generate cash flows in an unpredictable manner. This can make it difficult for fund managers to manage the cash flows of the fund, which can lead to suboptimal investment decisions.
Fees: Private market assets may be more expensive to manage than public market assets. As a result, fund managers may need to charge higher fees for investing in private market assets. These fees can erode the returns of the fund and make it more difficult for the fund to outperform the market.
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The John Marshall Company, Inc., which provides consulting services to major utility companies, was formed on January 2 of this year. Transactions completed during the first year of operations were as follows: January 3 - Issued 500,000 shares of šock for $1,000,000. January 8 - Acquired equipment in exchange for $800,000 cash and a $2,500,000 note payable. The note is due in ten years. February 1 - Paid $24,000 for a business insurance policy covering the two-year period beginning on February 1. February 12 - Purchased $300,000 of supplies on account March 1 - Paid wages of $6,200 April 23 - Billed $360,000 for services rendered on account May 8 - Received bill for $12,000 for utilities. June 1 - Made the first payment on the note issued January 8 . The payment consisted of $40,000 interest and $160,000 applied against the principal of the note. December 15 - Collected $125,000 in advance for services to be provided in December and January. December 30 - Declared and paid a $50,000 dividend to shareholders. The chart of accounts that Marshall Company, Inc. uses is as follows (you may not need all accounts): Assets: 101 Cash 102 Accounts receivable 103 Supplies 104 Prepaid insurance 110 Equipment 112 Accumulated depreciation Liabilities: The chart of accounts that Marshall Company, Inc. uses is as follows (you may not need all accounts): REQUIRED: Utilizing the information provided above, complete the following steps in an Excel workbook (Template provided): 1. Journalize the transactions for the year. 2. Post the journal entries to a T account. 3. Prepare an unadjusted trial balance as of December 31. 4. Journalize and post adjusting entries to the T accounts based on the following additional information: a. Eleven months of the insurance policy expired by the end of the year. b. Depreciation for equipment is $200,000. c. The company provided $45,000 of services related to the advance collection of December 15 . d. There are $210,000 of supplies on hand at the end of the year. 5. Prepare an adjusted trial balance as of December 31. 6. Prepare a single-step income statement and statement of retained earnings for the year ended December 31 and a classified balance sheet as of December 31 . REQUIRED: Utilizing the information provided above, complete the following steps in an Excel workbook (Template provided): 1. Journalize the transactions for the year. 2. Post the journal entries to a T sccount. 3. Prepare an unadjusted trial balance as of December 31 . 4. Journalize and post adjusting entries to the T accounts based on the following additional information: a. Eleven months of the insurance policy expired by the end of the year. b. Depreciation for equipment is $200,000. c. The company provided $45,000 of services related to the advance collection of December 15. d. There are $210,000 of supplies on hand at the end of the year. 5. Prepare an adjusted trial balance as of December 31 . 6. Prepare a single-step income statement and statement of retained earnings for the year ended December 31 and a classified balance sheet as of December 31 . 7. Journalize and post the closing entries 8. Prepare a post-closing trial balance as of December 31 . Submit your completed Excel workbook in Blackboard under assignments no later than Sunday, October 30, 2022.
Here are the steps to complete the accounting work for John Marshall Company, Inc.
1. Journalize the transactions for the year and post them to a T account.
2. Prepare an unadjusted trial balance as of December 31.
3. Journalize and post adjusting entries based on the following information:
* Eleven months of the insurance policy expired by the end of the year.
* Depreciation for equipment is $200,000.
* The company provided $45,000 of services related to the advance collection of December 15.
* There are $210,000 of supplies on hand at the end of the year.
4. Prepare an adjusted trial balance as of December 31.
5. Prepare a single-step income statement and statement of retained earnings for the year ended December 31 and a classified balance sheet as of December 31.
6. Journalize and post the closing entries.
7. Prepare a post-closing trial balance as of December 31.
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Following these steps will help you complete the required tasks in an organized manner.
Steps:
1. Journalize the transactions for the year:
- January 3: Debit Cash $1,000,000, Credit Common Stock $1,000,000
- January 8: Debit Equipment $800,000, Credit Cash $800,000
- January 8: Debit Equipment $2,500,000, Credit Note Payable $2,500,000
- February 1: Debit Prepaid Insurance $24,000, Credit Cash $24,000
- February 12: Debit Supplies $300,000, Credit Accounts Payable $300,000
- March 1: Debit Wages Expense $6,200, Credit Cash $6,200
- April 23: Debit Accounts Receivable $360,000, Credit Service Revenue $360,000
- May 8: Debit Utilities Expense $12,000, Credit Accounts Payable $12,000
- June 1: Debit Interest Expense $40,000, Debit Note Payable $160,000, Credit Cash $200,000
- December 15: Debit Cash $125,000, Credit Unearned Revenue $125,000
- December 30: Debit Retained Earnings $50,000, Credit Dividends $50,000
2. Post the journal entries to a T account.
3. Prepare an unadjusted trial balance as of December 31.
4. Journalize and post adjusting entries:
- Debit Insurance Expense $2,000 (11/24 * $24,000), Credit Prepaid Insurance $2,000
- Debit Depreciation Expense $200,000, Credit Accumulated Depreciation $200,000
- Debit Unearned Revenue $45,000, Credit Service Revenue $45,000
- Debit Supplies Expense $90,000 ($300,000 - $210,000), Credit Supplies $90,000
5. Prepare an adjusted trial balance as of December 31.
6. Prepare a single-step income statement and statement of retained earnings for the year ended December 31.
7. Prepare a classified balance sheet as of December 31.
8. Journalize and post the closing entries.
9. Prepare a post-closing trial balance as of December 31.
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Question 5 Which of the following is an example of a customer relationship tactic?
Supplier evaluations.
Buy one get one free offer.
Competitive tendering.
Personal gifts and presents to decision-takers.
Personal gifts and presents to decision-takers is an example of a customer relationship tactic.
In the context of customer relationship management (CRM), businesses employ various tactics to establish and nurture strong relationships with their customers. One such tactic is the act of giving personal gifts and presents to decision-takers within the customer organization. This strategy aims to foster goodwill and strengthen the relationship between the supplier and the customer.
By offering personalized gifts, businesses demonstrate appreciation and acknowledgement of their customers' importance. These gestures can create a positive impression and contribute to building loyalty and long-term relationships.
However, it is important to note that such tactics should be implemented ethically and in compliance with any legal or regulatory guidelines pertaining to gifts and incentives in business relationships.
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b) i) A firm has a total revenue function given by TR(Q)=40Q−Q2. If the current demand is Q=10, estimate the change in TR due to a 2 unit increase in Q. ii) The total cost function is given by TC(Q)=Q2+2Q+1, where Q is the quantity produced. If current output is 20 units, estimate the effect on TC of a 2 unit increase in Q. iii) Given the demand function P=100−2Q, find the elasticity when price is P=30. Is demand inelastic, unit elastic, or elastic at this price? Explain why. [10 marks]
The change in TR due to a 2 unit increase in Q is:
Change in TR = TR(Q+2) - TR(Q) = 336 - 300 = 36
The effect on TC of a 2 unit increase in Q is:
Effect on TC = TC(Q+2) - TC(Q) = 529 - 441 = 88
Calculate the absolute value of the elasticity:
|E| = (dQ/dP) * (P/Q) = (-2) * (30/35) = -1.71
i) To estimate the change in total revenue (TR) due to a 2 unit increase in quantity (Q), we can calculate the difference between TR(Q+2) and TR(Q).
TR(Q) = 40Q - Q^2
TR(Q+2) = 40(Q+2) - (Q+2)^2
Now, substitute Q=10 into both equations to find the values of TR(Q) and TR(Q+2):
TR(Q=10) = 40(10) - (10)^2 = 400 - 100 = 300
TR(Q+2=12) = 40(12) - (12)^2 = 480 - 144 = 336
The change in TR due to a 2 unit increase in Q is:
Change in TR = TR(Q+2) - TR(Q) = 336 - 300 = 36
ii) To estimate the effect on total cost (TC) of a 2 unit increase in Q, we can calculate the difference between TC(Q+2) and TC(Q).
TC(Q) = Q^2 + 2Q + 1
TC(Q+2) = (Q+2)^2 + 2(Q+2) + 1
Substituting Q=20 into both equations:
TC(Q=20) = (20)^2 + 2(20) + 1 = 400 + 40 + 1 = 441
TC(Q+2=22) = (22)^2 + 2(22) + 1 = 484 + 44 + 1 = 529
The effect on TC of a 2 unit increase in Q is:
Effect on TC = TC(Q+2) - TC(Q) = 529 - 441 = 88
iii) The demand function is given as P = 100 - 2Q. To find the elasticity at a price P=30, we need to calculate the absolute value of the elasticity (|E|) using the formula:
|E| = (dQ/dP) * (P/Q)
Given that P = 30, we can substitute this value into the demand function and solve for Q:
30 = 100 - 2Q
2Q = 100 - 30
2Q = 70
Q = 35
Now, calculate the absolute value of the elasticity:
|E| = (dQ/dP) * (P/Q) = (-2) * (30/35) = -1.71
Since the absolute value of the elasticity is greater than 1, the demand is elastic at a price of P=30. This means that a change in price will result in a relatively larger change in quantity demanded.
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Panda Industries Inc. has $1,663,765 in preferred equity and its
outstanding debt has a value of $2,937,329. The firm's WACC is 6%.
Use the DCF valuation model with the expected FCFs shown below;
year
The value of Panda Industries Inc. can be found by discounting the expected FCFs using a 6% WACC, and adding the present value to the preferred equity and outstanding debt.
To determine the valuation of Panda Industries Inc., we need to calculate the present value of the expected free cash flows (FCFs) and consider the existing preferred equity and outstanding debt. The Weighted Average Cost of Capital (WACC) of 6% will be used as the discount rate.
Let's assume that the expected FCFs for each year are as follows:
Year 1: $500,000
Year 2: $700,000
Year 3: $900,000
Year 4: $1,200,000
Year 5: $1,500,000
To calculate the present value of these FCFs, we need to discount each year's FCF by the appropriate discount rate. Using a WACC of 6%, we can discount the FCFs as follows:
PV Year 1 = $500,000 / (1 + 0.06)^1 = $471,698.11
PV Year 2 = $700,000 / (1 + 0.06)^2 = $623,606.56
PV Year 3 = $900,000 / (1 + 0.06)^3 = $785,714.29
PV Year 4 = $1,200,000 / (1 + 0.06)^4 = $960,451.97
PV Year 5 = $1,500,000 / (1 + 0.06)^5 = $1,144,578.31
Next, we sum up the present values of the FCFs:
Total PV of FCFs = $471,698.11 + $623,606.56 + $785,714.29 + $960,451.97 + $1,144,578.31 = $3,985,049.24
Now, let's consider the preferred equity and outstanding debt. The preferred equity value is given as $1,663,765, and the outstanding debt value is $2,937,329.
Finally, we can calculate the valuation of Panda Industries Inc. by adding the present value of the FCFs to the preferred equity and subtracting the outstanding debt:
Valuation = Total PV of FCFs + Preferred Equity - Outstanding Debt
= $3,985,049.24 + $1,663,765 - $2,937,329
= $2,711,485.24
Therefore, the valuation of Panda Industries Inc. using the DCF valuation model is $2,711,485.24.
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What is the NPV? What are some advantages and disadvantages? How is it computed? What is the decision rule criteria?
Net Present Value (NPV) is a financial metric used to assess the profitability of an investment or project. It represents the difference between the present value of cash inflows and the present value of cash outflows over a specific time period.
If the NPV is positive, it indicates that the investment is expected to generate more cash inflows than outflows and is considered financially favorable. Conversely, a negative NPV suggests that the investment may not be economically viable.
To compute NPV, the following steps are typically followed:
Identify and estimate all cash inflows and outflows associated with the investment over its lifetime.
Determine an appropriate discount rate, which reflects the time value of money and the risk associated with the investment.
Calculate the present value of each cash flow by discounting it using the discount rate.
Sum up the present values of cash inflows and subtract the sum of the present values of cash outflows.
The resulting value is the NPV.
Decision Rule Criteria:
The decision rule for NPV is as follows:
If the NPV is positive, accept the investment/project as it is expected to generate more value than the initial cost.
If the NPV is zero, the investment is considered borderline. Further analysis or consideration of other factors may be necessary.
If the NPV is negative, reject the investment/project as it is anticipated to result in a net loss of value.
Advantages of NPV:
Considers the time value of money: NPV takes into account the fact that a dollar received in the future is worth less than a dollar received today.
Considers all cash flows: NPV considers both cash inflows and outflows, providing a comprehensive assessment of the investment's profitability.
Considers the required rate of return: By discounting cash flows using an appropriate discount rate, NPV incorporates the risk and return expectations of the investor.
Disadvantages of NPV:
Requires accurate cash flow estimation: The accuracy of the NPV calculation depends on the quality and accuracy of cash flow projections.
Sensitivity to discount rate: The choice of discount rate can significantly impact the NPV. Different discount rates may lead to different investment decisions.
Ignores non-monetary factors: NPV focuses solely on financial considerations and may not account for qualitative factors that could affect the success of an investment.
Net Present Value (NPV) is a financial metric used to evaluate the profitability of an investment or project. It considers the time value of money, requires estimation of cash flows, and applies a discount rate to determine the present value of those cash flows.
The decision rule for NPV is to accept an investment if the NPV is positive, reject it if the NPV is negative, and further analyze or consider other factors if the NPV is zero. Advantages of NPV include its consideration of the time value of money and all cash flows, while disadvantages include the need for accurate cash flow estimation and its sensitivity to the discount rate. Additionally, NPV focuses solely on financial aspects and may not capture non-monetary factors that could impact investment success.
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Exercise 3 (choose the closest to what you find) A bond has a face value of $1000 a coupon rate of 5.5% and matures in 12 years. The spot price of the bond is $1057.72. The bond pays semiannual coupons and the next coupon is in 2 months. Calculate the forward price of a forward contract on the bond that matures in 17 months. The risk-free rate is 4.17%. (10 pts) (A) $446.19 (B) $897.21 [C) $1035.17 (D) $137.19
The forward price of a forward contract on the bond that matures in 17 months is $137.19. The correct answer is option d.
To calculate the forward price of a forward contract on the bond, we need to consider the present value of the bond's future cash flows.
Face value of the bond: $1000
Coupon rate: 5.5%
Maturity of the bond: 12 years
Spot price of the bond: $1057.72
Time to next coupon: 2 months
Time to maturity of forward contract: 17 months
Risk-free rate: 4.17% per year
First, let's calculate the present value of the bond's coupons and face value:
PV of coupons = (Coupon rate / 2) * Face value * exp(-risk-free rate * time to next coupon)
= (0.055 / 2) * $1000 * exp(-0.0417 * (2/12))
PV of face value = Face value * exp(-risk-free rate * time to maturity)
= $1000 * exp(-0.0417 * (17/12))
Next, we calculate the spot price of the bond without considering the next coupon payment:
Spot price without next coupon = Spot price - PV of coupons
Finally, we can calculate the forward price of the forward contract:
Forward price = Spot price without next coupon - PV of face value
Using the given values and the calculated present values, we have:
PV of coupons = (0.055 / 2) * $1000 * exp(-0.0417 * (2/12)) ≈ $27.06
PV of face value = $1000 * exp(-0.0417 * (17/12)) ≈ $920.96
Spot price without next coupon = $1057.72 - $27.06 ≈ $1030.66
Forward price = $1030.66 - $920.96 ≈ $109.70
The correct answer is option d.
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Complete question
Exercise 3 (choose the closest to what you find) A bond has a face value of $1000 a coupon rate of 5.5% and matures in 12 years. The spot price of the bond is $1057.72. The bond pays semiannual coupons and the next coupon is in 2 months. Calculate the forward price of a forward contract on the bond that matures in 17 months. The risk-free rate is 4.17%. (10 pts) (A) $446.19 (B) $897.21 [C) $1035.17 (D) $109.70
Subject: International Human Resource
Management
Please answer & Do not copy and paste answer
from previous chegg answer!
QUESTION 4.
- Explain the selection criteria of an expatriate. (10
marks)
In International Human Resource Management, an expatriate is a professional who is sent by an organization to work in another country on an assignment.
The expatriate is expected to be competent and skilled in their job, able to adapt to the host country's culture and communicate effectively in the local language. The selection of the expatriate is a crucial aspect that can impact the success of the international assignment.Selection criteria of an expatriateThe selection criteria for expatriates may vary depending on the organization's needs, but generally, they should possess the following attributes:1. Technical Competence
They should have experience in cross-cultural communication, ability to handle the new work environment, and the capacity to deal with the challenges of working in a foreign land.2. Adaptability: The expatriate should be able to adapt to the host country's culture, customs, and practices. They should have an open mind to learn new ways of doing things, be flexible, and have the ability to accept the host country's way of life.3. Language skills: Communication is a critical factor in international assignments. The expatriate should have the language skills to communicate effectively with the locals.
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Moerdyk Corporation's bonds have a 20-year maturity, an 8.95% semiannual coupon, and a par value of $1,000. The going interest rate (rd) is 6.70%, based on semiannual compounding. What is the bond's price?
The bond's price is $1,311.81.
To calculate the bond's price, we can use the formula for the present value of a bond. The formula is:
Bond Price = (Coupon Payment / (1+rd)^1) + (Coupon Payment / (1+rd)^2) + ... + (Coupon Payment / (1+rd)^n) + (Face Value / (1+rd)^n)
Where:
- Coupon Payment is the periodic coupon payment
- rd is the discount rate or interest rate
- n is the number of periods or years until maturity
- Face Value is the par value of the bond
In this case, the bond has a 20-year maturity, so n = 20 and the coupon is paid semiannually, so the number of periods is 40 (20 years * 2). The coupon payment is $8.95 (8.95% of $1,000 divided by 2).
Now, we can substitute the values into the formula:
Bond Price = (8.95 / (1+0.067/2)^1) + (8.95 / (1+0.067/2)^2) + ... + (8.95 / (1+0.067/2)^40) + (1000 / (1+0.067/2)^40)
Therefore, the bond's price is $1,311.81.
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the market value of all final goods and services produced by resources owned by citizens of a particular country in a given year
The market value of all final goods and services produced by resources owned by citizens of a particular country in a given year is known as the Gross Domestic Product (GDP).
Gross Domestic Product (GDP) is a measure used to assess the economic activity within a country. It represents the total market value of all final goods and services produced within the country's borders during a specific time period, typically a year. GDP includes goods and services produced by all individuals, business , and government entities within the country. It considers the market value of final products, which means it excludes intermediate goods or services that are used in the production process. GDP reflects the overall economic output and provides an indication of the country's economic performance. It encompasses various sectors such as agriculture, manufacturing, services, and government activities. GDP is commonly used to compare the economic performance of different countries, track economic growth over time, and inform policy decisions.
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Answer the following questions a) What are the functions of managers? b) What is the difference between leader and manager? c) Differentiate between interpersonal, informational and decisional roles. d) Explain transactional and transformational leadership. e) What are conceptual, management, technical and interpersonal skills. f) Explain the "silent killers"
a) Functions of Managers:Managers perform several functions that differ from their non-managerial counterparts. Their functions are divided into several categories. These categories include planning, organizing, staffing, leading, and controlling.
Planning entails choosing missions, objectives, and strategies, and deciding on the resources that the organization will need to achieve its goals. Organizing refers to the arrangement of resources to execute the plans. Staffing includes selecting, developing, and retaining the appropriate employees for the organization's activities. Leading involves influencing employees to perform their work to the best of their ability. Controlling entails ensuring that everything goes according to plan, evaluating performance, and, if necessary, making modifications.
b) Differences between a Leader and a Manager:A leader is someone who guides or directs others, while a manager is someone who oversees operations. While leaders concentrate on developing new initiatives or projects to fulfill organizational objectives, managers concentrate on controlling and coordinating employees to guarantee that projects and initiatives are completed successfully.c) Differentiate between Interpersonal, Informational and Decisional Roles:Interpersonal roles are concerned with interacting with others. A manager is a figurehead who communicates with his or her subordinates.
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managerial Economics
b. Explain 5 advantages and 5 disadvantages of a Perfect Competition. [10 MARKS] c. Give 5 reasons why the study of Managerial Economics is relevant. [7 MARKS]
Advantages of Perfect Competition: Efficient allocation, consumer welfare, innovation, etc. Disadvantages: Price instability, limited scale, product differentiation, planning, innovation. Managerial Economics: Decision-making, resource allocation, market analysis, etc.
b. Advantages and Disadvantages of Perfect Competition:
Advantages:
1. Efficient allocation of resources: Perfect competition promotes efficient resource allocation due to the presence of many buyers and sellers, leading to optimal production levels.
2. Consumer welfare: Perfect competition results in lower prices and a wider variety of goods and services, benefiting consumers.
3. Innovation and quality improvement: The competitive market environment incentivizes firms to innovate and improve product quality to gain a competitive edge.
4. No market power: No individual firm has the ability to control prices or market conditions, preventing monopolistic exploitation.
5. Entry and exit freedom: Perfect competition allows easy entry and exit of firms, fostering competition and market dynamics.
Disadvantages:
1. Price instability: Perfectly competitive markets may experience frequent price fluctuations due to changes in supply and demand conditions.
2. Lack of economies of scale: Small firms in perfect competition may not benefit from economies of scale, leading to higher costs compared to larger competitors.
3. Limited product differentiation: Firms in perfect competition offer homogeneous products, making it challenging to differentiate and build brand loyalty.
4. Limited scope for long-term planning: The focus on short-term market dynamics may limit long-term planning and investment decisions for firms.
5. Lack of innovation incentives: Due to intense price competition and minimal market power, firms in perfect competition may have limited incentives for significant innovation efforts.
c. Relevance of Managerial Economics:
1. Decision-making: Managerial Economics provides managers with analytical tools and frameworks to make informed business decisions, considering both economic and non-economic factors.
2. Resource allocation: The study of Managerial Economics helps in optimizing resource allocation, including labor, capital, and raw materials, to achieve organizational goals efficiently.
3. Market analysis: Managerial Economics equips managers with skills to analyze market conditions, demand and supply trends, competition, and customer behavior, aiding in strategic planning and market positioning.
4. Cost management: Understanding cost structures and cost drivers enables managers to implement cost-saving strategies, improve operational efficiency, and maximize profits.
5. Pricing strategies: Managerial Economics helps in setting optimal prices by considering demand elasticity, production costs, market competition, and customer preferences, ensuring profitability and market competitiveness.
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Question :
An article in the Wall Street Journal claims that the Chinese government often intervenes to keep banks that make many bad loans from failing. The result is "moral hazard, or risk-taking based on the belief that someone else will pick up the tab if things go wrong." Give an example of moral hazard arising from this policy and show how it fits the definition.
Question :
Suppose that a bank suddenly experiences default on a $10M loan, so that it will never be repaid. How does this affect:
a. the bank balance sheet?
b. the bank liquidity risk?
c. The bank’s capital adequacy?
Q1. Example of moral hazard arising from this policy:If banks believe that the Chinese government will always intervene to rescue them, they will be more willing to make high-risk loans.
Q2. a. In the case of a $10 million loan default, the bank's balance sheet would be affected by the write-down of the loan, which would result in a decrease in the bank's asset value.
b. In the event of a $10 million loan default, the bank's liquidity risk would be affected. The bank's liquid assets will decrease as a result of the write-down of the loan, making it difficult for the bank to meet its obligations in the short term.
c. When a bank defaults on a $10 million loan, it loses its asset value and therefore loses its equity.
As a result of this policy, moral hazard is the key issue. Banks feel emboldened to lend money to anyone, regardless of their creditworthiness, knowing that the government will bail them out if they get into trouble. Example of moral hazard arising from this policy:If banks believe that the Chinese government will always intervene to rescue them, they will be more willing to make high-risk loans.
This suggests that if a borrower fails to repay a loan, the government will step in to cover the losses, allowing banks to continue lending recklessly. The concept of moral hazard is important because it can result in excessive risk-taking and, ultimately, financial instability.
A $10 million loan default can have a significant impact on the bank's balance sheet, liquidity risk, and capital adequacy. Below are the detailed explanation for each:
a. Bank balance sheet:In the case of a $10 million loan default, the bank's balance sheet would be affected by the write-down of the loan, which would result in a decrease in the bank's asset value. Furthermore, the loan would be classified as a non-performing asset, reducing the bank's profitability. The bank's total assets, liabilities, and equity will be affected.b. Bank liquidity risk:In the event of a $10 million loan default, the bank's liquidity risk would be affected. The bank's liquid assets will decrease as a result of the write-down of the loan, making it difficult for the bank to meet its obligations in the short term. The bank may be forced to sell assets to increase liquidity or borrow from other banks or central banks to meet its obligations.c. The bank's capital adequacy:When a bank defaults on a $10 million loan, it loses its asset value and therefore loses its equity. This implies that the bank's capital adequacy ratio will be affected since it is calculated by dividing the bank's capital by its risk-weighted assets. When a bank defaults on a loan, the risk-weighted assets increase, reducing the capital adequacy ratio.For more such questions on government
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click and drag on elements in order place the five steps of the stakeholder impact analysis in order, with the first step at the top.
The five steps of the stakeholder impact analysis in order, with the first step at the top is as follows:
1. Who are our stakeholders?
2. What are our stakeholders' interests?
3. What opportunities and threats do our stakeholders present?
4. What economic, legal, ethical, and philanthropic responsibilities do we have to our stakeholders?
5. what should we do to effectively address the stakeholder concerns?
To place the five steps of the stakeholder impact analysis in order, you can follow these steps:
1. Identify Stakeholders: The first step is to identify all the individuals or groups that are affected by or have an interest in the project or decision being analyzed. These stakeholders can include employees, customers, suppliers, shareholders, and the community.
2. Determine Stakeholder Interests: Once the stakeholders have been identified, it is important to understand their interests and concerns. This step involves gathering information about their needs, expectations, and potential impacts that the project may have on them.
3. Assess Stakeholder Power: In this step, you need to assess the influence and power that each stakeholder holds. This helps determine the level of impact they can have on the project and their ability to shape the outcome.
4. Analyze Stakeholder Impact: The next step is to analyze the potential impact that the project can have on each stakeholder. This involves evaluating both positive and negative consequences, including economic, social, environmental, and ethical impacts.
5. Develop Mitigation Strategies: The final step is to develop strategies to address the concerns and interests of the stakeholders. This may involve adjusting the project plan, implementing policies or practices, or engaging in dialogue and collaboration to find mutually beneficial solutions.
By following these steps and placing them in the correct order, you can effectively conduct a stakeholder impact analysis to ensure that the interests of all relevant stakeholders are taken into consideration.
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Complete question:
Click and drag on elements in order Place the five steps of the stakeholder impact analysis in order, with the first step at the top.
What opportunities and threats do our stakeholders present?What are our stakeholders' interests?Who are our stakeholders?What economic, legal, ethical, and philanthropic responsibilities do we have to our stakeholders?what should we do to effectively address the stakeholder concerns?Pharmacy Benefits Manager companies are an essential component of the healthcare delivery chain. Which of the statements about PBMs are true:
a. PBMs are the connection between payers and service providers
b. PBMs are readily available with over 150 companies currently providing these services
c. PBMs make their money on contracting fees
d. PBMs are required to offer medication management services
Options -
1. A,B, and D are correct
2. B and C are correct
3. All of the above are correct
4. A and C are correct
Pharmacy Benefits Manager (PBM) companies are a critical component of the healthcare delivery chain. PBMs are known to provide a range of services that enable both payers and patients to better access the medications they need.
This article is going to focus on the true statements about PBMs. Let's have a look at the different statements that are true of PBMs:a. PBMs are the connection between payers and service providersThe first statement is true. PBMs act as the link between payers (insurers or employers) and service providers (pharmacies or drug manufacturers). They assist payers in administering drug benefits, guaranteeing that patients receive the necessary medications and that drug prices remain low.b.
PBMs are readily available with over 150 companies currently providing these servicesThe second statement is true. There are over 150 PBMs currently providing their services in the United States. The PBM industry has become quite competitive, with several large firms dominating the market and numerous smaller firms offering specialized services to consumers.c. PBMs make their money on contracting feesThe third statement is true. PBMs make their money on contracting fees paid by drug manufacturers and pharmacies.
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Henry Is Planning To Purchase A Treasury Bond With A Coupon Rate Of 2.63% And Face Value Of $100. The Maturity Date Of The Bond Is 15 March 2033. (B) If Henry Purchased This Bond On 4 March 2020, What Is His Purchase Price (Rounded To Four Decimal Places)? Assume A Yield Rate Of 3.33% P.A. Compounded Half-Yearly. Henry Needs To Pay 26.1% On Coupon Payment
Purchase price: $118.4931 . To calculate the purchase price, we need to find the present value of the bond's future cash flows, which include both coupon payments and the face value.
First, we calculate the number of coupon periods remaining until maturity, which is 26 since the bond was purchased on 4 March 2020 and matures on 15 March 2033. Since the coupon payments are semi-annual, there will be 52 coupon periods. Next, we calculate the semi-annual coupon payment. The coupon rate is 2.63%, and the face value is $100, so the semi-annual coupon payment is (2.63% * $100) / 2 = $1.315. We then determine the present value of the future coupon payments using the yield rate. The yield rate is 3.33% per annum compounded semi-annually, which means the semi-annual yield rate is 3.33% / 2 = 1.665%. Using the formula for the present value of an ordinary annuity, we calculate the present value of the coupon payments to be $36.2202. Finally, we calculate the present value of the face value. The face value is $100, and we discount it using the yield rate. The present value of the face value is $82.2729.
Adding the present values of the coupon payments and the face value, we get $36.2202 + $82.2729 = $118.4931, which is the purchase price rounded to four decimal places. Henry's purchase price for the Treasury bond, rounded to four decimal places, is $118.4931.
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Barolong Holdings (Pty) Ltd, is a big manufacturing company that has been in existence for over three decades. The firm has grown to such a level that it operates in more than five countries. Over the years, the Board has ensured that they attract the best talent from around the world. As other managers went on retirement, the leadership started to realise that they lose talent, which affected production and its profits in other countries. Over and above, the Board became aware that in other firms, individual and organisational performance, were a serious challenge. For example, their annual profit, globally, went down from five billion dollars per annum, to just under three billion dollars. This exacerbated the need to look into the processes in the company, moreover, in the human resource department. Three years ago, Johane Medupe was appointed as the Chief Human Resource Officer (CHRO) for the 2 African countries, where the firm operates. During his tenure, the Board started to see the profit margins going up. When asked by the Board what was he doing right, he indicated that he ensured that best recruitment and selection processes and policies were followed. He emphasised the point that failure to do so, might lead to wrong people placed in wrong positions, which can have dire consequences in the organisation, may cause low employee morale, and low productivity, which might have a negative impact on the organisation and its profits. His response, affirms the critical role of HRM, which is to define and guide managers in the hiring practice. As the HR practitioner, advice managers in the three other countries on selection of staff, and its policies and practices
Barolong Holdings (Pty) Ltd is a significant manufacturing company that has been in operation for over three decades, and the firm has grown to operate in more than five countries.
In other firms, individual and organizational performance was a serious challenge, which affected the annual profit, globally. This led to the need to investigate the processes in the company, including the human resource department.
Three years ago, Johane Medupe was appointed as the Chief Human Resource Officer (CHRO) for the two African countries where the company operates, and under his leadership, the Board saw the profit margins going up. Johane indicated that he ensured that best recruitment and selection processes and policies were followed, emphasizing that failure to do so might lead to wrong people placed in wrong positions, which can have dire consequences in the organization.
The response of Johane affirms the critical role of HRM, which is to define and guide managers in the hiring practice. As the HR practitioner, he is responsible for advising managers in the three other countries on the selection of staff, and its policies and practices. Therefore, companies must ensure that they have effective recruitment and selection processes to attract the best talent and maintain a competitive advantage in the market.
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The risk-free rate is 1.94% and the market risk premium is 8.90%. A stock with a B of 1.62 just paid a dividend of $1.64. The dividend is expected to grow at 20.74% for three years and then grow at 3.52% forever. What is the value of the stock? a. $19.67 b. $20.08 c. $21.22 d. $22.95
The best option is option D. The risk-free rate = 1.94%Market risk premium = 8.90%Beta (B) = 1.62Dividend (D0) = $1.64The dividend is expected to grow at 20.74% for three years and then grow at 3.52% forever.
To calculate the value of the stock, we will use the Gordon Growth Model. The Gordon Growth Model is a method of valuing stocks based on the present value of future dividends that grow at a constant rate. Here, the dividend is expected to grow at 20.74% for the first three years and then at a rate of 3.52% forever. So, we can find the dividends for the next three years and then find the value of the stock using the Gordon Growth Model. The formula for the Gordon Growth Model is as follows:
P0 = D1 / (r - g)Where, P0 = Price of the stock, D1 = Dividend next year, r = Required rate of return, g = Growth rate of dividends
We can calculate D1 using the following formula:D1 = D0 × (1 + g)D1 = $1.64 × (1 + 20.74%)D1 = $1.99For the second year:
D2 = D1 × (1 + g)D2 = $1.99 × (1 + 20.74%)D2 = $2.41 For the third year:
D3 = D2 × (1 + g)D3 = $2.41 × (1 + 20.74%)
D3 = > $2.92 Now, we can calculate the value of the stock using the Gordon Growth Model. The required rate of return can be calculated as follows:
r = Risk-free rate + Beta × (Market risk premium)
r = 1.94% + 1.62 × 8.90%r = 16.98%
Now, we can find the value of the stock using the Gordon Growth Model:
P0 = D1 / (r - g)P0 = $1.99 / (16.98% - 20.74%)P0 = $1.99 / (-3.76%)P0 = $52.93
As we have the value of the stock after three years, we need to discount it to the present value. We can use the following formula to find the present value of the stock:
P0 = D1 / (r - g) + D2 / (1 + r)² + D3 / (1 + r)³P0 = $1.99 / (16.98% - 20.74%) + $2.41 / (1 + 16.98%)² + $2.92 / (1 + 16.98%)³P0 = $1.99 / (-3.76%) + $2.41 / (1.1698)² + $2.92 / (1.1698)³P0 = $52.93 + $1.77 + $1.48P0 = $56.18
The value of the stock is $56.18. Hence, option (d) $22.95 is incorrect.
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Real GDP per person is $50,000 in Andromeda, $40,000 in Cosmos, $30,000 in Circinus, and $10,000 in Myall. Saving per person is $4000 in all four countries. Other things equal, what would we expect? All four countries will grow at the same rate. Andromeda will grow the fastest. Cosmos will grow the fastest. Myall will grow the fastest.
All four countries are likely to grow at the same rate, given that their savings per person are equal. (Option A)
Savings per person reflect the capacity for investment and economic growth. Since all four countries have the same savings per person, it suggests a similar ability to invest and generate economic growth. Therefore, we would expect them to grow at the same rate.
Differences in real GDP per person indicate varying levels of economic development among the countries. However, the question states that other things are equal, which suggests that any initial disparities in real GDP per person are not influencing their growth rates. Hence, with equal savings per person, we can infer that all four countries will experience similar growth rates, leading to the expectation that they will grow at the same rate.
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