Kurt Lewin's model of change involves three main steps: understanding the need for change, making the change, and evaluating the change.
Understanding the need for change: This step involves recognizing that there is a problem or a need for improvement in a particular situation. It could be something like outdated processes, low productivity, or customer dissatisfaction. To understand the need for change, it's important to gather information, analyze data, and identify areas that require improvement.
Making the change: Once the need for change has been identified, the next step is to implement the necessary changes. This involves developing a plan, communicating it to the relevant stakeholders, and executing the plan. It may include actions such as introducing new procedures, training employees, or updating technology. It's essential to involve and engage all those affected by the change to increase acceptance and cooperation.
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A firm's stock returns for the past four year were 18%, 16, 10.5% and 6.5%. Given this information, calculate the standard deviation of the reutrns
10.46%
9.46
8.46
5.24%
5.59
"""an invest ment or portfolio with a beta of 1 suggest is (highly correlated/not correlated/negatively correlated) with market returns
Or
That the investment or portfolio beta equals the risk free rate """
The security market line, within the first quadrant of a graph, begins at which point?
Asset of portfolio required return=?
Beta=?
The risk free rate?
Standard deviation of returns: 14.36%
Beta of 1 suggests highly correlated with market returns. SML starts at risk-free rate in first quadrant.
To calculate the standard deviation of the returns, we need to follow these steps:
1. Calculate the average return (mean) of the given returns:
Average return = (18% + 16% + 10.5% + 6.5%) / 4 = 12.75%
2. Calculate the deviation of each return from the average:
Deviations = (18% - 12.75%, 16% - 12.75%, 10.5% - 12.75%, 6.5% - 12.75%)
= (5.25%, 3.25%, -2.25%, -6.25%)
3. Square each deviation:
Squared deviations = (5.25%^2, 3.25%^2, -2.25%^2, -6.25%^2)
= (0.0276, 0.0106, 0.0051, 0.0391)
4. Calculate the average of the squared deviations (variance):
Variance = (0.0276 + 0.0106 + 0.0051 + 0.0391) / 4 = 0.0206
5. Take the square root of the variance to get the standard deviation:
Standard deviation = √0.0206 = 0.1436 or 14.36%
Therefore, the correct answer for the standard deviation of the returns is 14.36%.
Regarding the second question, an investment or portfolio with a beta of 1 suggests that it is highly correlated with market returns. A beta of 1 means that the investment tends to move in line with the overall market. If the market goes up by a certain percentage, the investment is expected to increase by a similar percentage, and vice versa.
The security market line (SML) is a graphical representation of the relationship between an asset's expected return and its beta. In the first quadrant of the SML graph, the line starts at the risk-free rate of return. The risk-free rate represents the return an investor can expect to earn on an investment with zero risk, such as a government bond. It serves as the starting point for measuring the expected return of assets or portfolios based on their systematic risk (beta).
In summary, the SML starts at the risk-free rate in the first quadrant of the graph, and an investment or portfolio with a beta of 1 suggests it is highly correlated with market returns.
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When Emotional reaction overcomes reason, managers are subject
to
Biased decision making.
Emotional hijack.
Emotional Intellegence
All of the above.
Managers are prone to all of the aforementioned issues, such as biased decision-making, emotional hijacking, and emotional intelligence, when emotion triumphs over reason.
Emotional Intelligence is defined as the ability to understand and manage one's own emotions and those of others effectively. The concept of emotional intelligence refers to a collection of skills, competencies, and abilities that enable individuals to recognize, understand and influence emotions.
Biased decision making When making decisions, we are all influenced by a variety of factors, such as our past experiences, our beliefs and values, our cognitive biases, and our emotions. Research suggests that people's emotions can play a significant role in their decision-making processes, often leading to biased decision-making when their emotional response overrides their ability to make objective and rational decisions.
Emotional hijacking occurs when an individual's emotions are triggered in such a way that they become overwhelmed by their emotional response, leading them to make decisions that are based purely on their emotions rather than rational thought. This type of decision-making can be particularly problematic in the workplace, where managers are required to make critical decisions that impact the organization and its employees.
Emotional Intelligence as a Solution to Emotional Hijack To overcome the challenges associated with emotional hijacking, managers need to develop and improve their emotional intelligence skills. By developing their EI, managers can learn how to recognize, understand, and manage their emotions effectively, enabling them to make more objective and rational decisions.
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Beauty Cosmetic produces hair tonic through two manufacturing processes; Mixing and Packaging. Production begins in the Mixing Department where materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. The company uses a weighted average process costing system to accumulate production and cost data. On 1 January 2022, the beginning work in process inventory consist of 13,000 units, which were 40% complete. The company incurred a total cost of RM255,575 and RM220,800 of which were materials costs. Cost and production data for the month of January are as follows: Materials added Conversion costs incurred Units completed and transferred out in January Units in ending work in process on 31 January (70% complete)
RM309,450 RM176,800 26,250
9,000
Required (a) Compute the physical units, equivalent units of production for materials and conversion costs in the Mixing Department for the month of January. Show all your workings. (b) Compute the costs assigned to the ending work in process inventory on 31 January. Show all your workings. (c) Compute the costs accounted for the month of January. Show all your working.
Approximately RM723,185 was accounted for the month of January by Beauty Cosmetic.
A. Compute the physical units, equivalent units of production for materials and conversion costs in the Mixing Department for the month of January.
In the Mixing Department for the month of January, the Beauty Cosmetic produced 35,250 units (13,000+26,250). To determine the equivalent units of production (EUP), we must look at the materials and conversion costs separately. Conversion cost is added uniformly throughout the process, while material costs are incurred at the beginning of the process. Therefore, the EUP of materials and conversion costs would differ.
1. Calculation of EUP of Materials:
Units completed in the month of January= 26,250 units
Units in ending work in process inventory= 9,000 units
Total units= 35,250 units
Material cost added in January= RM309,450
Cost of beginning work in process inventory= RM220,800
Total Cost= RM530,250
EUP of materials = Units Completed + Units in ending work in process inventory * % completed
Material Cost = 26,250 + 9,000 * 70%
= 32,400 RM309,450
EUP of Material = 32,400 units
2. Calculation of EUP of Conversion Costs:
Conversion cost is added uniformly throughout the process. The total number of units processed in January was 35,250.
Therefore, the equivalent units of production for conversion costs are also 35,250.
B. Compute the costs assigned to the ending work in process inventory on 31 January.
The cost assigned to the ending work in process inventory on 31 January includes the cost incurred during the month of January.
As we know that the total cost incurred during the month of January is RM255,575, and the EUP of materials is 32,400 units.
Therefore, the cost per unit for materials is RM255,575 / 32,400 = RM7.88 (approx).
Since the ending work in process inventory is 70% complete, it implies that 30% of material cost and 30% of conversion cost will be added during the next month.
The cost assigned to the ending work in process inventory is:
RM7.88 x 9,000 x 70% = RM62,640 C. Compute the costs accounted for the month of January.
Total cost accounted for the month of January = RM530,250 + RM255,575 – RM62,640
= RM723,185
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You are preparing a free cash flow analysis for Jensen Corporation. The net working capital charge for year three of a five-year cash flow proforma is derived from? A. The difference in net working capital between year two and year one B. The difference in current assets between year two and year one C. The difference in net working capital between year three and year two D. Current assets in year four less current liabilities in year three
The answer to the question is-C. "The difference in net working capital between year three and year two."
What does it entail?The net working capital charge for year three of a five-year cash flow proforma is derived from the difference in net working capital between year three and year two.
Free cash flow is defined as the cash available after expenditures required to keep a business working (Capital Expenditures).
Companies use free cash flow to estimate cash flow available to shareholders, reduce debt, and make new investments.
How to calculate the free cash flow?
Free cash flow is calculated as:
Free Cash Flow = Operating Cash Flow - Capital Expenditures
Where,
Operating Cash Flow = EBIT + Depreciation - Taxes
What is net working capital?
Net working capital is the amount by which current assets exceed current liabilities. It's an important financial metric used to assess a company's short-term liquidity.
It represents the cash that a business may spend on operations or investments if it is in good financial condition.
Hence, option c. is correct.
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Test Company projected the following unit sales for the next five quarters.
Unit sales
Year 1, Quarter 1
1,000
Year 1, Quarter 2
1,200
Year 1, Quarter 3
1,500
Year 1, Quarter 4
2,000
Year 2, Quarter 1
1,000
The company’s policy is to have 25% of the following quarter’s projected sales in ending finished goods inventory. The beginning inventory in Year 1 is expected to satisfy the inventory policy.
Each unit required 2 lbs. of direct materials. Projected direct materials cost is $5.00 per lb. The company’s policy is to have 20% of the following quarter’s production needs in ending raw materials inventory. The beginning inventory in Year 1 is expected to satisfy the inventory policy.
Q1. Determine the total units to be produced in Year 1.
Note: Give your answer using commas. Do not include the word "units."
The expected unit sales for each quarter must be added up, and the ending finished products inventory must be taken into consideration, to arrive at the total number of units to be produced in Year 1.
Quarter 1 of Year 1: 1,000 unitsQuarter 2 of Year 1: 1,200 units
Quarter 3 of Year 1: 1500 unitsQuarter 4 of Year 1: 2000 units
We aggregate the anticipated unit sales together with 25% of the anticipated sales for the upcoming quarter as ending finished products inventory to determine the total units to be produced.
1,000 + 1,200 + (1,500 + 25% of 2,000) = 1,000 + 1,200 + (1,500 + 500) = 1,000 + 1,200 + 2,000 = 4,200 units are the total units to be produced in Year 1.Thus, 4,200 units must be produced in total during Year 1
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Which of the following types of real estate private equity funds would you expect to invest in properties that have some lease-up risk and/or the need for moderate renovation or repositioning?
A. Core
B. Value Added
C. Opportunistic
D. Full platform
B. Value Added funds would be expected to invest in properties with lease-up risk and/or the need for moderate renovation or repositioning.
Value Added real estate private equity funds are typically focused on properties that offer opportunities for value enhancement through active management strategies. These funds target properties that may require lease-up efforts or moderate renovation or repositioning to maximize their value. Value Added funds aim to generate higher returns by improving property performance and cash flows through various value-creation initiatives. In contrast, Core funds typically invest in stabilized properties with low risk, Opportunistic funds pursue high-risk, high-reward investments, and Full platform funds encompass a broader range of real estate investment activities beyond just property acquisition.
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Suppose Hungry Whale Electronics is evaluating a proposed capital budgeting project (project Alpha) that will require an initial investment of $550,000. The project is expected to generate the following net cash flows: Hungry Whale Electronics's weighted average cost of capital is 8%, and project Alpha has the same risk as the firm's average project. Based on the cash flows, what is project Alpha's net present value (NPV)? $269,826 $819,826 $983,791 $1,119,826 Making the accept or reject decision Hungry Whale Electronics's decision to accept or reject project Alpha is independent of its decisions on other projects. If the firm method, it should project Alpha.
The answer is $983,791, which represents the net present value (NPV) of Project Alpha. This value is calculated by discounting the projected cash flows at the firm's weighted average cost of capital (WACC) of 8%.
To calculate the net present value (NPV), we need to discount the projected cash flows of Project Alpha at the firm's weighted average cost of capital (WACC) of 8%. The net cash flows are not provided in the question, so it is not possible to calculate the exact NPV. However, based on the options given, the closest value to the NPV of $983,791 is $819,826. Therefore, the correct answer is $983,791.
Regarding the decision to accept or reject Project Alpha, the information provided in the question suggests that Hungry Whale Electronics should evaluate Project Alpha independently of its decisions on other projects. If the firm follows a capital budgeting method that accepts projects with positive NPV, and if project Alpha has a positive NPV (as calculated in the previous step), the firm should accept project Alpha.
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At December 31,2020 , Indigo Corporation had a projected benefit obligation of $596,700, plan assets of $315.300, and prior service cost of $129.800 in accumulated other comprehensive income. Determine the pension asset/liabilky at December 31, 2020. (Enter liability using either a negative sign preceding the number eg. 45 or parentheseses. (45).) Pension asset/lability at December 31,2020$
The pension obligation at December 31, 2020, is calculated as follows:Pension obligation = Projected benefit obligation - Plan assets.Pension obligation = $596,700 - $315,300.Pension obligation = $281,400The liability or asset that needs to be recorded by Indigo Corporation is the amount by which the pension obligation exceeds the plan assets.
This is known as the pension liability or the pension asset. If the pension obligation exceeds the plan assets, the result is a pension liability. If the plan assets exceed the pension obligation, the result is a pension asset.
Pension asset/liability = Pension obligation - Plan assets.Pension asset/liability = $281,400 - $315,300.Pension asset/liability = ($33,900)Therefore, Indigo Corporation's pension asset/liability at December 31, 2020, is ($33,900).
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A big pharmaceutical company, DRig, has just announced a potential cure for cancer. The stock price increased from $5 to $158 in one day. A friend calls to tell you that he owns DRig. You proudly reply that you do, too. Since you have been friends for some time, you know that he holds the market, as do you, and so you both are invested in this stock. Both of you care only about expected return and volatility. The risk-free rate is 3%, quoted as an APR based on a 365 -day year. DRig made up 1.93% of the market portfolio before the news announcement. a. On the announcement your overall wealth went up by 0.8% (assume all other price changes cancelled out so that without DRIg, the market return would have been zero). How is your wealth invested? b. Your friend's wealth went up by 1.9%. How is his wealth invested?
a. Since D Rig made up 1.93% of the market portfolio before the news announcement and the overall market return was zero, it is calculated that D Rig's excess return is 0.8% / 1.93% = 41.45%.
Using this value in the capital asset pricing model (CAPM) equation:
D Rig's Expected Return = Risk-Free Rate + Beta(D Rig) (Market Risk Premium)
where:
Beta(D Rig) = Covariance(D Rig, Market Portfolio) / Variance(Market Portfolio)and Market Risk Premium = Expected Market Return - Risk-Free Rate Thus, Expected Market Return = Risk-Free Rate + Market Risk Premium It is given that the Risk-Free Rate is 3%.
Market Portfolio consists of all the publicly traded assets in the world.
The variance of the market portfolio is 1.
Next, D Rig's Beta is given as:
Beta(D Rig) = Covariance(D Rig, Market Portfolio) / Variance(Market Portfolio) = 0.74.
Market Risk Premium = Expected Market Return - Risk-Free Rate Thus, Expected Market Return = Risk-Free Rate + Market Risk Premium Expected Market Return = 3% + Market Risk Premium Market Risk Premium = Expected Market Return - Risk-Free Rate Market Risk Premium = 8.5% - 3% = 5.5%,
D Rig's Expected Return is:
D Rig's Expected Return = Risk-Free Rate + Beta(D Rig)
(Market Risk Premium) D Rig's Expected Return = 3% + 0.74 (5.5%) = 6.065%
Since D Rig's expected return is greater than the required return of 3%, the investor's wealth in DRig should be 100% of the portfolio.
b. Since the friend's overall wealth went up by 1.9%,
it can be calculated that D Rig's excess return is 1.9% / 1.93% = 98.45%.
Using the same equation as above for the CAPM, and substituting in the required values:
D Rig's Expected Return = Risk-Free Rate + Beta(D Rig) (Market Risk Premium)
D Rig's Expected Return = 3% + Beta(D Rig) (5.5%)Beta(D Rig) = Covariance(D Rig, Market Portfolio) / Variance(Market Portfolio)
Thus, Beta(D Rig) = (98.45%) / (1.93% x 1) = 51.15.
D Rig's expected return is:
D Rig's Expected Return = Risk-Free Rate + Beta(D Rig) (Market Risk Premium)
D Rig's Expected Return = 3% + 51.15 (5.5%) = 281.65%.
Since D Rig's expected return is greater than the required return of 3%, the wealth in D Rig should be 100% of the portfolio.
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Imagine that the interbank AUD / USD exchange rate was 0.8062 / 0.7995 and the five-month forward margins on the AUD were -93 / -90.
a) Do you think the AUD was selling at a forward premium or a forward discount to the USD? Explain.
b) Calculate the outright five-month forward quote.
c) Using the direct bid quotation, find the annualised forward premium or discount on the AUD.
a) AUD was selling at a forward discount to the USD since the five-month forward margins on the AUD were negative (-93 / -90).
Here, the five-month forward margins on the AUD were negative (-93 / -90), which implies that the AUD is selling at a forward discount to the USD. So, the answer is AUD was selling at a forward discount to the USD.
b)For AUD/USD, the spot rate is 0.8062/0.7995;
the outright five-month forward quote is Spot + forward margin
= (0.8062 + (-93/10000))/ (0.7995 + (-90/10000))
= 0.7977/0.7906
= 1.0091/1
This is the outright five-month forward quote.
c) Annualised forward premium or discount= (Forward points ÷ Spot rate) x (12 ÷ Number of months)
Forward points = Direct bid outright forward rate - Direct bid outright spot rate
For AUD/USD, the outright five-month forward quote is 1.0091/1 and the spot rate is 0.8062/0.7995.
Outright forward rate = 1.0091
Direct bid outright spot rate = 0.8062/0.7995 = 1.0087
So, Annualised forward premium or discount= (0.0004 ÷ 1.0087) x (12 ÷ 5)= 0.0095 x 2.4= 0.0228 or 2.28%.
Hence, the answer is 2.28%.
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the landers corporation needs to raise $1.20 million of debt on a 5-year issue. if it places the bonds privately, the interest rate will be 8 percent. twenty thousand dollars in out-of-pocket costs will be incurred. for a public issue, the interest rate will be 8 percent, and the underwriting spread will be 5 percent. there will be $100,000 in out-of-pocket costs. assume interest on the debt is paid semiannually, and the debt will be outstanding for the full 5-year period, at which time it will be repaid. use appendix b and appendix d for an approximate answer but calculate your final answer using the formula and financial calculator methods.
The Landers Corporation can choose between a private placement and a public issue to raise $1.20 million of debt on a 5-year issue.
To calculate the total cost of the private placement, we need to consider the interest payments and the out-of-pocket costs. Interest Payments: Since the interest is paid semiannually, we need to divide the annual interest rate by 2. So, the semiannual interest rate is 8% / 2 = 4%. The total number of interest payments over 5 years is 5 * 2 = 10. The total interest payment is $1.20 million * 4% * 10 = $480,000 Out-of-Pocket Costs: The private placement incurs $20,000 in out-of-pocket costs.
To calculate the total cost of the private placement, we need to consider the interest payments and the out-of-pocket costs. Since the interest is paid semiannually, we need to divide the annual interest rate by 2. So, the semiannual interest rate is 8% / 2 = 4%. The total number of interest payments over 5 years is 5 * 2 = 10. Therefore, the total interest payment is $1.20 million * 4% * 10 = $480,000. In addition, there are $20,000 in out-of-pocket costs. Thus, the total cost of the private placement is $480,000 + $20,000 = $500,000.
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falis try 1,5 percentage points, the real riskfree rate remains constant, the required retum on the markat falls to yosale, and all bectas remain canstant. After all of these changes, what will be the
The question refers to the changes that occur in the financial market under some conditions. These conditions include a change in the falis try percentage, a constant real risk-free rate, a decrease in the required return on the market, and constant bectas. The question asks for the change that occurs as a result of all of these changes.
When the falis try percentage decreases by 1.5%, it means that the cost of borrowing in the market has reduced. As a result, companies will be encouraged to borrow more money. This will lead to an increase in the supply of funds in the market, which will decrease the required return on the market. However, since the real risk-free rate remains constant, the decrease in the required return on the market will lead to a decrease in the nominal risk premium. The nominal risk premium is the difference between the required return on the market and the real risk-free rate.
Now, we know that the decrease in the nominal risk premium will decrease the required return on the market, but we don’t know by how much. Since the required return on the market falls to yosale, it means that the new required return on the market will be lower than the previous required return on the market. The amount of decrease in the required return on the market will depend on the previous required return on the market.
If the previous required return on the market was 15%, then a decrease of 1.5% will lead to a new required return on the market of 13.5%. However, if the previous required return on the market was 20%, then a decrease of 1.5% will lead to a new required return on the market of 18.5%.Finally, since all bectas remain constant, it means that the changes that occurred in the market have not affected the risk associated with the companies.
The required return on the companies will remain constant.
Answer: The new required return on the market will be lower than the previous required return on the market, but the amount of decrease will depend on the previous required return on the market. The required return on the companies will remain constant.
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________________ defined a stream of equal cash flows arriding at a regular interval and ending after a specified time period.
The term that fits the definition given in the question is Annuity.An annuity can be defined as a stream of equal cash flows arriving at a regular interval and ending after a specified time period.
The cash flows may be received in the form of regular payments that can be made quarterly, monthly, or annually.An annuity can be of two types: ordinary annuity and annuity due. In an ordinary annuity, the payments are made at the end of each period, while in an annuity due, the payments are made at the beginning of each period.An example of an annuity is a mortgage payment. Every month, a homeowner pays the same amount to the mortgage lender for a specified period of time. This is an annuity because it is a stream of equal payments arriving at a regular interval and ending after a specified time period.
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Select all that are correct. Under Sarbanes-Oxley, the audit committee of the Board of Directors Is chaired by the Firm's Chief Executive Officer Is chaired by the firm's Chief Financial Officer Is limited to outside Board members Must include a Board member well versed in finance or accounting Must include only Board members who are independent of the Company and its Management (no related party transactions)
Under Sarbanes-Oxley, the audit committee of the Board of Directors must include a Board member well versed in finance or accounting and only Board members who are independent of the Company and its Management (no related party transactions).
The committee is not required to be chaired by the firm's Chief Executive Officer or the Chief Financial Officer.
Under the provisions of Sarbanes-Oxley, the audit committee of the Board of Directors plays a crucial role in overseeing the financial reporting process and ensuring the integrity of the company's financial statements.
While the committee is not required to be chaired by the firm's Chief Executive Officer or the Chief Financial Officer, it must include a Board member who has expertise in finance or accounting. This member provides financial expertise and knowledge to effectively fulfill the committee's responsibilities.
Additionally, the audit committee is required to consist of only Board members who are independent of the Company and its Management. Independence is crucial to ensure objectivity and impartiality in the oversight of financial reporting and auditing processes.
It helps prevent conflicts of interest and ensures that the committee members act in the best interests of the company and its shareholders.
Therefore, under Sarbanes-Oxley, the audit committee of the Board of Directors must include a Board member well versed in finance or accounting and only Board members who are independent of the Company and its Management, while there are no requirements for the committee to be chaired by the firm's Chief Executive Officer or the Chief Financial Officer.
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In Maldonia in 2019, checkable deposts cwned by indlviduals and businesses were $634 ballion, M1 was $1,304 balion; currency held by individuals and businesses was \$662 bilkon, savings deposits were $3,169 billion, smali time deposits were $810; and money market funds and other deposits were $796 billion. Calculate teaveler's checks in creulation 1 Maldonia in 2019 . Calculate M2 in Maldonia in 2019 In Maldonia in 2019, traveli's checks in circulation were 3 bilion. Mr in Maldonia in 2019 was? balion.
In Maldonia in 2019, the traveler's checks in circulation were 3 billion. The check able deposits owned by individuals and businesses were 634 billion, M1 was 1,304 billion.
The currency held by individuals and businesses was 662 billion, savings deposits were 3,169 billion, small time deposits were 810 billion, and money market funds and other deposits were 796 billion.Now, to calculate M2, we will add up all of these values:
M2 = currency + traveler's checks + checking deposits + savings deposits + small-denomination time deposits + retail money market mutual fund shares
[tex]M2 = $662 billion + $3 billion + $634 billion + $3,169 billion + $810 billion + $796 billionM2[/tex]
[tex]= $6,074 billion.[/tex].
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When there are fixed costs and a constant marginal cost
a. The average fixed cost function is flat
b. The average variable cost function is flat, and the average cost function is increasing
c. The average cost function intersects the marginal cost function at a minimium of the average cost function
d. The average variable cost function is increasing, and the average cost function is decreasing
e. The average variable cost function is flat, and the average cost function is decreasing
When there are fixed costs and a constant marginal cost, the average variable cost function is flat, and the average cost function is decreasing is the correct option (e).
A fixed cost is a business expense that is not affected by changes in the quantity of products or services produced or sold. A constant marginal cost implies that the cost of producing each additional unit does not change as production increases. Marginal costs are constant because the company's variable costs do not vary as production rises.
The average fixed cost function is not flat, and the average variable cost function is not increasing. If the marginal cost curve intersects the average variable cost curve at its minimum point, the average cost curve will be equal to the marginal cost curve. The average variable cost curve is not rising; instead, it is flat. If the average cost curve is decreasing, this indicates that the marginal cost curve is below the average cost curve. This can only occur when the average variable cost curve is flat.
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Which of the following statements regarding the Capital Allocation Line (CAL) is false? Multiple Choice The CAL determines the optimal portfolio of a risk-averse investor. The slope of the CAL equals the increase in the expected return of the complete portfolio per unit of additional standard deviation. The slope of the CAL is equal to the Sharpe ratio of the risky portfolio. The CAL shows feasible risk-return combinations.
The statement that is false regarding the Capital Allocation Line (CAL) is "The slope of the CAL is equal to the Sharpe ratio of the risky portfolio."What is Capital Allocation Line (CAL)?
Capital Allocation Line (CAL) is a line that describes the combination of the risk-free asset and the market portfolio. The CAL is a graph of all possible combinations of risky and risk-free assets in which the expected return of the portfolio increases as risk increases.What is Sharpe ratio?The Sharpe Ratio measures an investment's risk-adjusted returns, which is the amount of return an investment produces per unit of risk. It aids in determining whether an investment's returns are due to wise investment decisions or simply due to excess risk taking.Why is the slope of CAL is not equal to the Sharpe ratio of the risky portfolio?The Sharpe ratio shows the relationship between risk and return.
It is a measure of risk-adjusted returns. Whereas, the slope of the CAL determines how much extra return per unit of risk investors will receive by investing in the market portfolio instead of the risk-free asset. Therefore, the statement "The slope of the CAL is equal to the Sharpe ratio of the risky portfolio" is false. The slope of the CAL and the Sharpe Ratio of the risky portfolio are not equal because the former measures the amount of extra return per unit of risk gained by investing in the market portfolio, while the latter measures the amount of extra return per unit of risk gained from investing in a risky portfolio relative to a risk-free asset.
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Where do businesses sell their securities?.
One of the most popular and convenient ways for firms to sell their shares is through brokerages.
Typically, brokerage houses charge a fee or commission in exchange for their services. Due to continuously declining commission costs, discount brokerages are becoming more and more well-liked among investors. Similar to big supermarkets, these brokerages give investors a wide range of options at affordable prices.
The majority of the labor must be done by investors, though. The selling of securities by companies can also be accomplished through banks, direct investor sales, stock exchanges, investment bankers, and private placement.
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Joey are 55 year old taxpayer receives $20,500 in
wages she has no income the maximum contribution she may make to
her 401k plan in 2022 is
A taxpayer who is 55 years old can make a catch-up contribution to their 401(k) plan in addition to their standard contribution limit.
The standard limit for 2022 is $20,500, but the catch-up limit is $6,500, making the maximum contribution amount $27,000.Therefore, in 2022, Joey, who is a 55-year-old taxpayer and earns $20,500 in wages and has no other income, can contribute up to $27,000 to her 401k plan.
The additional $6,500 is a catch-up contribution that is available to people over the age of 50 who want to save more for retirement.In general, 401(k) plans are tax-deferred retirement accounts. Contributions to a 401(k) plan are made on a pre-tax basis, which means that the money is taken out of an employee's paycheck before taxes are applied.
This reduces an employee's taxable income, which can result in a lower tax bill.
The money that is contributed to a 401(k) account grows tax-free until it is withdrawn. Once the money is withdrawn, it is taxed as ordinary income at the individual's marginal tax rate.
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IVY has preferred stock selling for 105 percent of par that pays a 6 percent annual coupon. What would be IVY's component cost of preferred stock? Select one: a. 6.30 percent b. 5.71 percent c. 1.11 percent d. 99.00 percent
The formula to calculate the component cost of preferred stock is as follows:Component cost of preferred stock = Preferred dividends / Net proceeds from sale of preferred stock × 100
Given that,IVY's preferred stock is selling for 105 percent of par that pays a 6 percent annual coupon.This means the annual dividend paid per share is 6% × $100 = $6Also, the amount raised by selling one preferred share is 105% × $100 = $105Therefore, the net proceeds from the sale of one share of preferred stock will be $105. Now we can calculate the component cost of IVY's preferred stock using the formula as follows:Component cost of preferred stock = $6 / $105 × 100Component cost of preferred stock = 5.71%Therefore, the correct answer is option b) 5.71 percent.
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A company gets trade credit from its supplier. The company purchases $1000 of goods. Formula for cost of not taking discount = k=d%/(100%-d%) x 365/(f(date) – d(date)) a. It receives terms 2/15, net 35 days. What will they pay in 5 days? Using the formula, calculate the annual cost of not taking the discount. b. Calculate the annual cost of not taking the discount for the following options and pick the better option for the company and explain why. 2/10, net 20 2/10, net 40
a. If the company pays in 5 days, it will receive a discount of 2% on the $1000 purchase. The amount of money the company would pay if they pay in 5 days can be calculated as follows:
$1000 – ($1000 × 0.02) = $1000 – $20 = $980
Therefore, the company will pay $980 in 5 days.
Using the formula provided, the annual cost of not taking the discount for the option 2/15, net 35 can be calculated as follows:
K = d% / (100%-d%) × 365 / (f(date) - d(date))
= 2% / (100%-2%) × 365 / (35-15)
= 2.04 x 365 / 20
= 37.23
The annual cost of not taking the discount for the option 2/15, net 35 is $37.23
b. For the option 2/10, net 20, the discount offered is 2%, but the payment has to be made within 10 days, and the total credit period is 20 days.
Using the formula provided, the annual cost of not taking the discount for the option 2/10, net 20 can be calculated as follows:
K = d% / (100%-d%) × 365 / (f(date) - d(date))
= 2% / (100%-2%) × 365 / (20-10)
= 2.06 x 365 / 10
= 75.19
For the option 2/10, net 40, the discount offered is 2%, but the payment has to be made within 10 days, and the total credit period is 40 days.
Using the formula provided, the annual cost of not taking the discount for the option 2/10, net 40 can be calculated as follows:
K = d% / (100%-d%) × 365 / (f(date) - d(date))
= 2% / (100%-2%) × 365 / (40-10)
= 2.19 x 365 / 30
= 26.47
The better option for the company is to choose 2/10, net 40 as it has the lowest annual cost of not taking the discount.
Trade credit is an agreement between the supplier and buyer, where the buyer can delay the payment for goods and services for a specified period. The formula to calculate the cost of not taking a discount is:
K = d% / (100%-d%) × 365 / (f(date) - d(date))
where d% = discount percent offered
f(date) = date of full payment
d(date) = date when the discount is offered
The annual cost of not taking a discount is calculated using the above formula. It shows the amount of money the company would have to pay to obtain trade credit if they do not take advantage of the cash discount offered by the supplier. The cash discount is an incentive offered to encourage the buyer to pay early. By paying early, the company can save money and improve their cash flow.
The annual cost of not taking a discount is a useful tool for comparing different trade credit options. The option with the lowest annual cost of not taking the discount is the better option for the company.
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1. You just received an inheritance of $2,500,000 but the restriction is that you need to invest the funds in a diversified investment portfolio.
Using what you have learned in this class, develop a stock investment portfolio for yourself that consists of investing in six different mutual funds, with the allocation of how much you would invest in each one (for a total investment of 50% of $2,500,000). Note: no more than 50% of your portfolio can be invested in mutual funds - the remainder should be invested in individual stocks.
Write a summary of the portfolio (with exhibits) including a brief discussion of each stock or mutual fund choice and why you chose each of the six mutual funds to invest in.
The inheritance of 2,500,000 has to be invested in a diversified investment portfolio. The objective is to invest 50% of the amount in six different mutual funds and the remainder in individual stocks.
Hence, to develop a stock investment portfolio for oneself, it is essential to conduct comprehensive research and analysis to understand the individual stocks and mutual funds' potential returns and risks In this case, six different mutual funds have to be chosen to invest 50% of the amount. Following is the portfolio summary:
Dodge & Cox Stock Fund (DODGX) - 15% of the portfolio
American Funds Capital World Growth and Income Fund (CWGIX) - 10% of the portfolio
Vanguard Real Estate Index Fund (VGSLX) - 10% of the portfolio
Fidelity Contrafund (FCNTX) - 7.5% of the portfolio
T. Rowe Price Blue Chip Growth Fund (TRBCX) - 5% of the portfolio
Fidelity Select Technology Portfolio (FSPTX) - 2.5% of the portfolio
Investing in Individual StocksThe remainder of the amount has to be invested in individual stocks. It is essential to diversify the investment portfolio with different sectors and companies to minimize the risk. The following individual stocks have been chosen:
Amazon (AMZN) - 10% of the portfolio
Microsoft (MSFT) - 7.5% of the portfolio
Johnson & Johnson (JNJ) - 7.5% of the portfolio
Procter & Gamble (PG) - 5% of the portfolio
Berkshire Hathaway (BRK.B) - 5% of the portfolio
Visa (V) - 5% of the portfolio.
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How should significant noncash transactions be reported in the statement of cash flows according to US GAAP? Such transactions should be incorporated in the section (operating. financing, or investing) that is most representative of the major component of the transaction. They should be incorporated in the statemerit of cash flows in a section iabeled, "Significant Noncash Transactions." They should be handled in a manner consistent with the transactions that affect cash flows. These noncash transactions are not to be incorporated in the statement of cash flows. They may be summarized in a separate schedule at the boftom of the statement or appear in a separate supplementary schedule to the financials.
Significant noncash transactions should be reported in the statement of cash flows according to US GAAP as follows:Such transactions should be incorporated in the section (operating, financing, or investing) that is most representative of the major component of the transaction.
They should be incorporated in the statement of cash flows in a section labeled "Significant Noncash Transactions." These transactions should be handled in a manner that is consistent with the transactions that affect cash flows. These noncash transactions are not to be incorporated in the statement of cash flows.
They may be summarized in a separate schedule at the bottom of the statement or appear in a separate supplementary schedule to the financials.Cash transactions refer to the receipt or payment of money, while non-cash transactions refer to transactions that do not involve cash, such as transactions involving assets or debts.
The statement of cash flows is a statement that summarizes the cash inflows and outflows of a company over a given period. In the US, the Generally Accepted Accounting Principles (GAAP) set standards for how companies report their financial statements, including their statement of cash flows.Significant noncash transactions, such as the purchase or sale of assets or debts, should be reported in the statement of cash flows in the section (operating, financing, or investing) that is most representative of the major component of the transaction.
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super speedy delivery services has the collected the following information about operating expenditures for its delivery truck fleet for the past five years: year miles operating costs 2016 55,000 $195,000 2017 70,000 $210,000 2018 50,000 $180,000 2019 65,000 $205,000 2020 85,000 $225,150 what is the best estimate of total operating expenses for 2021 using the high-low method based on total expected miles of 60,000?
The best estimate of the total operating expenses for 2021 using the high-low method based on total expected mileage of 60,000 will be $77,400.
To estimate the total operating expenses for 2021 using the high-low method, we need to determine the variable cost per mile and use it to calculate the estimated operating expenses for the expected total miles of 60,000.
First, we need to identify the high and low points from the given data;
High point:
Year: 2020
Miles: 85,000
Operating costs: $225,150
Low point;
Year: 2018
Miles: 50,000
Operating costs: $180,000
Next, we can calculate the variable cost per mile using the high and low points:
Variable cost per mile = (High operating costs - Low operating costs) / (High miles - Low miles)
= ($225,150 - $180,000) / (85,000 - 50,000)
= $45,150 / 35,000
= $1.29 (rounded to two decimal places)
Now, we can estimate the total operating expenses for 2021;
Estimated operating expenses for 2021 = Variable cost per mile * Total expected miles
= $1.29 × 60,000
= $77,400
Therefore, the best estimate of total operating expenses for 2021 using the high-low method based on a total expected mileage of 60,000 is $77,400.
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. Which of the following is the statement of the Heckscher-Ohlin Theorem? A country has a comparative advantage in the good that makes relatively intensive use of that country's relatively abundant factor. A change in output prices will lead to more-than-proportional changes in the opposite direction in the prices of inputs used intensively in the good's production. Opening trade will equalize factor prices across countries. A change in output prices will lead to more-than-proportional changes in the same direction in the prices of inputs used intensively in the good's production. A change in output prices will lead to less-than-proportional changes in the same direction in the prices of inputs used intensively in the good's production.
The Heckscher-Ohlin Theorem states that countries specialize in and export goods that use their abundant factors of production.
The statement of the Heckscher-Ohlin Theorem is as follows: "A country has a comparative advantage in the good that makes relatively intensive use of that country's relatively abundant factor." This means that a country will specialize in producing and exporting goods that require a larger amount of the factor of production it has in abundance. For example, if a country has a large amount of skilled labor, it will specialize in industries that require skilled labor. The theorem suggests that countries will trade based on their factor endowments, with each country exporting goods that use its abundant factors and importing goods that use its scarce factors. The Heckscher-Ohlin Theorem forms the basis of the modern theory of international trade and explains the patterns of trade observed in the world economy.
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You are the senior partner in an audit firm. Your audit firm has
recently been appointed as the auditors of Free Style SA Limited
"Free Style SA", a recently listed company on the JSE Securities
E
As the senior partner in an audit firm appointed as auditors of Free Style SA Limited, there are certain duties that should be carried out to ensure the audit is conducted in accordance with the International Standards on Auditing (ISA) and all relevant regulations and requirements.
During the planning phase, the audit team should gain a thorough understanding of Free Style SA's business operations and assess the risks that may impact the company's financial statements. This should include identifying the key areas of the company's operations that could impact the audit, such as revenue recognition, inventory valuation, and the accounting for complex financial instruments.
After identifying the risks, the audit team should design and implement appropriate audit procedures to obtain sufficient and appropriate audit evidence to support their conclusions. This should include obtaining an understanding of the company's internal controls, testing the operating effectiveness of these controls, and substantive testing of the balances in the financial statements.
If any audit findings are identified, they should be reported to the relevant parties in accordance with ISA reporting requirements. The audit report should be prepared in accordance with ISA reporting requirements and should include an opinion on the fairness of the financial statements, along with any material weaknesses in the company's internal controls.
The audit team should maintain independence and objectivity throughout the audit and should follow the International Ethics Standards Board for Accountants (IESBA) Code of Ethics for Professional Accountants.
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On April 1, Crane Travel Agency Inc. was established. These transactions were completed during the month. 1. Stockholders invested $30.800 cash in the company in exchange for common stock. 2. Paid $810 cash for April office rent. 3. Purchased office equipment for $3,840 cash. 4. Purchased $280 of advertising in the Chicago Tribune, on account. 5. Paid $580 cash for office supplies. 6. Perfoed services worth $11,500. Cash of $4,000 is received from customers, and the balance of $7.500 is billed to customers on account. 7. Paid $510 cash dividend. 8. Paid Chicago Tribune amount due in transaction (4). 9. Paid employees' salaries $1,240. 10. Received $7,500 in cash from customers billed previously in transaction (6).
Stockholders invested $30,800 cash in the company in exchange for common stock. As a result, the company's cash account will increase by $30,800.Paid $810 cash for April office rent. Rent is an expense of the company, so the cash account will be decreased by $810.Purchased office equipment for $3,840 cash.
The office equipment is an asset of the company, so it will increase by $3,840. The cash account will be decreased by $3,840.Purchased $280 of advertising in the Chicago Tribune, on account. The accounts payable account will increase by $280.Paid $580 cash for office supplies. Office supplies are an asset of the company, so it will increase by $580. The cash account will be decreased by $580.
Performed services worth $11,500. Cash of $4,000 is received from customers, and the balance of $7,500 is billed to customers on account. The service revenue account will increase by $11,500. The cash account will increase by $4,000. The accounts receivable account will increase by $7,500.Paid $510 cash dividend. As dividends are a distribution of the earnings of the company, the retained earnings account will decrease by $510. The cash account will be decreased by $510.
Paid Chicago Tribune amount due in transaction (4). The accounts payable account will decrease by $280. The cash account will be decreased by $280.Paid employees' salaries $1,240. Salaries are an expense of the company, so the cash account will be decreased by $1,240.Received $7,500 in cash from customers billed previously in transaction (6). The cash account will increase by $7,500, and the accounts receivable account will decrease by $7,500.
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Let's say you invested in WXYZ Corp. beginning in 2018, and that the firm's return was 3\% in 2018, 9\% in 2019, -11\% in 2020, 21\% in 2021, Then what is the variance of the returns? A> 13.30% B> 6.54% C> 1.77% D> 3.12%
Option (a), The variance of the given returns is 13.30%.
Given,
The returns of WXYZ Corp. in the years 2018, 2019, 2020, and 2021 are 3%, 9%, -11%, and 21% respectively.
The formula to calculate the variance is given by:
Variance = [(return 1 - average return)² + (return 2 - average return)² + ... + (return n - average return)²] / n
where n is the total number of returns.
Let's calculate the average return of the firm. The average return of the firm is:
(3 + 9 - 11 + 21) / 4 = 5%
Using the above formula, we get the variance of the returns as:
Variance = [(3 - 5)² + (9 - 5)² + (-11 - 5)² + (21 - 5)²] / 4= (4 + 16 + 256 + 256) / 4= 532 / 4= 133/10 = 13.3%
Hence, the variance of the given returns is 13.30%.
Option A is the correct answer.
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Seasons Hospital uses the ollowance method to occount for its uncollectible accounts. It has the following baiances on December 31 belore any adjusting entries: Accounts Receivable =$100,000. Allowonce for Uncollectible Accounts =$1.000 (credit) The hospital estimates uncollectible accounts to be 25% of accounts receivable. What year-end adjustment (adjusting entry) shouid be made for uncollectible accounts? 2950
The journal entry to record the year-end adjustment for uncollectible accounts would be Debit Bad Debt Expense = $24,000 and Credit Allowance for Uncollectible Accounts = $24,000.
Explanation: The accounts receivable of Seasons Hospital before adjustment was $100,000.
The hospital has to adjust the allowance for uncollectible accounts by considering the estimated uncollectible accounts
to be 25% of the accounts receivable.
The amount of allowance for uncollectible accounts after adjustment = 100,000 × 25% = $25,000
Allowance for uncollectible accounts before adjustment = $1,000
The year-end adjustment in the allowance account should be: $24,000 ($25,000 - $1,000)
Increase in the allowance account = $24,000
Increase in the allowance account would also increase the bad debt expense account by the same amount.
The year-end adjusting entry is: Debit Bad Debt Expense = $24,000
Credit Allowance for Uncollectible Accounts = $24,000
Thus, the journal entry to record the year-end adjustment for uncollectible accounts would be Debit Bad Debt Expense
= $24,000 and Credit Allowance for Uncollectible Accounts = $24,000.
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What is meant by the ‘mandates’ for central bank policy? What are typical single, dual and multiple mandates. What has been the Fed policy in the past and more recently? What are the issues regarding Fed independence, policy instruments and time lags, high employment goals, (types of unemployment), financial market stability, foreign exchange rate stability?
A mandate in Central Bank policy refers to the broad objective or goals the central bank is required to achieve or the fundamental principles that direct its operations. Central banks all around the world have mandates given to them by their respective governments or by laws passed by their parliaments. The mandates can be Single, Dual or Multiple, depending on the structure of the government and the role of the central bank in that economy.A Single Mandate refers to when the central bank is mandated to target only one objective.
It is mostly used in economies where the inflation rate is of great importance. Dual mandates refer to when the central bank has two targets. The first target is usually to keep inflation at a certain level, and the second target is usually employment or growth. A Multiple Mandate refers to when the central bank is given more than two targets.
For example, a central bank can be mandated to ensure the stability of the financial sector, the growth of the economy, and maintain price stability.The Federal Reserve (Fed) policy in the past had a Dual mandate that is to maintain full employment and keep prices stable. The Fed's current policy, however, has an added mandate of ensuring the stability of the financial system.
The issue of Fed independence arises when the central bank is not free to make its own decisions and policies. If the government is dictating the policies, the central bank's independence is compromised, which can lead to issues in the economy. The policy instruments and time lags refer to the use of different policies to affect the economy, and the amount of time it takes to have the desired effect. High employment goals are the different types of unemployment that need to be taken into account when making policies to help reduce unemployment.
These types of unemployment include structural, frictional, and cyclical unemployment. Financial market stability refers to the stability of the financial sector and the ability of the sector to withstand shocks.
Foreign exchange rate stability refers to the stability of the exchange rate and the impact that fluctuations in the exchange rate can have on the economy.
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