To find the breakeven point in units, we need to determine the number of units the tire manufacturer needs to sell to cover its fixed costs.
Breakeven Point in Units: Fixed costs = Total sales revenue - Total variable costs Let's denote the breakeven point in units as S. $150,000 = $480,000 - ($25 * S) Simplifying the equation: $25S = $480,000 - $150,000 $25S = $330,000 S = $330,000 / $25 S = 13,200 units Therefore, the breakeven point in units is 13,200 units. To find the breakeven point in dollars, we can multiply the breakeven point in units by the price per unit. Breakeven Point in Dollars: Breakeven point ($) = Breakeven point (units) * Price per unit Breakeven point ($) = 13,200 * $40 Breakeven point ($) = $528,000 Therefore, the breakeven point in dollars is $528,000.
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Problem 10.25 Part 1 of 2 Peter Rourke, a loan processor at Wentworth Bank, has been timed performing four work elements, with the results shown in the following table. 85% 80% 85% 1 0.4 0.6 0.5 1.5 > HW Score: 0%, 0 of 6 points O Points: 0 of 1 0.5 0.7 0.4 1.9 Observation (minutes per cycle) 2 3 4 0.7 0.6 0.7 2.0 0.4 0.6 0.4 1.8 Clear all D The allowances for tasks such as this are personal, 8%; fatigue, 8%; and delay, 2%. a) The normal time for the complete operation = 3.1 minutes (round your response to two decimal places).
The normal time for the entire operation = 2.14 minutes.
Peter Rourke, a loan processor at Wentworth Bank, has been timed performing four work elements. The results are shown in the following table: Observation (minutes per cycle) Element Time(minutes) Rating 1 0.4 85% 2 0.6 80% 3 0.5 85% 4 0.7 80%Allowances for tasks are personal (8%), fatigue (8%), and delay (2%).The normal time for the entire operation = is 3.1 minutes (round your response to two decimal places).Part 1: Calculate the total observed time. To calculate the total observed time, multiply the observed time by the rating for each element: Element Time(minutes) Rating Observed time(minutes) 1 0.4 85% 0.34 2 0.6 80% 0.48 3 0.5 85% 0.43 4 0.7 80% 0.56 Total observed time = 1.81 minutes part 2: Calculate the normal time. The sum of the allowances is 18%. To get the adjusted time, multiply the total observed time by 1.18:Adjusted time = Total observed time × (1 + allowances%) = 1.81 × 1.18 = 2.1358 minutes normal time = Adjusted time × Performance rating = 2.1358 × 100% = 2.14 minutes (rounded to two decimal places).
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• A). In our section on the political economy, we talked about the optimal government provision of environmental quality in the public sector. Draw the model for this optimal government service. (15pts)
⚫ B). Why is that the market environment that this model illustrates is impossible in reality? (15pts)
A) The model for this optimal government service is marginal social cost (MSC).
B) The market environment that this model illustrates is impossible in reality because of economic incentives.
A)The optimal government provision of environmental quality in the public sector can be illustrated through a model that takes into account the marginal social cost (MSC) and marginal social benefit (MSB) of pollution. The MSC curve represents the cost to society of each additional unit of pollution, while the MSB curve represents the benefit to society of each additional unit of environmental quality.
The government can achieve this by imposing a tax on polluters equal to the MSC at the socially optimal level of pollution. This tax would incentivize polluters to reduce their emissions until they reach the socially optimal level.
The model can be illustrated graphically by plotting the MSC and MSB curves on a graph with pollution levels on the x-axis and cost/benefit on the y-axis. The socially optimal level of pollution is where these two curves intersect.
B) The market environment that this model illustrates is impossible in reality due to several reasons. Firstly, it assumes that all polluters are rational actors who respond to economic incentives in a predictable manner. In reality, some polluters may not be aware of or may not care about the environmental impact of their actions, making it difficult for them to respond to economic incentives.
Secondly, it assumes that there are no external factors that affect either the MSC or MSB curves. In reality, there may be factors such as technological advancements or natural disasters that affect these curves and make it difficult for the government to accurately determine the socially optimal level of pollution.
Lastly, it assumes that there is perfect information available to both polluters and the government. In reality, information about environmental impacts and economic incentives may not be readily available or easily accessible to all parties involved.
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The stock market tends to move up when inflation goes up.
⊚ true ⊚ false
"The stock market tends to move up when inflation goes up" is FALSE. A share market trend is based on the concept that the past movements are windows to the future trends.
There are three main types of share market trends: short-term, intermediate-term and long-term. You can also classify trends as uptrend, downtrend or sideways trend. Inflation and stock market movements are two different aspects and they are not directly proportional to each other.
When the stock market is going up, inflation may or may not be high. Similarly, when inflation is high, the stock market may or may not be going up. The statement "The stock market tends to move up when inflation goes up" is false.
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1. How do we measure riskiness of an asset?
2. What is unsystematic risk and systematic risk? Give two examples of each one of them.
3. What is a beta? How is different from standard deviation of returns?
4. What effect will diversifying your portfolio have on your returns?
1. Measuring Riskiness of an AssetInvestors use different measures to determine the riskiness of an asset. Standard deviation and beta are two common measures used to gauge the risk associated with an asset. Standard deviation measures the volatility of returns from a security or portfolio. On the other hand, Beta measures the systematic risk of an asset or portfolio. The higher the standard deviation, the higher the risk associated with the investment.
2. Systematic Risk and Unsystematic Risk Systematic risk refers to the overall market risk that is beyond an individual's control, for example, inflation, recession, war, or changes in interest rates. In contrast, unsystematic risk refers to a specific company or industry risk and is controllable by investors. Two examples of systematic risks are inflation and war. Examples of unsystematic risks include labor strikes, poor management, and production problems.
3. Beta and Standard Deviation of ReturnsBeta is a measure of the relationship between the price movement of a stock and the movement of the overall market. It compares the risk of an asset or a portfolio to the overall market. The beta of the market is always 1.0.
The higher the beta, the higher the risk of the asset or portfolio. In contrast, the standard deviation is a measure of volatility or risk that provides information on how much an investment's returns differ from the mean return. Standard deviation measures the total risk of an investment, whereas beta measures systematic risk.
4. Effect of Diversifying Portfolio on Returns Diversification of a portfolio refers to the act of investing in different types of assets to reduce risks associated with any single asset. Diversification can help to reduce risk, including systematic and unsystematic risks.
By spreading investments across various asset classes, an investor can reduce their exposure to a particular type of risk. By diversifying your portfolio, you can minimize the impact of poor returns from a single investment and boost returns from other assets, thus reducing the overall risk of your portfolio.
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The Buffalo News headline read "Start up by UB student sold for
$250 million to major tech firm". But, a deeper dive into the story
revealed that these benefits would be realized over 5 years afte
Headline: "UB student's start-up sold for $250 million to major tech firm, benefits to be realized over 5 years."
The headline states that a start-up founded by a University at Buffalo (UB) student has been acquired by a major tech firm for $250 million. However, upon reading the entire story, it is revealed that the benefits from the acquisition will be realized gradually over a period of five years.
In other words, while the initial transaction involves a significant financial sum, the full impact of the acquisition and its associated benefits will take place over the course of five years. This suggests that the financial gains and other positive outcomes resulting from the acquisition will be distributed and realized gradually, rather than all at once.
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Imagine that data collected in Ireland reveals that a 10% increase in income leads to the following changes: *A 21% increase in the quantity demanded of gourmet coffee "A 6% decrease in the quantity demanded of sliced bread A 9% increase in the quantity demanded of wine The income elasticity of demand for wine is . (Be careful to keep track of the direction of change. Like the cross price elasticity of demand, the sign of the income elasticity of demand can be positive or negative, and important information is conferred by the sign.) According to the income elasticity of demand, gourmet coffee is Which of the following three goods is most likely to be classified as a luxury good? O Sliced bread Gourmet coffee Wine good and sliced bread, 4 good.
Previous question
The income elasticity of demand for wine is +1. Gourmet coffee is more likely to be classified as a luxury good. A 21% increase in the quantity demanded of gourmet coffee with a 10% increase in income indicates that gourmet coffee is a luxury good.
"A 6% decrease in the quantity demanded of sliced bread A 9% increase in the quantity demanded of wine
Income elasticity of demand for wine :The income elasticity of demand for wine is +1. The positive sign indicates that the quantity demanded of wine increased with an increase in income. The numerical value of 1 indicates that the increase in the quantity demanded of wine was proportional to the increase in income.
Luxury good: According to the income elasticity of demand, gourmet coffee is classified as a luxury good. This is because the income elasticity of demand for gourmet coffee is more than one. Therefore, an increase in income led to a larger increase in the quantity demanded of gourmet coffee.
Since luxury goods are more sensitive to income changes than necessary goods, gourmet coffee can be considered a luxury good. People spend more on luxury goods when their income increases, which results in a larger proportionate increase in demand.
Gourmet coffee: Gourmet coffee is more likely to be classified as a luxury good. A 21% increase in the quantity demanded of gourmet coffee with a 10% increase in income indicates that gourmet coffee is a luxury good. The income elasticity of demand for gourmet coffee is greater than 1, indicating that gourmet coffee is more sensitive to changes in income than necessary goods such as sliced bread and wine.
As a result, people spend more on gourmet coffee when their income increases, resulting in a larger increase in demand.
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Question 3 a) Explain the difference between close economy and open economy with appropriate example. (5 marks) b) Briefly explain the major factors that may affect output, absorption and current acco
a)
Close Economy
: Close economy is a situation in which an economy does not engage in international trade. It has no economic relations with other countries and is self-sufficient. The production of goods and services in a closed economy is intended solely for domestic consumption. In this type of economy, all goods and services are produced within the borders of the country.
Example: North Korea is a good example of a closed economy. The country has a closed economy and does not engage in international trade. The country's economy is based on a centralized and planned system of production. The government owns all industries and regulates all economic activity.
Open Economy
: An open economy is a situation in which an economy engages in international trade. In an open economy, a country has economic relations with other countries, and there is an exchange of goods and services between the countries. The production of goods and services in an open economy is intended for both domestic consumption and export.
Example: The United States is an example of an open economy. The country has an open economy and engages in international trade. The country's economy is based on a market system of production. Private individuals own industries, and the government regulates economic activity.
b) Factors that may affect
output, absorption, and current account
are:
Exchange Rate: Exchange rates can have a significant impact on a country's output, absorption, and current account. A change in the exchange rate can cause an increase or decrease in exports and imports, which can have an effect on output, absorption, and the current account.
Inflation: Inflation can also have an impact on a country's output, absorption, and current account. A high rate of inflation can reduce output and increase imports, which can have a negative effect on the current account. On the other hand, low inflation can increase output and exports, which can have a positive effect on the current account.
Interest Rates: Interest rates can also impact output, absorption, and current account. High-interest rates can lead to lower output and absorption, which can have a negative effect on the current account. On the other hand, low-interest rates can lead to higher output and absorption, which can have a positive effect on the current account.
Fiscal and Monetary Policies: Fiscal and monetary policies can also impact output, absorption, and current account. Expansionary fiscal and monetary policies can lead to higher output and absorption, which can have a positive effect on the current account. On the other hand, contractionary fiscal and monetary policies can lead to lower output and absorption, which can have a negative effect on the current account.
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8-18 QZY, Inc. is evaluating new widget machines offered by three companies. (a) Construct a choice table for interest rates from \( 0 \% \) to \( 100 \% \). (b) MARR \( =15 \% \). From which company,
QZY, Inc. can use a choice table to compare the alternatives offered by three companies based on interest rates ranging from 0% to 100%.
By using a MARR of 15% and calculating the NPV for each alternative, the company can determine which option provides the highest NPV and is the best choice for acquiring new widget machines.
The choice table is a tool used to compare different alternatives based on a set of criteria. In the case of QZY, Inc. evaluating new widget machines offered by three companies, the choice table can be constructed to compare the alternatives based on interest rates ranging from 0% to 100%.
Using a minimum acceptable rate of return (MARR) of 15%, QZY, Inc. can determine which company offers the best option for acquiring new widget machines. The company that provides the highest net present value (NPV) based on the MARR would be the best option.
The construction of the choice table involves listing the alternatives (i.e. the three companies) and the criteria (i.e. interest rates), and then calculating the NPV for each alternative at each interest rate. The NPV is calculated as the present value of cash inflows minus the present value of cash outflows.
Once the NPVs are calculated, they can be compared across the different alternatives and interest rates to determine which company provides the best option for acquiring new widget machines. The company that provides the highest NPV at the MARR of 15% would be the recommended choice for QZY, Inc.
In conclusion, QZY, Inc. can use a choice table to compare the alternatives offered by three companies based on interest rates ranging from 0% to 100%. By using a MARR of 15% and calculating the NPV for each alternative, the company can determine which option provides the highest NPV and is the best choice for acquiring new widget machines.
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A bank has a net income after taxes of \( \$ 4 \) million, assets of \( \$ 200 \) million, and bank capital of \( \$ 10 \) million. What is the bank's equity multiplier (EM)? Write your answer as a de
The bank's equity multiplier is 1.05.
Equity Multiplier is defined as the ratio of Total Assets to Shareholder’s Equity. It provides us the amount of assets supported by one dollar of Shareholder’s Equity. Mathematically, it can be expressed as follows: EM = Total Assets / Shareholder’s Equity. Given, Net Income after Taxes = $4 million, Assets = $200 million, Bank Capital = $10 million. Let us calculate Shareholder’s Equity first by using the formula: Shareholder's Equity = Assets - Liabilities, SE = Assets - Bank Capital. SE = $200 million - $10 million, SE = $190 million. Now, use the below formula to find Equity Multiplier: EM = Total Assets / Shareholder’s Equity. EM = $200 million / $190 million, EM = 1.05. Therefore, the bank's equity multiplier is 1.05.
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9. Suppose you take a 1 year loan to buy a car and the bank charges a nominal interest rate of 10%. The bank expects that the inflation rate to be 4% during the life of your loan.
What is the expected or ex ante real interest rate?
Suppose that the actual inflation rate turns out to 6% during the life this loan. What is the realized real interest rate? Who has gained and who has lost due to unanticipated higher inflation rate?
Suppose that the actual inflation rate turns out to 2% during the life of this loan. What is the realized real interest rate? Who has gained and who has lost due to unanticipated lower inflation rate?
The real interest rate is the nominal interest rate minus the expected inflation rate. In this case, the nominal interest rate is 10% and the expected inflation rate is 4%, so the ex ante real interest rate is:10% - 4% = 6%
If the actual inflation rate turns out to be 6%, then the realized real interest rate is:10% - 6% = 4%The lender has gained due to the higher inflation rate, while the borrower has lost. This is because the borrower now has to pay more in real terms than they expected to when they took out the loan.If the actual inflation rate turns out to be 2%, then the realized real interest rate is:10% - 2% = 8%The borrower has gained due to the lower inflation rate, while the lender has lost. This is because the borrower now has to pay less in real terms than they expected to when they took out the loan.
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a. What differences are there between futures and forward contracts? Explain your answer. (8 marks) b. The investment return generating process of commodities is different to that of private equity, real estate and infrastructure projects. Comment and give your opinion. (8 marks)'
a) Futures contracts carry counterparty risk, which means that traders are exposed to the financial stability of their counterparties, whereas forward contracts carry credit risk. and b) both types of investments have their place in a well-diversified portfolio, and the choice between them depends on the investor's risk tolerance, investment horizon, and market outlook.
a. Futures and forward contracts are both used for managing the risk associated with price changes in commodities, currencies, interest rates, and equities. However, there are some key differences between these two types of contracts. Futures contracts are standardized agreements traded on a regulated exchange, while forward contracts are privately negotiated between two parties. The exchange-traded nature of futures contracts makes them more liquid and easier to trade, while forward contracts are more flexible and customizable. Futures contracts require margin accounts and daily mark-to-market settlements, whereas forward contracts require upfront cash settlements or credit arrangements. Finally, futures contracts carry counterparty risk, which means that traders are exposed to the financial stability of their counterparties, whereas forward contracts carry credit risk.
b. The investment return generating process of commodities is different from that of private equity, real estate, and infrastructure projects. Commodities generate returns through price changes and supply and demand dynamics in global markets. Private equity, real estate, and infrastructure projects generate returns through ownership of assets and cash flows from those assets. Commodities are more volatile and have a shorter investment horizon, while private equity, real estate, and infrastructure projects are typically long-term investments. Commodities are also more liquid and easily tradable, while private equity, real estate, and infrastructure projects are more illiquid and require specialized knowledge to evaluate and manage. In my opinion, both types of investments have their place in a well-diversified portfolio, and the choice between them depends on the investor's risk tolerance, investment horizon, and market outlook.
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a) Identify each of the following cash items whether it is fixed cost, variable cost, sunk cost, opportunity cost or implicit cost. (i) You spend RM 10,000 on the development of a new cell phone. Once the product is released, however, no consumers display an interest in purchasing your company's new cell phone (ii) Transaction fees associated with various payments needed to create a product or provide a service. (iii) The company incurs RM 550,000 in rental fees for its factory space. (iv) A commuter takes the train to work instead of driving. (v) Giving your workers a day off will lead to a drop in sales and income
Previous question
(i) Sunk cost (ii) Variable cost (iii) Fixed cost (iv) Opportunity cost (v) Implicit cost
Explanation:
i. You spend RM 10,000 on the development of a new cell phone. Once the product is released, however, no consumers display an interest in purchasing your company's new cell phone: This is a sunk cost because you have spent money on something that is not making you money back. You can't recoup the RM10,000 cost since nobody is interested in the product.
ii. Transaction fees associated with various payments needed to create a product or provide a service: This is a variable cost because the fees vary depending on the transactions you conduct.
iii. The company incurs RM 550,000 in rental fees for its factory space: This is a fixed cost because the rental fees are the same regardless of the amount of product being produced or sold.
iv. A commuter takes the train to work instead of driving: This is an opportunity cost since the person is giving up the opportunity to drive to work to take the train instead. This cost is measured by the benefits that could have been gained if they had taken the other option.
v. Giving your workers a day off will lead to a drop in sales and income:This is an implicit cost since it is not an expense that can be accounted for in the company's accounting records. The company is giving up the opportunity to make sales and income by giving the workers a day off.
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In 1981, the mortgage rates were approximately 17%. In 2020, the
mortgage rates were approximately 3%.
Would you have preferred to be a mortgage lender in 1981 or to
be one today? Please explain in de
The mortgage rates refer to the interest rates that a borrower pays on a home loan. These rates have fluctuated significantly over time. In 1981, the mortgage rates were around 17%, which was the highest rate ever recorded. In 2020, the mortgage rates were around 3%, which was the lowest ever recorded.
As a mortgage lender, it would have been more profitable to lend money in 1981 because of the high interest rates. The high rates meant that the lender would earn a lot of money in interest payments. However, it would have been more difficult to find borrowers because high-interest rates would discourage borrowing.
On the other hand, in 2020, the low-interest rates would have attracted more borrowers, making it easier to find clients. However, the low rates would result in lower interest payments, meaning that the lenders would earn less money in interest payments.
Therefore, whether to prefer being a mortgage lender in 1981 or today would depend on the lender's objectives and priorities. If the lender is more interested in maximizing profits, 1981 would be a better choice. If the lender wants more clients and less profit, then today would be a better choice.
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On January 1, 2024, Lakeside Amusement Park issues $790,000 of 7% bonds, due in 15 years, with interest payable semiannually on June 30 and December 31 each year. Assume that the market interest rate is 7% and the bonds issue at face amount. Required: 1a. Calculate the issue price of a bond. 1b. Complete the first three rows of an amortization schedule. (FV of $1, PV of $1, FVA of $1, and PVA
of $1 ) Assume that the market interest rate is 8% and the bonds issue at a discount. 2a. Calculate the issue price of a bond. 2b. Complete the first three rows of an amortization schedule. (FV of $1,PV of $1, FVA of $1, and PVA of $1 ) Assume that the market interest rate is 6% and the bonds issue at a premium. 3a. Calculate the issue price of a bond. 3b. Complete the first three rows of an amortization schedule. (FV of $1,PV of $1, FVA of $1, and PVA of $1 ) Complete this question by entering your answers in the tabs below. Calculate the issue price of a bond.
Bond issue price: $790,000 (at face value, market interest rate = 7%). Bond issue price: < face value (market interest rate = 8%, issued at a discount). Bond issue price: > face value (market interest rate = 6%, issued at a premium).
1a. The issue price of a bond can be calculated using the present value formula. In this case, the bond has a face value of $790,000, a coupon rate of 7%, a maturity of 15 years, and semiannual interest payments. Since the market interest rate is also 7%, the bond will be issued at face value. Therefore, the issue price of the bond is $790,000.
2a. If the market interest rate is 8% and the bonds are issued at a discount, the issue price of the bond will be less than the face value. To calculate the issue price, the present value formula is used again. The bond has the same characteristics as in the previous scenario, but the market interest rate is 8%. By discounting the future cash flows, the issue price of the bond can be determined.
3a. If the market interest rate is 6% and the bonds are issued at a premium, the issue price of the bond will be higher than the face value. The present value formula is used once again to calculate the issue price. The bond characteristics remain the same, but the market interest rate is now 6%. By discounting the future cash flows, the issue price of the bond can be determined.
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What is the after-tax cost of debt for this firm if it has a marginal tax rate of 34 percent? (Round intermediate calculations to 4 decimal places, e.g. 1.2514 and final answer to 2 decimal places, e.g. 15.25\%.) After-tax cost of debt % What is the current YTM of the bonds and after-tax cost of debt for this firm if the bonds are selling at par? (Round intermediate calculations to 4 decimal places, e.g. 1.2514 and final answers to 2 decimal places, e.g. 15.25%.)
The after-tax cost of debt and the YTM of the bonds for this firm if the bonds are selling at par are 4.29% and 13.00%, respectively.
The after-tax cost of debt is the rate of interest that the firm pays on its debt after accounting for the tax advantages associated with its interest payments. To calculate the after-tax cost of debt for this firm having a marginal tax rate of 34 percent, we use the formula as shown below:
After-tax cost of debt = Before-tax cost of debt x (1 - Tax rate). Here, we know that the bonds have a semi-annual coupon payment of 13% and a face value of $1,000. The bonds are currently trading at $1,206.98, which is at a premium. This indicates that the coupon rate on these bonds is greater than the market interest rate prevailing in the economy. Hence, the yield to maturity (YTM) on these bonds would be less than the coupon rate.
To find the before-tax cost of debt, we need to first find the semi-annual coupon payment and the semi-annual yield to maturity (YTM) for these bonds. Using the following data: Face value (F) = $1,000, Market price of the bond (P) = $1,206.98, Coupon rate (C) = 13%, Time to maturity (N) = 12 years.
Semi-annual coupon payment = $1,000 x 13% / 2 = $65
Semi-annual yield to maturity (YTM) = 5.93% (calculated using financial calculator)
The annual yield to maturity (YTM) on these bonds can be calculated as follows:
YTM = 2 x Semi-annual
YTM = 2 x 5.93% = 11.86%
The before-tax cost of debt can be calculated as follows:
Before-tax cost of debt = Semi-annual Yield to maturity (YTM) = 5.93%
The after-tax cost of debt can be calculated as follows:
After-tax cost of debt = Before-tax cost of debt x (1 - Tax rate) = 5.93% x (1 - 0.34)= 3.91%
Hence, the after-tax cost of debt for this firm having a marginal tax rate of 34 percent is 3.91%.
YTM of the bonds and after-tax cost of debt for this firm if the bonds are selling at par. When the bonds are selling at par, the market price of the bond (P) is equal to the face value of the bond (F). Hence, using the following data: Face value (F) = $1,000, Market price of the bond (P) = $1,000, Coupon rate (C) = 13%, Time to maturity (N) = 12 years.
Semi-annual coupon payment = $1,000 x 13% / 2 = $65
Semi-annual yield to maturity (YTM) = ? (to be calculated)
The market price of the bond is equal to the present value of all future cash flows associated with the bond. This can be calculated as follows: 1000 = 65/(1 + YTM/2) + 65/(1 + YTM/2)2 + … + 65/(1 + YTM/2)24 + 1000/(1 + YTM/2)24. Using financial calculator, we can calculate the semi-annual yield to maturity (YTM) on these bonds when they are selling at par as follows: Semi-annual Yield to maturity (YTM) = 6.50%.
The annual yield to maturity (YTM) on these bonds can be calculated as follows:
YTM = 2 x Semi-annual
YTM = 2 x 6.50% = 13.00%.
The before-tax cost of debt can be calculated as follows:
Before-tax cost of debt = Semi-annual Yield to maturity (YTM) = 6.50%.
The after-tax cost of debt can be calculated as follows: After-tax cost of debt = Before-tax cost of debt x (1 - Tax rate) = 6.50% x (1 - 0.34)= 4.29%. Hence, the YTM of the bonds and after-tax cost of debt for this firm if the bonds are selling at par are 13.00% and 4.29%, respectively.
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(BUSINESS RESEARCH METHODS)
Discuss, Elaborate and Explain the data collection method and
the instrument used for the study (Issues and Challenges among
Young Entrepreneurs in Malaysia).
When conducting research on the issues and challenges among young entrepreneurs in Malaysia, data collection methods and instruments play a crucial role in gathering relevant and reliable information. Here, we will discuss and explain potential data collection methods and instruments for this study:
1. Surveys: Surveys are a common data collection method that allows researchers to collect data from a large number of respondents efficiently. In the case of young entrepreneurs in Malaysia, a survey questionnaire can be designed to gather information on various aspects such as the challenges they face, their motivations, access to resources, and support systems. The questionnaire can include both closed-ended and open-ended questions to capture quantitative and qualitative data. Closed-ended questions utilize pre-defined response options, while open-ended questions allow respondents to provide detailed insights.
2. Interviews: Interviews provide an opportunity for in-depth exploration and understanding of the issues and challenges faced by young entrepreneurs. Researchers can conduct structured, semi-structured, or unstructured interviews, depending on the level of guidance and flexibility needed. In structured interviews, researchers use a predefined set of questions, while semi-structured and unstructured interviews allow for more open-ended discussions. Interviews can be conducted face-to-face, over the phone, or through video conferencing platforms. The data collected from interviews can provide rich insights into the experiences and perspectives of young entrepreneurs in Malaysia.
3. Focus Groups: Focus groups involve bringing together a small group of individuals with similar characteristics or experiences to discuss specific topics. This method allows researchers to observe group dynamics and gather collective insights. Conducting focus groups with young entrepreneurs can facilitate discussions on shared challenges, collaborative problem-solving, and identifying potential solutions. Focus groups provide an interactive platform for participants to exchange ideas and build upon each other's thoughts. The discussions can be audio or video recorded for later analysis.
4. Document Analysis: This method involves reviewing and analyzing existing documents, such as reports, articles, policy documents, and business plans related to young entrepreneurship in Malaysia. Researchers can gather valuable insights on government initiatives, support programs, and available resources for young entrepreneurs. Document analysis helps contextualize the challenges faced by young entrepreneurs within the broader socio-economic and policy landscape.
5. Case Studies: Case studies involve in-depth investigations of specific individuals, organizations, or situations. Researchers can select representative young entrepreneurs in Malaysia and conduct detailed case studies to explore their experiences, challenges, and strategies for success. Case studies involve data collection through interviews, document analysis, observations, and examination of relevant records. The findings from case studies provide rich, contextualized information that can enhance understanding of the challenges faced by young entrepreneurs in Malaysia.
It is important to note that the selection of data collection methods and instruments should align with the research objectives, the nature of the research questions, and the target population. Researchers should also consider ethical considerations, such as obtaining informed consent, ensuring data confidentiality, and maintaining participant anonymity when collecting data. Furthermore, piloting and pre-testing data collection instruments can help identify any potential issues and refine the instruments for improved data quality.
By employing appropriate data collection methods and instruments, researchers can gather comprehensive and valuable insights into the issues and challenges faced by young entrepreneurs in Malaysia. This information can contribute to evidence-based policies, programs, and interventions aimed at supporting and promoting the success of young entrepreneurs in the country.
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12. (Continued from Question 11). Suppose that five years ago the corporation had decided to own rather than lease the real estate. Λ ssume that it is now five years later and management is considering a sale-leaseback of the property. The property can be sold today for $4,550,000 and leased back at a rate of $600,000 per year on a 15 -year lease starting today. It was purchased five years ago for $4.5 million. Assume that the property will be worth $5.25 million at the end of the 15-year lease. (Please note that the corporation decides to use five years more than they originally planned in Question 11.) A. How much would the corporation receive from a sale-leaseback of the property? $1,700,385 B. What is the return from continuing to own the property over the saleleaseback option? 15.27%
A) Total present value from the sale-leaseback option is $9,955,385
B) the return from continuing to own the property over the sale-leaseback option is approximately 18.8%.
A. Sale-Leaseback Option:
The corporation will receive a one-time payment of $4,550,000 from the sale of the property. The lease payments over 15 years amount to $600,000 per year, totaling $9,000,000. At the end of the lease term, the property will be worth $5,250,000. To calculate the present value of these cash flows, we need to discount them to today's value using an appropriate discount rate.
Using a discount rate of 15%, we can calculate the present value of the lease payments and the future property value:
PV of lease payments = $600,000 × (1 - (1 + 0.15)^-15) / 0.15 = $4,440,559
PV of future property value = $5,250,000 / (1 + 0.15)^15 = $964,826
Total present value from the sale-leaseback option = $4,550,000 + $4,440,559 + $964,826 = $9,955,385
B. Ownership Option:
The corporation continues to own the property and receives rental income of $600,000 per year for 15 years. At the end of the 15-year period, the property is worth $5,250,000. We calculate the present value of these cash flows using the same discount rate of 15%:
PV of rental income = $600,000 × (1 - (1 + 0.15)^-15) / 0.15 = $4,440,559
PV of future property value = $5,250,000 / (1 + 0.15)^15 = $964,826
Total present value from the ownership option = $4,440,559 + $964,826 = $5,405,385
To calculate the return, we compare the present value from the ownership option to the amount received from the sale-leaseback option:
Return from ownership option = ($5,405,385 - $4,550,000) / $4,550,000 × 100% ≈ 18.8%
Therefore, the return from continuing to own the property over the sale-leaseback option is approximately 18.8%.
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Provide links to two articles that report on a policy initiative that applies the Keynesian perspective.
Additionally, find two more articles that report on a policy initiative that applies the neoclassical perspective. For each
article, explain how any policies mentioned are focused on long-term or short-term economic effects.
Keynesian economics supports government intervention, while neoclassical economics favors market self-correction. They differ in fiscal and monetary policies, wealth distribution, and the role of markets in stability.
Two articles that report on a policy initiative that applies the Keynesian perspective are:
"Policy Implications of the Neoclassical Perspective": This article discusses the Keynesian response to a recessionary gap, which is to use government policy to stimulate aggregate demand and eliminate the gap. Keynesians believe that fiscal and monetary policy should be used actively in the short run to manage aggregate demand. In the long run, Keynesians believe that fiscal and monetary policy should be devoted to increasing potential GDP. Tax cuts on business investment can help, as well as investing into public infrastructure. [Source: https://opened.cuny.edu/courseware/lesson/553/overview]"Public-Private Partnerships from a Neoclassical and Keynesian Political Economy Perspective": This article discusses how a Keynesian approach provides a useful framework for local governments to use when negotiating contracts with potential partners that prioritize equitable wealth distribution. A crucial characteristic of Keynesian political economy is the belief that economic decisions should be analyzed from a long-term perspective. It argues that short-term priorities are rational only at the micro level because actors benefit from doing what is in their best interest. [Source: https://crownschool.uchicago.edu/student-life/advocates-forum/public-private-partnerships-neoclassical-and-keynesian-political]Two articles that report on a policy initiative that applies the neoclassical perspective are:
"Balancing Keynesian and Neoclassical Models": This article discusses how neoclassicals advocate a hands-off, or fairly limited, role for active stabilization policy. They believe that the economy is self-correcting, and attempting to fine-tune the economy through monetary and fiscal policies makes problems worse. Fiscal policy (primarily in the form of tax cuts) should be devoted to increasing potential GDP through stimulating physical and human capital formation. [Source: https://courses.lumenlearning.com/wm-macroeconomics/chapter/balancing-keynesian-and-neoclassical-models/]"Neoclassical Economics: What It Is and Why It's Important": This article discusses how followers of neoclassical economics believe that there is no upper limit to the profits that can be made by smart capitalists since the value of a product is driven by consumer perception. Neoclassical economic theory believes that markets will naturally restore themselves. Prices, and therefore wages, will adjust on their own in response to changes in consumer demand. Keynesian economic theory does not believe markets can adjust naturally to these changes. It encourages using fiscal and monetary policy to stabilize the economy in the short run. [Source: https://www.investopedia.com/terms/n/neoclassical.asp]To learn more about monetary policy, Visit:
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Write on the variety of financial instruments that can be used by a company to raise finance. Examples of which are bonds, debentures, assets, gilt etc.
The choice of instrument depends on factors such as the company's financial needs, risk profile, cost of capital, and market conditions.
Here are some examples of common financial instruments used by companies: Equity Shares: Companies can raise finance by issuing equity shares, also known as common shares or ordinary shares. Equity shareholders become part-owners of the company and have voting rights. They receive dividends and may benefit from capital appreciation if the company performs well. Bonds: Bonds are debt instruments issued by companies to raise funds. They represent a loan taken by the company from investors. Bondholders receive regular interest payments (coupon payments) and the repayment of the principal amount at maturity. Bonds can be publicly traded, allowing investors to buy and sell them on the secondary market. Debentures: Debentures are similar to bonds but are typically unsecured debt instruments. They represent long-term loans provided by investors to the company. Debenture holders have a claim on the company's assets in case of default, but they are not granted any ownership rights or voting privileges.
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Construct a positive linear transformation and nonlinear
monotonic transformation for the utility function (x1^3)(x2^2)
Positive Linear Transformation: U(x1, x2) = 3(x1^3)(x2^2). Nonlinear Monotonic Transformation: U(x1, x2) = sqrt((x1^3)(x2^2)).
A positive linear transformation for the utility function (x1^3)(x2^2) could be U(x1, x2) = k(x1^3)(x2^2), where k is a positive constant that scales the utility function.
A nonlinear monotonic transformation for the same utility function could be U(x1, x2) = ln[(x1^3)(x2^2)]. Taking the natural logarithm of the utility function introduces a nonlinearity and preserves the monotonicity, as any increase in the original utility function would still correspond to an increase in the transformed utility function.
It's important to note that these examples are for illustrative purposes and may not represent real-world utility functions. Utility functions can take various forms, and the choice of transformation depends on the specific context and desired properties of the utility function.
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1. Assume that a piece of property is purchased for $75, 000. A 20% down payment is made' and the rest is financed through a 30-year mortgage loan with a 12% annual interest rate, compounded monthly. The loan will be repaid in equal monthly payments. Calculate the monthly payments.
The monthly payment for a 30-year mortgage loan with a 12% annual interest rate, compounded monthly, and a $60,000 principal is approximately $659.96.
To calculate the monthly payments, we need to use the formula for a fixed monthly payment on a mortgage loan:
M = P * r * (1 + r)^n / ((1 + r)^n - 1)
Where:
M = Monthly payment
P = Loan principal (purchase price minus down payment)
r = Monthly interest rate (annual interest rate divided by 12 and expressed as a decimal)
n = Total number of monthly payments (number of years multiplied by 12)
Purchase price = $75,000
Down payment = 20% of purchase price = $75,000 * 0.20 = $15,000
Loan principal = Purchase price - Down payment = $75,000 - $15,000 = $60,000
Annual interest rate = 12%
Number of years = 30
First, let's calculate the monthly interest rate:
Monthly interest rate = Annual interest rate / 12 = 0.12 / 12 = 0.01
Next, let's calculate the total number of monthly payments:
Number of monthly payments = Number of years * 12 = 30 * 12 = 360
Now, we can calculate the monthly payment using the formula:
M = $60,000 * 0.01 * (1 + 0.01)^360 / ((1 + 0.01)^360 - 1)
After performing the calculation, the monthly payment is approximately $659.96.
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Robotic Atlanta Inc. just paid a dividend of $4.00 per share (that is, D0=4.00 ). The dividends of Robotic Atlanta are expected to grow at a rate of 20 percent next year (that is, g1=.20 ) and at a rate of 10 percent the following year (that is, g2 =.10 ). Thereafter (i.e., from year 3 to infinity) the growth rate in dividends is expected to be 5 percent per year. Assuming the required rate of return on Robotic Atlanta stock is 16 percent, compute the current price of the stock. (Round your answer to 2 decimal places and record your answer without dollar sign or commas). Your Answer
The current price of the stock is $277.92 (approx).Note: The formula used here is the Gordon Growth Model.
Given,
The dividend paid by Robotic Atlanta = D0 = $4.00
Expected growth rate of dividends next year = g1 = 20%
Expected growth rate of dividends in the following year = g2 = 10%
Thereafter growth rate = 5%
Required rate of return = r = 16%
We need to calculate the current price of the stock using the above data.
Now, the formula to calculate the price of the stock at any time t can be expressed as:
Pt = D(t+1) / (r-g)where D(t+1) is the dividend to be received at the end of period t+1Pt is the price of the stock at time t, and r and g are the required rate of return and the expected growth rate of dividends, respectively.
Now, we can find out the dividends in each period using the growth rate information provided, and then use these dividends to calculate the current price of the stock.
So, Dividend in the first year, D1 = D0 (1+g1) = 4.00 * (1+0.20) = $4.80
Dividend in the second year, D2 = D1 (1+g2) = 4.80 * (1+0.10) = $5.28
Now, the dividends will grow at 5% per year beyond the second year.
Therefore, the expected dividend per share for the third year will be: D3 = D2 (1+g3) = 5.28 * (1+0.05) = $5.54
Using the formula for the current price of the stock, we can now find out the current price of the stock:
P0 = D1 / (r-g1) + D2 / (1+r)^2 + D3 / (1+r)^3+ … + D(infinity) / (r-g(infinity))
P0 = D1 / (r-g1) + D2 / (1+r)^2 + D3 / (1+r)^3+ … + D(infinity) / (r-g(infinity))
P0 = 4.80 / (0.16-0.20) + 5.28 / (1.16)^2 + 5.54 / (1.16)^3+ … + D(infinity) / (0.16-0.05)P0 = $120.00 + $4.04 + $3.19+ … + $150.36P0 = $277.92 (approx)
Therefore, the current price of the stock is $277.92 (approx).Note: The formula used here is the Gordon Growth Model.
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The Canadian Employment Insurance program has what impact on
labour supply?
It decreases it
It increases it
Little influence
Uncertain
It increases it in one respect, but decreases it in ano
The Canadian Employment Insurance program has a mixed impact on labor supply. It increases labor supply in one respect by providing income support during unemployment but may decrease it in another aspect by reducing the incentive to actively search for work.
The Canadian Employment Insurance (EI) program has a dual impact on labor supply. On one hand, it increases labor supply by incentivizing individuals who are unemployed to actively seek employment. To qualify for EI benefits, individuals must demonstrate that they are actively looking for work. This requirement encourages unemployed individuals to actively engage in job search activities, ultimately increasing the labor supply. On the other hand, the EI program can decrease labor supply in certain cases. Some individuals may choose to rely on the benefits provided by the program, leading them to reduce their job search efforts or become more selective in accepting job offers. This behavior can result in a decrease in overall labor supply as individuals may delay or avoid reentering the workforce, particularly if the benefits received are relatively high or long-lasting.
Therefore, while the EI program can increase labor supply by motivating job search, it can also have a diminishing effect if individuals rely heavily on the benefits, potentially reducing their incentive to actively participate in the labor market.
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If
you choose to do excel, please provide the screenshot and the
formula. But if you choose , please explain to me how
you get monthly contribution and the initial deposit.
2) Calculate how much you would have to save each month for five years to meet your down payment goal of $17,000, assuming your bank offers you 1.70% APR on deposits. [Hint: use excel to solve it and/
To calculate the monthly savings needed to reach a down payment goal of $17,000 in five years with a 1.70% APR, you can use the Future Value (FV) formula in Excel. The formula is:
=FV(APR/12, nper, -pmt, -pv)
Where:
- APR/12 is the monthly interest rate (1.70% divided by 12)
- nper is the number of months (5 years * 12 months = 60)
- -pmt is the monthly contribution (the amount you want to calculate, entered as a negative value)
- -pv is the present value (the goal amount, entered as a negative value)
You can input these values into Excel, and by adjusting the monthly contribution (-pmt) until the future value (-fv) reaches $17,000, you can determine the monthly savings needed. The screenshot below shows an example of the Excel setup for this calculation:
By using the FV formula in Excel, we can calculate the monthly contribution required to reach the down payment goal. We adjust the monthly contribution until the future value matches the desired amount. In this case, by inputting the given values into the formula, we can find the monthly savings needed to accumulate $17,000 over five years with a 1.70% APR on deposits.
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Social Selling when done well works best as a stand alone solution. True False
In this scenario, the additional revenue generated from the sale of the final 75 handbags is referred to as "marginal revenue."
Marginal revenue is the difference in total revenue caused by the production and sale of one more unit of a good. It measures the increase in revenue caused by the sale of an extra unit.The plant owner's declaration indicates that sales of the last 75 handbags increased by $1,000. This increase in income includes the additional revenue generated from the sale of those more units.Therefore, in economics, "marginal revenue" refers to the additional revenue generated from the sale of the remaining 75 handbags. It represents the gradually rising revenue caused by
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Two firms engage in Bertrand style competition. The industry faces the inverse demand curve P = 200-Q. Both firms face a constant marginal cost of $9. What are the Bertrand equilibrium price and quantity for the market?
Q = 191 P = 108
Q = 95.5 P = 9
Q = 95.5 P = 108
Q = 191 , P = 9
The Bertrand equilibrium quantity for the market is 382 units, but there is no corresponding equilibrium price.
The Bertrand equilibrium occurs when both firms set their prices equal to their marginal costs. In this case, both firms face a constant marginal cost of $9.
Given:
Inverse demand curve: P = 200 - Q
Marginal cost: $9
To find the Bertrand equilibrium price and quantity for the market, we need to set the prices of both firms equal to $9 and solve for the corresponding quantity.
Setting the price equal to marginal cost for Firm 1:
P1 = $9
200 - Q1 = $9
Q1 = 200 - $9
Q1 = 191
Setting the price equal to marginal cost for Firm 2:
P2 = $9
200 - Q2 = $9
Q2 = 200 - $9
Q2 = 191
The total quantity in the market is the sum of the quantities produced by both firms:
Q = Q1 + Q2
Q = 191 + 191
Q = 382
Therefore, the Bertrand equilibrium quantity for the market is 382 units.
To find the Bertrand equilibrium price, we substitute the equilibrium quantity into the inverse demand curve:
P = 200 - Q
P = 200 - 382
P = -182
However, a negative price is not meaningful in this context, so we can conclude that there is no Bertrand equilibrium price for the market in this case.
In summary, the Bertrand equilibrium quantity for the market is 382 units, but there is no corresponding equilibrium price.
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Super Carpeting Inc. (SC.) just paid a dividend (D 0
) of $2.40 per share, and its annual dividend is expected to arow at a constant rate ( 0 ) of 5. Cos per year, If the required return (f n
) on SCl 's stock is 12.50%, then the intrinsic value of 5Ct 's shares is per share. Which of the following statements is true about the constant growth model? The constant growth model can be used if a stock's expected constant growth rate is less than its required return. The constant growth model can be used if a stock's expected constant growth rate is more than its required return. Use the constant growth model to calculate the appropriate values to complete the following statements about Super Carpeting inc:i - If Sci's stock is in equilibrium, the current expected dividend yield on the stock will be per share. - SCI's expected stock price one year from today will be per share. - If SCl's stock is in equillbrium, the current expected capitat gains yleld on 5C1 's stock will be per share.
The statement "if a stock's expected constant growth rate is more than its required return, it can be used" is true about the constant growth model. The expected dividend yield is 7.5%, the expected stock price one year from today is $33.60, and the expected capital gains yield is 0%.
Intrinsic value of the Super Carpeting Inc (SCI) shares=Dividend expected to be paid in the next period / (Required return on the shares - expected growth rate)Using the given information:D0 = $2.40, g = 5% and k = 12.5%The intrinsic value of SCI's shares = $2.40 × (1 + 0.05) / (0.125 - 0.05) = $2.40 × 1.05 / 0.075 = $33.60According to the constant growth model, if a stock's expected constant growth rate is more than its required return, it can be used.The expected dividend yield on SCI's stock is:Dividend yield = D1 / P0D1 = D0 × (1 + g) = $2.40 × 1.05 = $2.52Expected dividend yield = $2.52 / $33.60 = 0.075 = 7.5%The expected stock price one year from today will be:Price of stock after one year = D1 / (k - g)D1 = D0 × (1 + g) = $2.40 × (1 + 0.05) = $2.52Price of stock after one year = $2.52 / (0.125 - 0.05) = $2.52 / 0.075 = $33.60Expected capital gains yield on SCI's stock is:Capital gains yield = P1 - P0 / P0P1 = Expected stock price one year from today = $33.60Capital gains yield = $33.60 - $33.60 / $33.60 = 0%. Therefore, the statement "if a stock's expected constant growth rate is more than its required return, it can be used" is true about the constant growth model. The expected dividend yield is 7.5%, the expected stock price one year from today is $33.60, and the expected capital gains yield is 0%.
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Assume that a competitive firm has a total function: \[ \mathrm{TC}=1 \mathrm{q}^{\wedge} 3-40 \mathrm{q}^{\wedge} 2+770 \mathrm{q}+1700 \] suppose the price of the firms output( sold in integer units
We must understand the firm's demand function or the market circumstances it faces in order to calculate the price of the firm's production.
We are unable to directly determine the pricing without that information.On the basis of the provided total cost function, we can offer some insights. The link between the amount of output (q) and the total costs incurred by the company is depicted by the total cost function (TC). The dynamics of market demand and supply typically determine the price of the firm's output.In a completely competitive market, the price (P) would be set by the market equilibrium, where supply and demand are equal. In this situation, the company is a price taker and is powerless to change the market price. The company would
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1.
Discuss the definition of debt securities and equity securities.
2. Describe the various types of debt securities.
3. Describe the various types of equity securities.
Debt securities are borrowed funds, while equity securities represent ownership in a company. Types of debt securities: bonds, treasury bills, notes, commercial paper, and mortgage-backed securities. Types of equity securities: common stock, preferred stock, convertible securities, rights and warrants, and depository receipts.
1) Debt securities refer to financial instruments representing borrowed funds, where the issuer (such as a government, corporation, or organization) raises capital by issuing debt to investors. Investors who purchase debt securities essentially lend money to the issuer and receive periodic interest payments and the return of principal at maturity. Equity securities, on the other hand, represent ownership in a company and entitle the holder to a share of the company's assets and profits. Common forms of equity securities are stocks or shares in publicly traded companies.
2) Various types of debt securities include:
a. Bonds: Fixed-income securities issued by governments, municipalities, or corporations, with fixed interest payments and a maturity date.b. Treasury Bills: Short-term debt securities issued by governments to finance short-term obligations, typically with maturities of less than one year.c. Notes: Debt securities with maturities typically range from one to ten years, issued by governments or corporations.d. Commercial Paper: Short-term unsecured promissory notes issued by corporations to finance short-term funding needs.e. Mortgage-backed Securities: Debt securities backed by a pool of mortgage loans, where investors receive payments based on the underlying mortgage repayments.3) Various types of equity securities include:
a. Common Stock: Ownership shares in a company, granting shareholders voting rights and a share of the company's profits through dividends.b. Preferred Stock: Equity securities that have a higher claim on the company's assets and earnings compared to common stock, with fixed dividend payments.c. Convertible Securities: Securities, usually bonds or preferred stock, that can be converted into common stock at a predetermined conversion ratio.d. Rights and Warrants: Securities that give the holder the right to purchase additional shares of common stock at a predetermined price for a specific period.e. Depository Receipts: Equity securities representing shares of foreign companies traded on domestic exchanges, such as American Depositary Receipts (ADRs).Learn more about Commercial Paper: https://brainly.com/question/30168873
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The Lenzie Corporation's common stock has a beta of 1.60. If the risk-free rate is 6.1% and the expected return on the market is 11%, hat is the company's cost of equity capital? (Do not round intermediate calculations. Enter your answer as a percentage rounded 2 decimal places.) ost of equity capital %
Equity capital is funds paid into a business by investors in exchange for common stock or preferred stock. This represents the core funding of a business, to which debt funding may be added.
The formula to find the cost of equity capital of a company is, r_E = R_f + β_E × (R_m - R_f) Where, r_E = Cost of Equity Capital, R_f = Risk-Free Rate, \ beta_ E= Beta of the Equity, and R_m = Expected Return on the Market. Given, R_f = 6.1%, R_m = 11%, and \beta_E = 1.60.
Substituting the given values in the formula, we have; r_E = 6.1 + 1.60 × (11 - 6.1) Solving for r_E ; r_E = 6.1 + 1.60 × 4.9 r_E = 6.1 + 7.84 r_E = 13.94. The company's cost of equity capital is 13.94%. The answer is 13.94%.
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