PLEASE ANSWER ASAP! Which of the following statements are true about brokerage firms? (Select all that apply.)
a. Full-service brokers do not provide any investment advices to their clients
b. Most people hire money managers as they provide the best services
c. Typically brokerage firms charge customers a commission, a fee for carrying out transactions.
d. All types of brokerage firms charge the same amount of fee per transaction
e. Discount brokers offer a reduced level of service, lower costs, and often the ability to make your trades yourself online.

Answers

Answer 1

Answer:

C and E.

Explanation:

Brokerage Firms are those firms that acts an a middlemen between the buyer and a seller to expedite a transaction. It is a financial institutions that ease the buying and selling of securities. These companies also charge a amount of fee or compensation on the completion of transactions. A brokerage firm is also known as brokerage company or brokerage.

There are three types of brokerage firms. They are:

Full-service brokerageDiscount brokerageRobo-advisors.

The discount brokerage provides less comprehensive services than the traditional one or the full-service brokerage. These services are provided via online as well by discount brokerage.

So, from the given options the correct options are C and E.


Related Questions

Question 3 of 10
Why do many banks consider student loans risky investments?
A. Student loans have long grace periods.
B. Student loans bring in a low rate of interest.
C. Student loans are regulated by the government.
D. Student loans aren't secured by collateral.
SUBMIT

Answers

The answer it’s “d”

Student loans aren’t secured by collateral

Question 8 of 25
A factory laying off a lot of workers in a town is most likely to lead to which of
the following?
O A. Economic recovery.
B. A buyer's market.
C. Increase in population density.
O D. Rise in housing investment.
CIT

Answers

Answer:

B. A buyer's market

Explanation:

Answer: A buyer's market

Explanation:

Economist Jones favors a constant-money-growth-rate rule. She says that if the annual money supply growth rate each year is equal to the average annual growth rate in Real GDP, price stability will exist over time. What would economist Smith, who favors activist monetary policy, say to economist Jones?

Answers

Answer: d. b and c

Your analysis assumes that velocity is constant, and it is not.

Your analysis assumes that you can correctly define the money supply

Explanation:

Here are the options for the question:

a. Your analysis assumes that Real GDP is constant over time, and it is not.

b. Your analysis assumes that velocity is constant, and it is not.

c. Your analysis assumes that you can correctly define the money supply.

d. b and c

e. a, b and c

According to the constant-money-growth-rate rule, the government should target money growth rate in a way that it will be equal to growth rate of the real GDP.

The likely thing that economist Smith, who favors activist monetary policy would say to economist Jones is that Jones is assuming velocity will be constant, and is also correctly defining the money supply which should not.be the case as velocity isn't always constant.

ECNAL Corp. manufactures bicycle parts. One of its new products, the Slipstream tire, is advertised to be 20 percent stronger than that of its competitors due to a new rubber compound used that makes the tires skid resistant. After receiving complaints of fraud, the Federal Trade Commission (FTC) determines that the tire is made from rubber similar to that found in most bicycle tires and is not skid resistant. The FTC orders ECNAL to run an ad admitting that its advertisements were misleading and remove the untrue information from its advertisements. In this scenario, which of the following remedies is used by the FTC?

A. corrective advertising
B. cease and desist advertising
C. comparative advertising
D. parody advertising
E. social advertising

Answers

Answer:

The correct answer is the option A: Corrective advertising.

Explanation:

To begin with, the concept known as "Corrective Advertising" refers to a severe penalty that is used by many agencies, including the Federal Trade Commision, in ordert to impose to the companies the fact that they had worked unethically regarding certain advertisements that they have been controled by the agency. Therefore that the corrective advertising is a way to penalize those companies, that had advertised products with false information or that might cause harm to the consumers.

Select all that apply On November 1, 2019, Movers, Inc., paid $24,000 for 2 years' rent beginning on November 1 (assume rent is the same amount each month). Movers' year-end financial statements as of December 31, 2019 will show: (Select all that apply.) Rent expense of $2,000 Rent expense of $1,000 Rent expense of $24,000 Prepaid rent of $22,000 Prepaid rent of $24,000

Answers

Answer:

Rent expense of $2,000

Prepaid rent of $22,000

Explanation:

Since we were told that On November 1,2019 Movers Inc., paid the amount of $24,000 for a 2 years' rent which will start or begin on November 1 which means Movers' year-end financial statements as of December 31,2019 will show:

Rent expense of $2,000

Prepaid rent of $22,000

The rent expense of $2,000 is calculated as

(1÷12*$24,000)=$2,000

The prepaid rent of $22,000 is calculated as

$24,000-$2,000

$22,000

Professional angels are ______________________. a. usually former business executives looking to use their savings or current income to invest b. independently wealthy retired or semiretired entrepreneurs or executives who often invest their personal capital in startups as a hobby c. doctors, lawyers, dentists, accountants, consultants, and the like, who invest their savings and income d. people who have already successfully started and operated their own businesses

Answers

Answer:

The answer is C. doctors, lawyers, dentists, accountants, consultants, and the like, who invest their savings and income

Explanation:

Professional angels are professionals who would invest in companies in their chosen area of specialization. Examples are, doctors, accountants, lawyers etc. They may also provide associated services to their invested company. Examples are:

Lawyer - legal services.

Accountant - accounting services.

Doctor - health services.

In order words, professional angels invest their savings and income in their related field.


Why did Krispy Kreme decide to manufacture all the donut mix and distribute it to the stores?

a) it made the products more consistent in various stores
b) franchise law demands is kind of central production
c) It is always cheaper to use this method
d) The company was having problems with distributors

Answers

Answer:

Option A

Explanation:

In simple words, Krispy Kreme Doughnuts, Inc. is an American doughnut company and coffeehouse chain owned by JAB Holding Company.  Krispy Kreme was founded by Vernon Rudolph, who bought a yeast-raised recipe from a New Orleans chef, rented a building in 1937 in what is now historic Old Salem in Winston-Salem, North Carolina, and began selling to local grocery stores.

They make all their dough of the product by themselves so that the neutrality regarding their consistency remains intact thought the country,

Explain the criticisms of labor unions today. 25 POINTSS​

Answers

Critics argue that labour unions can make a company less competitive due to added labour costs. Additionally, unreasonable union demands could hurt members when a business simply outscores jobs to foreign countries in search of cost-efficiency

One major criticism of labor unions today is that they have become too large and are out of touch with workers’ needs. In the past, union leadership has shown a pattern of corruption and many people worry that this trend continues today. Some people argue that union activity has hurt the US economy; higher union wages have meant higher prices for consumer goods and the introduction of improved technology has been slow as unions fear it will result in fewer employees.

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In early 2009, General Electric (GE) had a book value of equity of $105 billion, 10.5 billion shares outstanding, and a market price of $10.80 per share. GE also had cash of $48 billion, and total debt of $524 billion. Three years later, in early 2012, GE had a book value of equity of $116 billion, 10.6 billion shares outstanding with a market price of $17 per share, cash of $84 billion, and total debt of $410 billion. Over this period, what was the change in GE's a. Market capitalization? b. Market-to-book ratio? c. Enterprise value?

Answers

Answer and Explanation:

1. The computation of Market capitalization is shown below:-

Market Capitalization in 2009 = Market Price × Outstanding Shares

= 10.5 × $105

= $1,102.5 billion

Market Capitalization in 2012 = Market Price × Outstanding Shares

= $17 × $10.6

= $180.2 billion

Changes in Market Capitalization = Market Price × Outstanding Shares

= $1,102.5 billion - $180.2 billion

= $922.3

b. The computation of Market-to-book ratio is shown below:-

Market to Book Ratio in 2009 = Market Value of Firm ÷ Book Value of Firm

= $1,102.5 billion ÷ $105 billion

= 10.5

Market to Book Ratio in 2012 = Market Value of Firm ÷ Book Value of Firm

= $180.2 billion ÷ $116 billion

= 1.55

Changes in Market to Book Ratio = Market to Book Ratio in 2009 - Market to Book Ratio in 2012

= 10.5 - 1.55

= 8.95

c. The computation of enterprise value is shown below:-

Book Debt to Equity Ratio in 2009 = Debt ÷ Book Value of Equity

= $524 ÷ $105

= 4.99

Book Debt to Equity Ratio in 2012 = Debt ÷ Book Value of Equity

= $410 ÷ $116

= 3.53

Changes in Book Debt to Equity Ratio = Book Debt to Equity Ratio in 2012 - Book Debt to Equity Ratio in 2009

= 3.53 - 4.99

= -1.46

Which of the following does not appear on the asset side of a bank's balance sheet? Question 19 options: a) required reserves b) checkable deposits c) loans d) excess reserves

Answers

Answer: b) checkable deposits

Explanation:

Checkable Deposits are the deposits by customers into the bank. The bank uses these funds to make loans that it issues out to others. It is recorded as a liability on a Banks Balance sheet because it represents that the bank owes its customers.

You are a vendor representative with a new line of fashion watches showing it to a new buyer. The costume jewelry buyer says she would like to buy the line but has too many lines of fashion watches in her assortment already that are not selling. She continues to complain that her worst-selling brand of watches will not help her out with any markdown allowances or take any of the merchandise back. She states that she is no longer buying any more merchandise from this line and will have to wait until it sells before she can bring in a new line of watches. What might you suggest or negotiate?

Answers

Answer:

Doing a buyback

Explanation:

Answer:

Since She states that she will no longer buy any more merchandise from this line and she will have to wait until it sells before she can bring in a new line of watches what i would or might you suggest or negotiate is for her to do a BUYBACK.

Therefore BUYBACK can be seen as something or item that have been repurchased due to some unresolved issues that has been reported by the initial owner but has since been resolved and it can as well mean an agreement to buy something in return.

Lastly BUYBACK can tend to be a sale whereby something that is been sold is repurchased from the buyer by either the seller or the initial owner.

In one of her weekly live videos, the Federal Reserve Chairman remarked that inflation had begun to tick upward. However, unemployment in the U.S was still quite high and economic growth had slowed. With short-term interest rates close to 0 (zero), the Chair did not visualize that ____________ policy would be able to do anything for the high unemployment problem. She felt that _______ policy would be more useful for bolstering employment, but that would require local and state governments and the federal government to provide tax breaks for corporations.

Answers

Answer:

Monetary, Fiscal

Explanation:

Interest rate can be easily be said to be the amount due on an a loan. Monetary policies usually involve rules and regulation regarding money and how it affects the economy and sub-sections of the economy.

In the question, monetary policy h nothing to do to the state of unemployment in the US since no unemployed persons can be taking loans as there would not be a means to pay back.

Fiscal policy on the other hand can be defined as the use of a government's revenue collections and expenditure to influence an economy. This means that the government of any country uses collections such as taxes or tax cuts to improve the situation of the country.

From the above question, a fiscal policy can be used to tackle the unemployment in the US as the government can channel its expenditure and collections to the creation of jobs through establishment of companies and other opportunities.

Cheers.

Shannon Company segments its income statement into its North and South Divisions. The company’s overall sales, contribution margin ratio, and net operating income are $480,000, 36%, and $9,600, respectively. The North Division’s contribution margin and contribution margin ratio are $92,000 and 40%, respectively. The South Division’s segment margin is $32,500. The company has $62,400 of common fixed expenses that cannot be traced to either division. Required: Prepare an income statement for Shannon Company that uses the contribution format and is segmented by divisions. In addition, for the company as a whole and for each segment, show each item on the segmented income statements as a percent of sales. (Round your percentage answers to 1 decimal place (i.e. 0.1234 should be entered as 12.3

Answers

Answer:

                                 Shannon Company

                         Segmented Income Statement

                                 Total Company        North                     South

                                                                   Division                 Division

Total sales                  480,000  100%      230,000  47.9%    250,000 52.1%

Variable costs            307,200   100%      138,000   44.9%    169,200  55.1%

Contribution margin   172,800   100%       92,000   53.2%     80,800  46.8%                        

Traceable fixed          100,800   100%       52,500   52.1%      48,300  47.9%

Segment income         72,000   100%       39,500   54.9%     32,500  45.1%

Common fixed             62,400   100%

Net income                    9,600   100%

North's total sales = $92,000 / 40% = $230,000

South's total sales = $480,000 - $230,000 = $250,000

South's contribution margin = $172,800 - $92,000 = $80,800

Total segment income = common fixed + net income = $62,400 + $9,600 = $72,000

The purpose of stock valuation isGroup of answer choicesof limited value, since the efficient market hypothesis proves that all common stock is always fairly priced.to find common stocks whose market price equals the intrinsic value.to determine whether the common stock's value is fairly represented by its market price.to set the fair market price for a given common stock.

Answers

To determine whether the value of the common stock is fairly represented by its market price.

Shakira has a balance of $202.86 in her checking account on Saturday morning. She uses her debit card to pay her cell phone bill of $80.73 over the phone. She then picks up her dry cleaning, dog food at the pet store and groceries for debits of $16.89, $35.24, and $113.92. Shakira’s bank uses a balance system of deducting highest transactions first. The bank will not return amounts up to a total of $50 in overdraft, but they do charge a fee for each overdraft. How many overdraft fees will Shakira incur

Answers

Answer:

Shakira's bank will charge her 2 overdraft fees for purchasing dog food and her dry cleaning bill.

Explanation:

Shakira's initial balance $202.86

- groceries $113.92

balance = $88.94

- cell phone bill $80.73

balance = $8.21

- dog food $35.24

balance = $27.03  ⇒  OVERDRAFT 1

- dry cleaning $16.89

balance = $43.92  ⇒  OVERDRAFT 2

The number of overdrafts incurred by Shakira is: Two overdrafts.

Overdrafts and Checking accounts

According to the question;

She has a balance of $202.86.

Hence, upon the cell phone payment and the groceries debit which are first deducted;

New balance = $202.86 - $80.73 - $113.92 = $8.21.

Hence; The other debits result in an overdraft as follows;

$8.21 - $16.89 = - $8.68 ....1st overdraft.

- $8.68 - $35.24 = -$43.92.....2nd overdraft.

Read more on overdraft;

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On december 31, 2008, Pico acquired $ 250,000 per value of the outstanding $1,000,000 bonds of its subsidiary, sico, in the market for $ 200,000, on the date, Sico had a $ 100,000 discount on its total liability. Which one of the following is the net amount of gain or loss that will be recognized by pico in its December 31, 2008, consolidated financial statements as a result of its intercompany bonds?
a. $150,000
b. $ 50,000
c. $25,000
d. $75,000

Answers

Answer:

Pico gain = $25,000

Explanation:

Given:

Total bonds of sico = $1,000,000

Pico acquired = $250,000

Total amount of premium = $200,000

Discount amount = $100,000

Find:

Pico gain or loss

Computation:

Share of Pico = $250,000 / $1,000,000

Share of Pico = 0.25

Gain in premium = $200,000 × 0.25

Gain in premium = $50,000

Loss in discount = $100,000 × 0.25

Loss in discount = $25,000

Net gain = $50,000 - $25,000

Net gain = $25,000

What does the term scarcity mean as it relates to economics? A. Resources are used to produce the goods that constitute wants and needs. B. Needs are more important than wants. C. There are more wants than needs. D. There are more wants and needs than can be satisfied by the available resources.

Answers

Answer: supply and demand

Explanation:

the state of being scarce or in short supply; shortage.

Ravina is the owner of a large bakery that specializes in customized cupcakes for special occasions. When she refurnishes her kitchen, she finalizes a layout that groups various kitchen appliances and equipment according to the type of task they perform. According to Ravina, such a layout will help her in customizing small orders. Given this information, it can be inferred that Ravina has chosen a _____ for her kitchen.

Answers

>>>>>>————Layout————<<<<<

You are a consultant specializing in estimating the costs after the employees learn how to do a job more efficiently by repetition. Your client can produce a product the first time at a cost of $2,500. If their 65 percent learning curve allows them to reduce their costs on each product, what is the total cost of producing 400 units of the new product?

Answers

Answer:

$58,600

Explanation:

The computation of the total cost for producing the 400 units for the new product is shown below:

= Learning curve at 65% for producing 400 units × cost for produced first time

= 23.44 × $2,500

= $58,600

By multiplying the Learning curve at 65% for producing 400 units with the cost i.e produced first time so that the total cost could come and the same is to be considered

Setting prices for products and services requires entrepreneurs to balance a multitude of complex forces as entrepreneurs determine prices for their goods and services that will draw customers and ________.

Answers

Answer:

produce a profit

Explanation:

Price refers to the amount of money that is paid by one party to another to acquire a particular commodity or in return for unit of commodities. Some of the factors that determines the price of a commodity include cost of production, product demand, product supply, targeted profit, and among others.

A profit is the amount earned from selling a commodity minus the amount expended to purchase, operate, or produce the commodity.

The primary aim of an entrepreneur is to make a profit, and price setting is one of the important activities that influences a profit. Since the higher the price, the higher may be the profit. However, a higher price may also dicourage customers from buying a product and then reduces profit.

Therefore, setting prices for products and services requires entrepreneurs to balance a multitude of complex forces as entrepreneurs determine prices for their goods and services that will draw customers and produce a profit.

Manila Water, the provider of the water and sewerage services in the capital of the Philippines has purchased the government-owned water and sewerage system for the entire country. It promises to make the nation's water and sewerage system run as efficiently and profitably as the one it operates in Manila. The development, maintenance, and allocation of resources to achieve its goal will require:

Answers

Answer:

Planning

Explanation:

Planning can be defined as what is needed and required to achieve a desired goal because PLANNING is the first and foremost activity often needed to achieve a desired goal or results reason been that PLANNING involves the creation as well as the maintenance of a plan and it helps to achieve objectives which is why every organization or company always has certain objectives in which they keep on working hard to fulfill these goals and objectives which in turn helps the organization to achieve their aims.

Therefore based on the information given about Manilla water the development, maintenance, and allocation of resources to achieve its goal will require PLANNING.

On January 1, the Elias Corporation issued 10% bonds with a face value of $113,000. The bonds are sold for $110,740. The bonds pay interest semiannually on June 30 and December 31 and the maturity date is December 31, ten years from now. Elias records straight-line amortization of the bond discount. The bond interest expense for the year ended December 31 of the first year is.

Answers

Answer:

The bond interest expense for the year ended December 31, of the first year is $5,650

Explanation:

We will need to calculate the total annual interest expense on the bond which we are given as 10% of the face value. We will then divide the total interest on the bond by 2 because the pays semi-annual interest.

Total interest expense on the bond will therefore be ; 10% × $113,000

= $11,300

Semi-annual interest expense will now be ;

= $11,300/2

= $5,650

" Brad always buys and uses Nike brand golf balls. If he finds a Titlelist or Callaway ball in the rough, he gives it away. Brand loyal golfers like Brad allow Nike to charge a higher price and not lose many sales. Nike has effectively: "

Answers

Answer:

b. reduced the price elasticity of demand for its products.

Explanation:

The price elasticity of demand refers to the relationship between the percentage change in the price of a good and the percentage change in the quantity demanded

Like it in the question, it is mentioned that Nike charged a higher price and does not want to lose many sales which results that it declines the price elasticity of product demands

One of the easiest methods of diversifying away firm-specific risks is to: Multiple Choice build a portfolio with 40 to 55 individual stocks. buy only stocks with a beta of 1.0. purchase stocks that plot above the security market line. purchase the shares of an index fund.

Answers

Answer:

Option D. purchase the shares of a Index fund.

Explanation:

The reason is that the index funds are itself a mutual fund investment and they follow preset rules which helps an ordinary investor to understand those rules easily. Furthermore, they are already a diversified investment, hence investing in the shares of mutual fund makes the investment risk diversified investment.

The fictional school: Oakland Community College increases the income tax rate so that tax revenues increase by $70 million. Government spending also increases by $70 million and consumption falls by $10 million. If GDP remains the same and Oakland Community College is a closed economy, then investment a. increases by $140 million. b. increases by $70 million. c. decreases by $60 million. d. decreases by $80 million.

Answers

Answer: c. decreases by $60 million

Explanation:

The formula for Gross Domestic Product (GDP) in a closed economy using the Expenditure method is;

GDP = Consumption + Government Spending + Investment

Therefore;

Investment  = GDP - Consumption - Government Spending

GDP remained the same = $0

Consumption fell by $10 million = -$10 million

Investment = 0 - (-10) - 70

Investment = - $60 million

Drs. James and Janet Baker saw that many people experienced difficulty and frustration when typing, some because of physical disabilities. So they invented a voice recognition software to allow users to talk to the computer. Their ideas have become Dragon Naturally Speaking, a popular talk-to-type software application. Which of these statements describes their startup?
A) Borrow heavility from existing products or services.
B) Combine two businesses to create a market opening.
C) Begin with a problem in mind or a pain you can relieve.
D) Recognize a hot trend and ride the wave.

Answers

The answer is C) Begin with a problem in mind or a pain you can relieve

When Callie wants to obtain information to research changes in her market or determine what her customers are likely to want in the future, she relies on the articles and data available in trade journals, feedback from surveys, and personal interviews of her customers. Which of the following statements about Callie's sources of information is most accurate?
A. Callie is relying entirely on primary data for her research needs.
B. Callie is relying entirely on secondary data for her research.
C. The surveys and personal observations provide primary data, while the journals provide secondary data.
D. The surveys and personal observations provide secondary data, while the journals provide primary data.

Answers

Answer:

C. The surveys and personal observations provide primary data, while the journals provide secondary data.

Explanation:

Primary data is defined as data obtained from analysis of a sample or population of interest.

Secondary data is one that is obtained from primary data. That is primary data that is put to some use.

In the given scenario the surveys and personal interviews of the customer are a primary source of data. Directly from the customer.

Data from journals is a secondary data source, as this contains information from previous studies (other primary data).

A bond has a par value of $10,000 and currently has a price of $9,500. The bond pays a rate of 5% over 5 years. Calculate the current yield. The same bond started the year with a price of $9,500 and is expected to be sold for $9,750. What is the Capital Gains Yield

Answers

Answer:

The current yield is 5.2% and capital gain is 2.63%.

Explanation:

The par value of bond = $10000

Current price = $9500

Annual coupan payment = 5%

Annual coupan  payment = 10000 × 5% = $500

Now calculate the current yield.

The current yield =  annual coupon payment / current price  

The current yield =   500 / 9500 = 0.052 or 5.2%  

Now calculate the capital gain. In the question, it says that it starts at $9500 so its original price is 9500.

Capital gain yield = (9750 – 9500) / 9500 = 0.0263 or 2.63%

Halverstein Company's outstanding stock consists of 7,000 shares of cumulative 5% preferred stock with a $10 par value and 3,000 shares of common stock with a $1 par value. During the first three years of operation, the corporation declared and paid the following total cash dividends.Dividends Declared & PaidYear 1 $ 0Year 2 $ 6,000Year 3 $ 32,000The amount of dividends paid to preferred and common shareholders in Year 2 is:

Answers

Answer:

Preferred shareholders $6,000

Common shareholders = $0

Explanation:

Preference Stock holders have preference over Common stock holders when it comes to payment of dividends.

Also if the preference stocks are cumulative, previous dividends in arrears have to be settled before any distributions are made to common stockholders.

Preference Stock dividend per year is constant and is calculated as follows.

Preference Stock dividend =  7,000 × $10 × 5%

                                             =  $3,500

Year 1

No dividend was declared and paid.

Preference Stock dividend in arrears is  $3,500.

No dividend is available for Common stockholders

Year 2

Dividend declared and paid amount to $6,000

Preference Stock dividend in arrears  from first year to be paid is  $3,500.

Preference Stock dividend in current year to be paid is $3,500.

This leaves an arrear of $1,000 to be paid to Preference Stock holders after the payments.

Calculation = $6,000 - $3,500 (Year 1) - $3,500 (Year 2) = $1,000 (Arrears)

No distributions are available for Common stockholders.

Conclusion :

The amount of dividends paid to preferred and common shareholders in Year 2 is:

Preferred shareholders $6,000

Common shareholders = $0

Cost of common stock equity Ross Textiles wishes to measure its cost of common stock equity. The​ firm's stock is currently selling for ​$45.23. The firm just recently paid a dividend of ​$4.05. The firm has been increasing dividends regularly. Five years​ ago, the dividend was just ​$2.98. After underpricing and flotation​ costs, the firm expects to net ​$42.06 per share on a new issue. a. Determine average annual dividend growth rate over the past 5 years. Using that growth​ rate, what dividend would you expect the company to pay next​ year? b. Determine the net​ proceeds, Nn​, that the firm will actually receive. c. Using the​ constant-growth valuation​ model, determine the required return on the​ company's stock, r Subscript s​, which should equal the cost of retained​ earnings, r Subscript r. d. Using the​ constant-growth valuation​ model, determine the cost of new common​ stock, r Subscript n.

Answers

Answer:

A)grow = 6.33%

Nxt year dividends(rounded to nearest cent): $4.31

B) The firm receives 93% (1 - flotation cost) of the market value of the shares so It receives the 42.06 per share

C)  stock return 15.86%

D) required rate of return (with flotation): 16.57%

Explanation:

We solve for the constant grow rate:

[tex]\frac{Div_0}{(1 + grow)^{time} } = Div_{time}[/tex]

[tex]\frac{2.98}{(1 + grow)^{5} } = 4.05[/tex]

[tex] grow= \sqrt[5]{4.05/2.98} -1[/tex]

grow= 0.063280262

Dividends for the sixth year:

4.05 x (1.0633) = 4,306365

42.06 / (1 - flotation cost) = 45.23

flotation cost = 1 - 42.06 / 45.23 = 0.07 = 7%

rate of return without flotation:

4.31/45.23 + 0.0633 = 0.158590736 = 15.86%

solving for return considering the existence of flotation cost:

[tex]\frac{divends}{return-growth} = Intrinsic \: Value[/tex]

[tex]\frac{divends}{Price} = return-growth[/tex]

[tex]\frac{divends}{Price} + growth = return[/tex]

[tex]$Cost of Equity =\frac{D_1}{P(1-f)} +g[/tex]

D1 4.31

P 45.23

f 0.07

g 0.0633

[tex]$Cost of Equity =\frac{4.31}{45.23(1-0.07)} +0.0633[/tex]

Ke 0.165763157 = 16.57%

Other Questions
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