Answer:
It draws positive emotions from the customer towards the particular brand.
Explanation:
Given that Relationship Marketing seeks to build and keep the existing and life long relationship between the brand or producer and the customer. The main argument for this approach is that it draws positive emotions and intense interest or want from the customer towards a particular brand. Thereby making the brand or producer keep delivering products or services to the customers.
Donna, a single taxpayer, purchased an antique rug for $20,000 on April 1, 2015. On November 8, 2019, she sold the rug for $25,000. Donna's 2019 taxable income is $185,000, so her marginal tax rate is 32%. Donna's gain on the sale of the rug will be taxed at a rate of:_______ a. 15% b. 20% c. 28% d. 32%
Answer:
a. 15%
Explanation:
Donna'a gain should be considered a long term capital gain because she "invested" in an antique rug that she was able to sell later with a gain. Since the holding period was longer than a year, it is considered a long term capital gain. Donna's tax rate is 15% since her AGI is less than $434,550 (in 2019).
What would be included in the entry to record actual Manufacturing Overhead costs incurred in a process department?
Answer:
debit to manufacturing overhead.
Explanation:
When a product is manufactured, some costs are associated with the production processes. These costs are indirect costs which includes but not limited to; depreciation, rent of buildings, salaries(maintenance and managers) , wages, utilities for the factory etc. Manufacturing overhead consist of all production costs except direct material and labor.
With regards to the above, when actual manufacturing overhead costs(machine maintenance, supervisor salary, factory utilities) are incurred in a given period, they are recorded as debit in the manufacturing over head account while the credit entry goes to account payable.
Generally, as the proportion of middle-income households in a country increases, the nation's purchasing power __________.
Answer:
Increases
Explanation:
Generally, as the proportion of middle-income households in a country increases, the greater (an increase) nation's purchasing power.
Actually, the purchasing capability increases in proportion to an increase in the income of households.
Purchasing power is known as the currency value which is usually seen in the amount of goods or services that a unit of money can buy.
a company with a high level of productivity is able to a. Operate without much investment b. Avoid high opportunity cost c. produce goods and services efficiently d. expand without taking on debt
Answer is C to produce goods and services efficently
Explanation:
A company that has a high rate of productivity can generate goods and services quickly. So, the correct option is C.
What is Productivity?Productivity is a measure of how effectively commodities or services are produced. Productivity is sometimes represented as a ratio of the whole product to a single input or the total input utilized during a production process, or production per unit of input, usually over a predetermined time period.
An economy may create and consume additional goods and services with the identical amount of effort when productivity is growing. Individuals (workers and consumers), corporate executives, and analysts value productivity (for example policymakers and government statisticians).
Therefore, the correct option is C.
Learn more about Productivity, here:
https://brainly.com/question/30333196
#SPJ7
United services automotive association is one of the largest diversified financial. What are the highest paying jobs at United Services Automobile Association?
Answer with Explanation:
According to theladder, the average pay in the United Services Automotive Association is $132,957 and the highest paying jobs are mostly taken by the CFA candidates. The highest paying job includes:
Risk Analyst is the one who analyzes the risk that the investment of the company is bearing and the relevant actions are proposed by the person. Director of Risk Management is assigned the task to manage a team of risk management team by continuous assessment of the performance of the team members, setting deadlines for achievement of tasks, formation of policies and procedures, etc.Product Owner who is responsible for managing the product backlog and setting a standard levels and designing policies for developing products.The junior level jobs usually pay somewhat between $80k to $100k which means that all the jobs in USAA are very highly paid jobs in the country.
So if you are offered a position take it and save enough to start your own business in the future.
Micca ensures that all of her employees understand and follow through on the
expectations set by the business. Which technique for building positive customer
relations in Micca using?
Understand that each customer has unique needs
Set and achieve high standards
Provide quality service
Listen to and engage your customers
Answer:
Set and achieve high standards
Explanation:
Micca makes sure that all of her employees understand and follow through with the expectations set by the business and the technique for building positive customer relations that Micca uses is Set and achieve high standards.
This technique means that if a high enough standard is set and achieved by a business, then it will promote positive customer relations because the customers will be getting value for money.
Washington Company is preparing its statement of cash flows using the indirect method. Refer to the following portion of the comparative balance sheet: Washington Company Comparative Balance Sheet December 31, 2019 and 2018 2019 2018 Increase/(Decrease) Accounts Payable $9,000 $5,000 ($4,000) Accrued Liabilities 3,000 1,400 1,600 Long=term Notes Payable 55,000 66,000 (11,000) Total Liabilities $67,000 $72,400 $(5,400) Additional information provided by the company includes the following: 1. During 2019, the company repaid $35,000 of long-term notes payable. 2. During 2019, the company borrowed $24,000 on a new long-term note payable. Based on the above information only, what amount of net cash flow would be shown in the financing section of the statement of cash flows?
Answer:
Washington Corporation
Financing Activities Section of the Statement of Cash Flows for the year ended December 31, 2019 will show a net cash flow of:
($11,000)
Explanation:
a) Data and Calculations:
Washington Company Comparative Balance Sheet December 31, 2019 and 2018:
2019 2018 Increase/(Decrease)
Accounts Payable $9,000 $5,000 ($4,000)
Accrued Liabilities 3,000 1,400 1,600
Long-term Notes Payable 55,000 66,000 (11,000)
Total Liabilities $67,000 $72,400 $(5,400)
Repaid $35,000 of long-term notes payable
Borrowed $24,000 on new long-term notes payable
b) Financing Section:
Repayment of Long-term notes ($35,000)
Borrowing from Long-term notes 24,000
Net cash flow from financing ($11,000)
The Blooming Flower Co. has earnings of $1.48 per share. a. If the benchmark PE for the company is 15, how much will you pay for the stock?
Answer:
$22.20
Explanation:
Using the equation to calculate the price of a share of stock with the PE ratio:
P = Benchmark PE ratio * EPS
So, with a PE ratio of 15
P = 15*($1.48)
P = $22.20
Motor vehicle services technicians usually must provide their own tools as part of their employment. These tools are the property of the technician, and service technicians generally receive an hourly wage. Some automobile dealerships split service technician wages into classifications such as tool reimbursements and wages. The result of this practice is that workers’ hours are taxed and the tool reimbursements are not because they are classified as a business expense. Should the tool reimbursement be treated as income on the service technicians W-2? Why or why not? What are some implications of this practice
Answer:
the tool reimbursements should not be treated as income on the service technicians.
Explanation:
Any Reimbursement cannot be taxed because there is no income generated if actual reimbursement is made. So in the given case Tools Reimbursement received by the Technicians are not taxable because it is the amount spend by them for providing the service and actual reimbursement is made. No income has been generated in this.
This practice will reduce the income of the government by two side. One is on the side of the company we are allowing them with a business expenses thereby reducing their tax liability by reducing the profits and other is the same cannot be charged to tax from the side of the worker because it is just a mere reimbursement of actual expenses.
_________ variability is not one of the five sources of customer-induced variability.a. Arrival b. Capability c. Effort d. Demand
Answer:
Demand
Explanation:
customer-induced variability in finance can be explained as kind of co- creation that exist in customer and the service script.
It should be noted that the five sources of customer-induced variability are;
1)arrival of customers
2) Capability variability
3) effort
4) Request from customer
5) subjective reffrence
The arrival of customers shows what customers have in their own plan.
The capability variability gives the ideal about the strength of the customer concerning the service
Effort describe how willing the customer is, to give their support.
Hence among the given option only demand variability is not one of the five sources of customer-induced variability.
Under the gross method, ________. A. the processing fees charged are deducted from the company's bank account by the credit card processor B. the total sales plus the processing fee assessed equals the net amount of cash deposited C. the proceeds from debit and credit card transactions are deposited on the last day of the month D. there will be no fee charged by the credit card processor for the transaction
Answer: . A. the processing fees charged are deducted from the company's bank account by the credit card processor
Explanation:
Gross method is simply used for recording purchases made by th customers at full invoice price. It should be noted that there are no deduction in cash discounts.
Under the gross method, the processing fees charged are deducted from the company's bank account by the credit card processor.
The entry to record the flow of direct labor costs into production in a job order cost accounting system is to
Answer:
Debit : Work In Process Account and Credit : Salaries and Wages Payable Account
Explanation:
All manufacturing costs are accounted for in a Work in Process Account during manufacture. Therefore Debit the Work In Process Account to show accumulation of the manufacturing costs and Credit the Salaries and Wages Payable Account to show the utilization of labor.
If increasing the admission charge for National Parks increases the National Park Service's total revenue, then the demand for National Park visits is: Multiple Choice inelastic. elastic. perfectly elastic. a perfectly horizontal line.
Answer: inelastic
Explanation:
If increasing the admission charge for National Parks increases the National Park Service's total revenue, then the demand for National Park visits is inelastic.
This shows that a change in price will lead to a minimal change in the quantity demanded by the consumers. Even though price was increased, the number of visitors to the park rarely changed. This will lead to increase in revenue.
PharmY, Inc., is a U.S. GAAP reporter that is in the pharmaceutical industry. In the current year, PharmY incurred expenditures related to laboratory experiments designed to discover a new drug. The expenditures were as follows:
Laboratory equipment that will be used for this project only $1,000,000
Materials that will be used for this project only 750,000
Wages for employees involved exclusively in the project 500,000
Search the Codification to determine how to record each type of cost. Write a memo to the file to commu- nicate your results
Answer with Explanation:
Tangible assets fall under the scope of International Accounting Standard IAS-36 Property, Plant and Equipment which says that assets that qualify following conditions, must be capitalized:
Assets that have life expectancy of more than a year.Benefits of the Assets are controlled by the entity that will flow towards the company.Now here, the life expectancy of laboratory equipment is unknown and also that we don't know if the asset can be resold in the market or not. This means, if the asset has life expectancy is no more than a year and that the future benefits will flow towards the company then it must be capitalized otherwise it must be expensed out as per the guidelines of International Accounting Standard IAS-38 Intangible Assets, which says that the research cost prior to the development expenditure must be expensed out.
The other two costs are revenue expenditure and must be expensed out under the name research and development cost as per the guidelines of IAS-38.
If you were evaluating an investment opportunity, which technique would you use and why?
The weighted average cost of capital can consist of debt, preferred stock and equity. Which of these sources is the most expensive and the least expensive and why?
Answer:
1. Net Present Value
First off it is important to note that every investment is different and should be evaluated by a method that will take into account it uniqueness. However, I would choose the Net Present Value method of evaluation because it combines some very useful features from other methods to make it the best one in general.
The Net Present Value checks when an project will be able to pay back the investment that was put into it given the cash inflows from the project and it uses the present value of the cash inflows to do so. This means that in using the NPV method, the time value of money is factored in so that real analysis can be done.
The risk factor of the project is also reflected in the rate used which will enable one know if it is a project they would be interested in in case the rate is too high considering their company's cost of capital.
2. The most expensive form of capital is Equity. This is because it does not have a fixed cost and this varies depending on the profits that the company makes. It is also not tax deductible like debt.
The least expensive form of capital is Debt. Debt has a fixed rate which can be planned for. It is also tax deductible which means that paying off debt reduces tax expense thus making it cheaper.
) A company determines that its marginal revenue per day is given by R'(t) = 100et , R(0) = 0, where R(t) = the revenue, in dollars, on the tth day. The company's marginal cost per day is given by C'(t) = 140 - 0.3t, C(0) = 0, where C(t) = the cost, in dollars, on the tth day. Find the total profit from t = 0 to t = 5 (the first 5 days). Round to the nearest dollar. Note: P(T) = R(T) - C(T) = T 0 ∫ [R'(t) - C'(t)] dt.
Answer:
$14038
Explanation:
The company has marginal revenue R'(t) = [tex]100e^t[/tex]. Therefore its revenue R(t) is given as;
R(t) = ∫R'(t)
R(t)= ∫ [tex]100e^t[/tex] dt = [tex]100e^t[/tex] + c
R(t) = [tex]100e^t[/tex] + c
But R(0) = 0, therefore:
R(0) = [tex]100e^0[/tex] + c = 0
[tex]100e^0[/tex] + c = 0
100 + c =0
c = -100
Also the marginal cost per day is given by C'(t) = 140 - 0.3t
C'(t) = 140 - 0.3t
C(t) = ∫C(t) = ∫ (140 - 0.3t) dt = 140t - (0.3/2) t² + C
But C(0) = 0
C(0) = 140 (0) - (0.3/2)(0)² + c = 0
c = 0
C(0) = 140t - (0.3/2) t²
Profit P(t) = R(T) - C(T) , hence the total profit from t = 0 to t = 5 is given as:
P(t) = [tex]\int\limits^0_5 {[R'(t)-C'(t)]} \, dt =\int\limits^0_5 {([100e^t-(140-0.3t)]} \, dt=\int\limits^0_5 {100e^t} \, dt +\int\limits^0_5 {-0.3t} \, dt +\int\limits^0_5 {-140} \, dt \\\\=[100e^t]_0^5+[ -140t]_0^5+[-0.3t^2/2]_0^5=[14841.316-100]+[-700]+[-3.75]=14038[/tex]
The profit is $14038
Hernandez Corporation expects to have the following data during the coming year. What is Hernandez's expected ROE
Answer:
13.56%
Explanation:
For the computation of return in equity first we need to follow some steps which are shown below:-
D/A = Debt ÷ Total assets
Debt = $200,000 × 65%
= $130,000
Interest expense = $130,000 × 8%
= $10,400
Total assets = Total liabilities + Total equity
Total equity = $200,000 - $130,000
= $70,000
Net income = (EBIT - Interest expense) × (1 - Tax rate)
= ($25,000 - $10,400) × (1 - 0.35)
= $9,490
ROE = Net income ÷ Equity
= $9,490 ÷ $70,000
= 13.56%
Portions of the financial statements for Peach Computer are provided below.
PEACH COMPUTER
Income Statement
For the year ended December 31, 2018
Net sales $1,725,000
Expenses:
Cost of goods sold $1,020,000
Operating expenses 530,000
Depreciation expense 47,000
Income tax expense 37,000
Total expenses 1,634,000
Net income $ 91,000
PEACH COMPUTER
Selected Balance Sheet Data
December 31
2018 2017 Increase (I)
or
Decrease (D)
Cash $99,000 $83,500 $15,500 (I)
Accounts receivable 46,300 50,500 4,200 (D)
Inventory 72,000 53,500 18,500 (I)
Prepaid rent 2,700 4,400 1,700 (D)
Accounts payable 42,000 35,500 6,500 (I)
Income tax payable 4,700 8,500 3,800 (D)
Required:
Prepare the operating activities section of the statement of cash flows for Peach Computer using the DIRECT method. (List cash outflows as negative amounts.)
Answer:
$128,100
Explanation:
PEACH Computer
Statement of cash flow using direct method for the year ended 31 December 2018.
Cash flows from operating activity
Net income. $91,000
Adjustment to reconcile net income to net cash from operations
Depreciation expense. $47,000
Changes in working capital
Decrease in accounts re. $4,200
Increase in inventory. ($18,500)
Decrease in prepaid rent $1,700
Increase in accounts Payable $6,500
Decrease in Income tax Payable ($3,800)
Net cash flow from operating activities
$128,100
The position of a company with regard to pricing, promotion, advertising, product design and distribution is referred to as _______________.
a. planning
b. marketing strategy
c. organizing
d. restructuring
Answer:
b. marketing strategy
Explanation:
Marketing strategy is a mix of all factors which affect the 4 Ps which are Product (Design and Packaging) , Price (Pricing Policy / Techniques), Place (Distribution) and Promotion (all awareness activities).
Evaluating the competitive value of the cross-business strategic fits in a diversified firm's business portfolio entails consideration of:___________.
a. whether the competitive strategies in each business possess good strategic fit with the parent company's corporate strategy.
b. whether the parent's company's strongest competitive synergies are being deployed to maximum advantage in each of its business units.
c. how much competitive value can be generated from forceful efforts to capture the benefits of strategic fits stemming from cross-business transfer of competitively valuable resources and capabilities, cost-saving efficiencies in the value chains of sister businesses, brand- name sharing, and cross-business collaboration to create new performance-enhancing competitive capabilities.
d. whether the competitive strategy employed in each business acts to reinforce the competitive power of the strategies employed in the company's other businesses.
e. how compatible the competitive strategies of the various sister businesses are and whether these strategies are optimally crafted to achieve the same kind of competitive advantage and thereby enhance the diversified company's overall performance.
Answer:
c. how much competitive value can be generated from forceful efforts to capture the benefits of strategic fits stemming from cross-business transfer of competitively valuable resources and capabilities, cost-saving efficiencies in the value chains of sister businesses, brand- name sharing, and cross-business collaboration to create new performance-enhancing competitive capabilities.
Explanation:
To carry out the evaluation of the competitive value of the cross-business strategic fits in a diversified firm's business portfolio, the firm should assess and analyze the competitive value to be derived from the undertakings in a bid to takeover the advantages of strategic fits of cross business transfer.
Hence, in this case, the correct answer is option C, as it fully details what needs to be considered.
The following information was taken from the segmented income statement of Restin, Inc., and the company's three divisions:_______.
Restin, Los Angeles Bay Area Central Valley
Inc. Division Division Division
Revenues $ 1,000,000 $ 280,000 $ 315,000 $ 405,000
Variable operating expenses 554,000 154,000 170,000 230,000
Controllable fixed expenses 240,000 75,000 85,000 80,000
Noncontrollable fixed expenses 90,000 25,000 30,000 35,000
In addition, the company incurred common fixed costs of $21,000.
The profit margin controllable by the Central Valley segment manager is:_______.
Answer:
The profit margin controllable by the Central Valley segment manager is: $ 95,000.
Explanation:
Only items directly controllable by the Manager should be included in the divisional financial performance measure.
Central Valley Division
Revenues $ 405,000
Less Variable Costs :
Variable operating expenses ($ 230,000)
Controllable Contribution $ 175,000
Less Controllable fixed expenses ($80,000)
Controllable Profit $ 95,000
The income statement and additional data of Rolling Hills Corporation follow Prepare Rolling Hills Corporation's statement of cash flows for the year ended June 30, 2018. Use the direct method. (Use parentheses or a minus sign for numbers to be subtracted. If a box is not used in the statement leave the box empty; do not select a label or enter a zero.) Complete the statement one section at a time, beginning with the cash flows from operating activities. Rolling Hills Corporation Statement of Cash Flows Year Ended June 30, 2018 Cash Flows from Operating Activities Receipts Total Cash Receipts Payments Total Cash Payments Net Cash Provided by (Used for) Operating Activities
Rolling Hills Corporation Income Statement Year Ended June 30, 2018 Net Sales Revenue Cost of Goods Sold Gross Profit Operating Expenses $ 228,000 109,000 119,000 Salaries Expense Depreciation Expense-Plant Assets Advertising Expense Total Operating Expenses $ 44,000 22,000 14,000 80,000 39,000 Operating Income Other Income and (Expenses) Dividend Revenue Interest Expense Total Other Income and (Expenses) 7,500 (5,000) Net Income Before Income Taxes Income Tax Expense Net Income 2,500 41,500 7,000 $ 34,500
a. Collections from customers are $17,000 more than sales. b. Dividend revenue interest expense, and income tax expense equal their cash amounts. c. Payments to suppliers are the sum of cost of goods sold plus advertising expense d. Payments to employees are $1,000 more than salaries expense. e. Cash payment for the acquisition of plant assets is $104,000 f. Cash receipts from sale of land total $21,000 g. Cash receipts from issuance of common stock total $34,000 h. Payment of long-term notes payable is $20,000 i. Payment of dividends is $9,500. Cash balance at June 30, 2017, was $26,000; at June 30, 2018, it was $20,000
Answer:
Rolling Hills Corporation
Statement of Cash Flows for the year ended June 30, 2018, using the direct method:
Cash flows from operating activities:
Cash collections from customers $ 245,000
Cash paid to suppliers (123,000)
Cash to employees: ($45,000)
Income tax ($7,000)
Net Cash from operating activities $70,000
Net Cash Provided by (Used for) Operating Activities $70,000
Cash flows from investing activities:
Cash for plant acquisition ($104,000)
Cash from sale of land $21,000
Cash from Dividend revenue $7,500
Net Cash flows from investing (75,500) (75,500)
Cash flows from financing activities:
Cash from issuance of common stock $34,000
Payment for long-term notes payable (20,000)
Dividends payment (9,500)
Interest (5,000)
Net Cash flows from financing activities (500) (500)
Net cash outflows (6,000)
Explanation:
a) Data and Calculations:
Rolling Hills Corporation Income Statement Year Ended June 30, 2018
Net Sales Revenue $ 228,000
Cost of Goods Sold 109,000
Gross Profit 119,000
Operating Expenses:
Salaries Expense $ 44,000
Depreciation Expense
-Plant Assets 22,000
Advertising Expense 14,000
Total Operating Expenses 80,000
Operating Income 39,000
Other Income and (Expenses)
Dividend Revenue 7,500
Interest Expense (5,000)
Total Other Income
and (Expenses) 2,500
Net Income Before Taxes 41,500
Income Tax Expense 7,000
Net Income $ 34,500
b) Cash collections from customers:
Net Sales Revenue $ 228,000
More than 17,000
Total cash collections $ 245,000
c) Cash from Dividend revenue = $7,500
d) Cash Payment:
Interest = $5,000
Income tax = $7,000
Suppliers: $123,000
e) Payment to suppliers:
Cost of goods sold 109,000
Advertising 14,000
Cash payments $123,000
f) Payment to employees:
Cash to employees: = $45,000 ($44,000 + 1,000)
g) Cash for plant acquisition = $104,000
h) Cash from sale of land = $21,000
i) Cash from issuance of common stock = $34,000
j) Payment for long-term notes payable = $20,000
k) Dividends payment = $9,500
l) Rolling Hills Corporation can use the direct method for preparing its Statement of Cash Flows for the year ended June 30, 2018. It is one of the two methods in use. The other is the indirect method. The direct method uses only the actual cash receipts and payments to prepare the statement, under the three classifications of cash flows into operating, investing, and financing activities sections.
If a firm is experiencing economies of scale in its production process, ______________________________. g
Answer:
its long-run average total costs will fall
Explanation:
Economies of Scale is a term used in business operation or production manufacturing to describe the cost benefits a company or firm acquired when it expands its quantity or number of output. This often leads to a decrease in average variable cost.
Hence, the right answer is this situation is If a firm is experiencing economies of scale in its production process, "its long-run average total costs will fall"
Consider the single factor APT. Portfolio A has a beta of 1.8 and an expected return of 21%. Portfolio B has a beta of .8 and an expected return of 21%. The risk-free rate of return is 12%. If you wanted to take advantage of an arbitrage opportunity, you should take a short position in portfolio __________ and a long position in portfolio _________.
A: A;A
B: A;B
C: B;B
D: B;A
Answer:
... you should take a short position in portfolio A and a long position in portfolio B.
B: A;BExplanation:
Portfolio A:
21% = 12% + 1.8F
1.8F = 9%
F = 5%
Portfolio B:
21% = 12% + 0.8F
0.8F = 9%
F = 11.25%
Since Portfolio B's F = 11.25% > Portfolio A's F = 5%, then you should take a short position in Portfolio A and a long position in Portfolio B.
1
2
A business plan is a document describing the start-up costs and operating expenses of a new business.
Please select the best answer from the choices provided
OT
OF
False jus took the test .
Gwyneth owns a firm and wants to minimize the cost of producing output Q. Her production function is Q
Answer:
The answer is "1".
Explanation:
Some of the data is missing in the question, that will be defined in the attached file. please find it.
In the given EOS the C-D function:
[tex]= [\frac{d(\frac{K }{ L})}{d \ MRTS} \times \frac{MRTS}{(\frac{K}{L})}][/tex]
The MRTS value = [tex]\frac{1}{2} \times \frac{K-1}{2L} \times \frac{1}{4} \times \frac{1}{4} \times \frac{K1}{2L} - \frac{3}{4}[/tex]
[tex]= \frac{K}{2L}[/tex]
Rearrange it
[tex]\to \frac{K }{ L} = 2 \times MRTS \\\\ \to \frac{d(\frac{K}{L})}{d(MRTS) }= 2\\\\[/tex]
Replace the values in formula elasticity:
[tex]=2 \times \frac{( \frac{K}{2L})}{(\frac{K}{L})} \\\\ =2 \times \frac{K}{2L} \times \frac{L}{K} \\\\ =2 \times \frac{1}{2} \\\\= 1[/tex]
Puffy's Pastries generates five cents of net income for every $1 in equity. Thus, Puffy's has _______ of 5 percent.
Answer: return on equity
Explanation:
The return on equity is simply a measure of how profitable a business will be when it's being compared to its equity. Return on equity is the net income divided by the equity. It can also be gotten when liabilities is deducted from assets.
In the above analysis, return on equity equals 5% because 100 cents make 1 dollar. Therefore, 5/100 × 100 gives 5%.
Other things equal, the price of a stock call option is positively correlated with which of the following factors?
a. the stock price.
b. the stock volatility
c. the exercise price.
d. the time to expiration.
e. cannot be determined.
Answer:
a. the stock price.
b. the stock volatility
d. the time to expiration.
Explanation:
The price of the Call Option is positively correlated with the price of the underlying stock because a Call option gives the holder the right to buy a stock at a certain price so if the underlying stock increases in value, the call option will increase in value as well as it means that the holder might be able to buy the stock at a lower price.
Volatility also moves in the same direction as the call option price because a high volatility means there is a chance that the stock will increase past the exercise price.
Time to maturity for non-European call options is also directly related to call option price because it means that there will be more time for the stock to change in value potentially for the better thereby increasing the call option returns.
Would a depositor prefer an APR of 8% with monthly compounding or an APR of 8.5% with semiannual compounding?
Answer:
Therefore depositor would prefer an APR of 8.5% with semiannual compounding
Explanation:
First determine the Effective Interest Rate of the two Returns, then compare the Rates.
The Effective Annual Rate of Interest is the Annual rate that if compounded once a year, would give us the same result as the interest per period compounded a number of times.
1. APR of 8% with monthly compounding
Calculation of Effective Annual Rate of Interest using a Financial Calculator:
8 % Shift NOM %
12 Shift P/YR
Shift EFF % = 8.3 %
2. APR of 8.5% with semiannual compounding
Calculation of Effective Annual Rate of Interest using a Financial Calculator:
8.5 % Shift NOM %
2 Shift P/YR
Shift EFF % = 8.6806 or 8.68 %
Conclusion.
Choose the APR giving greater Effective Annual Rate.
Comparing the 2 Effective Annual Rate of Interest, it can be seen that an APR of 8.5% with semiannual compounding gives a greater Effective Annual Rate of Interest.
Therefore depositor would prefer an APR of 8.5% with semiannual compounding
After the USA introduces a tariff in the market for gigastraps, the price of gigastraps in the USA will:
Answer: increase
Explanation:
A tariff is a tax that is levied on goods that are imported into a particular country. It should be noted that tariffs are levied on order to prevent dumping, protect the host indutries and also prevent consumption of harmful products.
If the USA introduces a tariff in the market for gigastraps, the price of gigastraps in the USA will increase. This is because the tariff will be added as production cost to the producer which will lead to increase in price.