The advantages of a functional structure include all of the following EXCEPT "an improved ability to meet the needs of different types of customers.
A functional structure is an organizational design in which the departments are grouped based on similar skills, expertise, or functions. The advantages of a functional structure are improved communication and information sharing among workers, better monitoring by supervisors and group members, higher workers' skills, which, in turn, lead to higher performance, but not an improved ability to meet the needs of different types of customers.
The Baldwin and Bommer's Futile Resistance Model help analyze where change initiatives go wrong to steer clear of those pitfalls. It guides an organization on how to manage resistance to change, avoiding the wrong ways of implementing change, so as not to encounter resistance to change.
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The desire for "consumption-smoothing" is based on the economic principle of ?
Consumption-smoothing is based on the economic principle of insurance. It is a mechanism for spreading out the risk associated with consumption over time to increase the level of current consumption while minimizing the risk of a future reduction in consumption.
This involves saving money in good times and investing the money to earn returns, which are then used to maintain consumption levels during times of economic downturns. The aim of consumption-smoothing is to ensure that people maintain their standard of living during economic booms and busts.The desire for consumption-smoothing is based on the idea that people prefer to maintain a constant standard of living over time rather than experiencing sharp swings in their consumption patterns. As a result, people are willing to forgo consumption in good times to ensure that they have sufficient resources to maintain their consumption levels in bad times. Thus, the consumption-smoothing concept emphasizes the importance of building savings and investing in assets that provide a steady stream of income to support consumption during times of economic uncertainty.In conclusion, the economic principle that underpins the desire for consumption-smoothing is insurance. Insurance is a mechanism that helps to spread out risks over time, thereby reducing the impact of shocks on people's consumption patterns. The goal of consumption-smoothing is to ensure that people maintain their standard of living over time by saving and investing in assets that provide steady returns to support consumption during periods of economic uncertainty.
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Which of the following best describes accruals?
A. The payments made to suppliers for materials. B. The amount due in an accounting period which is unpaid. C. A payment made in advance of the accounting period to which it relates. D. An amount shown on the income statement to cover overheads.
Accruals refer to the amount due in an accounting period that is unpaid. This best describes option B. Accruals represent expenses that have been incurred but not yet paid or revenues that have been earned but not yet received.
Accruals are an essential concept in accounting and represent the recognition of expenses or revenues before the associated cash transactions occur. Option B, "The amount due in an accounting period which is unpaid," accurately describes accruals.
Accruals occur when expenses have been incurred or revenues have been earned but have not yet been recorded as cash transactions. They are necessary to adhere to the accrual accounting principle, which states that financial transactions should be recognized when they occur, regardless of the timing of cash flows.
Accruals help provide a more accurate representation of a company's financial position and performance by matching expenses with the revenues they generate in a particular accounting period.
Accruals are typically recorded as adjusting entries at the end of an accounting period to ensure that financial statements reflect the economic reality of the business. They help prevent distortions in financial reporting and provide a more comprehensive view of a company's financial activities.
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QUESTION 1 (45 marks) Adams Apple Traders Limited is one of the traders of iPads in South Africa. The entity got the right from the makers of iPads to trade them in South Africa. The entity is in the process of selecting two new non-executive directors. The year 2019 was not a good financial year for Adams Apple Traders Limited. The entity only managed to break even in the current year under audit even though other companies selling the same product made significant gains. As such your audit team also performed risk assessment procedures as part of the audit. While performing the risk assessment procedures the audit team noted the following system descriptions that might pose a risk of material misstatement in the revenue cycle of the company's order department. 1. 2. Some credit sales orders were not authorised by the credit manager Telephonic sales orders were accepted from non-account holders Not all sale orders were matched to picking slips and delivery notes 3. 1.1 Explain in detail with examples the nine fundamental principles of corporate and business governance that should be applied by Adams Apple Traders Limited. (20) 1.2 Adams Apple Traders Limited has tasked your audit team to draft recommendations on how the implementation of corporate governance could have prevented such risks identified (15) 1.3 Briefly discuss the role of non-executive directors (10)
1.1 Nine fundamental principles of corporate and business governance that should be applied by Adams Apple Traders Limited:Good governance in an entity is essential in creating value and sustaining growth.
It’s based on several fundamental principles, as outlined below: Transparency: This means that all the relevant information regarding the business must be available to the relevant stakeholders who need it. It also includes all the financial records and information on how business decisions are made. The same applies to Adams Apple Traders Limited. Accountability: The business must be accountable to all its stakeholders. This includes suppliers, customers, regulators, and the community where the business operates. To implement this, the company must have a clear reporting structure that outlines the roles of the stakeholders in the organization. This will allow for transparency and communication when necessary. Responsibility: The company must be responsible for its actions, decisions, and impact on society. This includes being socially responsible by ensuring that the company’s operations don’t harm the environment or society. Fairness: This principle entails treating all stakeholders equally. It involves treating all employees with dignity and respect, paying suppliers fairly, and ensuring that customers are not taken advantage of by unethical business practices. This principle is important in gaining the trust of the stakeholders. Integrity: This principle involves being honest and ethical in all business dealings. The company must ensure that it doesn’t engage in fraudulent activities such as corruption or money laundering. The company should also ensure that all employees adhere to ethical standards. This will help to build the reputation of the company. Confidentiality: The company must ensure that it protects all confidential information that it has. This includes all trade secrets, customer information, and employee information. The company should also ensure that employees adhere to the confidentiality policy. Compliance: This principle involves adhering to all the relevant laws and regulations. The company must ensure that it complies with all tax regulations, labor laws, environmental laws, and competition laws. This will help to avoid penalties and legal battles that may be costly. Independence: The company must ensure that there’s no conflict of interest. This means that there should be no relationship between the company and any other entity that may compromise the company’s objectivity. For example, the company should avoid having the same auditor for a long period.
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Refer to Apple’s financial statements in Appendix A to answer the following. Required
1. Assume that the amounts reported for inventories and cost of sales reflect items purchased in a form ready for resale. Compute the net cost of goods purchased for the year ended September 28, 2019.
2. Compute the current ratio and acid-test ratio as of September 28, 2019, and September 29, 2018.
3. Does Apple’s 2019 current ratio outperform or underperform the (assumed) industry average of 1.5?
4. Does Apple’s 2019 acid-test ratio outperform or underperform the (assumed) industry average of 1.0?
Without access to Appendix A or the financial statements of Apple, it is not possible to provide specific s to questions 1, 2, 3, and 4.
1. To compute the net cost of goods purchase for the year ended September 28, 2019, we need to find the difference between the opening and closing inventories.
Unfortunately, without access to Appendix A or the financial statements of Apple, I cannot provide the exact figures for the inventories. However, the net cost of goods purchased can be calculated using the formula:
Net Cost of Goods Purchased = Opening Inventory + Purchases - Closing Inventory
By subtracting the closing inventory from the sum of the opening inventory and purchases, we can determine the net cost of goods purchased.
2. The current ratio is calculated by dividing current assets by current liabilities. The acid-test ratio, also known as the quick ratio, is calculated by subtracting inventory from current assets and then dividing the result by current liabilities. The current ratio and acid-test ratio for September 28, 2019, and September 29, 2018, can only be determined by referring to the financial statements provided in Appendix A.
3. To determine if Apple's 2019 current ratio outperforms or underperforms the assumed industry average of 1.5, we need to compare Apple's current ratio to the industry average. If Apple's current ratio is higher than 1.5, it would indicate that they are performing better in terms of liquidity compared to the industry average. Conversely, if Apple's current ratio is lower than 1.5, it would suggest that they are underperforming in terms of liquidity.
4. Similarly, to determine if Apple's 2019 acid-test ratio outperforms or underperforms the assumed industry average of 1.0, we need to compare Apple's acid-test ratio to the industry average. If Apple's acid-test ratio is higher than 1.0, it would indicate that they have a stronger ability to meet short-term obligations without relying on inventory. On the other hand, if Apple's acid-test ratio is lower than 1.0, it would suggest that they are underperforming compared to the industry average in terms of their ability to meet short-term obligations.
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Calculate the following given the information in a four-sector macroeconomic model: Autonomous Consumption = 50 Investment = 20 Government spending = 40 Consumers have a marginal propensity to consume of 80 per cent. a.) Macro-equilibrium income using the income/spending approach [4] b.) The new equilibrium income if investment decreases with 10. Make use of the multiplier. [3]
The macro-equilibrium income using the income/spending approach is 110.b) to calculate the new equilibrium income if investment decreases by 10, we need to consider the multiplier effect.
a) to calculate the macro-equilibrium income using the income/spending approach, we need to consider the components of aggregate spending, which include autonomous consumption, investment, and government spending.
given:autonomous consumption = 50
investment = 20government spending = 40
the formula to calculate macro-equilibrium income using the income/spending approach is:
income = autonomous consumption + investment + government spending
income = 50 + 20 + 40income = 110 the multiplier represents the change in equilibrium income resulting from a change in autonomous spending.
the formula for the multiplier is:
multiplier = 1 / (1 - marginal propensity to consume)
given:marginal propensity to consume = 80% = 0.8
investment decrease = -10
multiplier = 1 / (1 - 0.8)multiplier = 1 / 0.2
multiplier = 5
to calculate the new equilibrium income, we need to multiply the change in investment by the multiplier and add it to the initial equilibrium income.
change in income = change in investment * multiplierchange in income = -10 * 5
change in income = -50
new equilibrium income = initial equilibrium income + change in incomenew equilibrium income = 110 + (-50)
new equilibrium income = 60
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largo+company+recorded+for+the+past+year+sales+of+$730,000+and+average+operating+assets+of+$292,000.+what+is+the+margin+that+largo+company+needed+to+earn+in+order+to+achieve+an+roi+of+32.5%?
Largo Company needs to maintain a margin of 13% to achieve an ROI of 32.5%. ROI or Return on Investment is a financial metric that tells us how much profit is gained from investments made by a business. ROI is the ratio of net income generated from an investment to the cost of investment.
To calculate ROI, divide the return of investment by the cost of investment. This can be represented mathematically as ROI = (Net Income / Cost of Investment) × 100. The ROI of 32.5% means that for every dollar of investment, the business gets $0.325 in return. Therefore, we have ROI = (Net Income / Average Operating Assets) × 10032.5% = (Net Income / $292,000) × 100. Net Income = (32.5 / 100) * $292,000. Net Income = $94,900. Margin refers to the percentage of revenue that becomes profit after deducting costs of goods sold (COGS) and other expenses.
We can calculate the margin using the following formula:
Margin = (Net Income / Revenue) × 100Sales - COGS = Gross Profit. The margin required to achieve an ROI of 32.5% can be found as follows: Margin = [(Net Income / Revenue) × 100] = [(Net Income / Sales) × 100]. Margin = [(Net Income / Sales) × 100] = [(94,900 / 730,000) × 100] ≈ 13%
Therefore, Largo Company needs to maintain a margin of 13% to achieve an ROI of 32.5%.
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You've just taken your dream fire ecologist job, but the position is located in a forest type you've never worked in. How would you start to reconstruct the fire disturbance regime, so you could take that information and start apply sound fire ecological theory to your new management plans? (Tell me everything!)
To reconstruct the fire disturbance regime in a new forest type, I would follow a systematic approach that involves collecting data, conducting research, and collaborating with experts in the field. Here are the steps I would take:
Literature Review: I would start by conducting an extensive literature review to understand the historical fire ecology of the forest type. This would involve studying published research articles, scientific journals, and relevant books to gain insights into the fire history, fire behavior, and vegetation dynamics of the area.
Field Surveys: Next, I would conduct field surveys to gather on-the-ground data. This would include assessing fire scars on trees, studying tree age structures, and examining fire-adapted plant species. By collecting data on fire history indicators, such as fire scars and tree rings, I can reconstruct the frequency, intensity, and spatial patterns of past fires.
Collaboration: I would seek collaboration with local fire ecologists, foresters, land managers, and Indigenous communities who have knowledge and experience in managing the forest type. Their expertise and traditional ecological knowledge can provide valuable insights into the historical fire regime and its ecological impacts.
Data Analysis: Once I have collected sufficient data, I would analyze it to identify patterns and trends in the fire disturbance regime. This would involve statistical analysis, dendrochronology techniques, and spatial mapping to understand the fire frequency, severity, and seasonality in the area.
Fire Modeling: I would use fire modeling tools and software to simulate fire behavior and predict fire effects under different scenarios. This would help in understanding the potential impacts of future fires and assist in developing sound fire management plans.
Management Plans: Based on the reconstructed fire disturbance regime and ecological knowledge gained, I would develop comprehensive fire management plans that align with the principles of fire ecology. These plans would incorporate strategies for prescribed burns, fuel management, fire suppression, and ecosystem restoration to promote healthy fire-adapted ecosystems.
By following these steps, I can reconstruct the fire disturbance regime of the new forest type and apply sound fire ecological theory to develop effective management plans that promote ecological resilience and biodiversity conservation.
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If an agribusiness firm is losing money on everything it sells: a. It should cut costs wherever possible.
b. It should increase volume to sell more.
c. It should consider bankruptcy.
d. It should examine its price policy and the resulting margins
Option d. It should examine its price policy and the resulting margins is the correct option. If an agribusiness firm is losing money on everything it sells, it should examine its price policy and the resulting margins.
When an agribusiness firm is experiencing losses on all its sales, it indicates that the prices at which it is selling its products are not covering the costs incurred in producing and selling them. In this situation, it is crucial for the firm to carefully evaluate its price policy and the resulting profit margins. By examining its price policy, the firm can assess whether its current pricing strategy is appropriate and whether adjustments need to be made. This evaluation involves considering factors such as production costs, market conditions, competition, and customer demand. The firm may need to reevaluate its pricing structure, such as reducing prices to align with market realities or exploring opportunities to differentiate its products and command higher prices.
Additionally, analyzing the resulting profit margins is essential to identify areas of inefficiency and potential cost reductions. The firm should scrutinize its cost structure, including operational expenses, input costs, and overhead, to identify areas where cost-cutting measures can be implemented without compromising the quality or value of its products. In conclusion, examining the price policy and profit margins allows the agribusiness firm to identify and address the underlying causes of its financial losses, ultimately working towards improving its profitability and sustainability.
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A company is about to invest in a joint venture research and development project with another company. The project is expected to last eight years, but yearly payments the company makes will begin immediately (i.e., a payment is made today, and the last payment is eight years from today). Salaries will account for S40 000 of each payment. The remainder of each payment will cover equipment costs and facility overhead. The initial (immediate) equipment and facility cost is $26 000. Each subsequent year the figure will drop by S3000 until a cost of S14 000 is reached, after which the costs will remain constant until the end of the project. (a) Draw a cash flow diagram to illustrate the cash flows for this situation. (b) At an interest rate of 7%, what is the total future worth of all project payments at the end of the eight years?
The total future worth of all project payments at the end of the eight years is $1,595,928.14.
Given the information in the question, we can find the total future worth of all project payments at the end of eight years using the following formula:FW = P * F * (A/P, i%, n)where P = the annual payment (i.e., the salary plus the equipment and facility costs),F = the future worth factor, which can be obtained from the future worth table for eight years at 7% interest rate as F = 5.206,A/P = the present worth factor, which can be obtained from the present worth table for eight years at 7% interest rate as A/P = 5.206, andn = the number of payments, which is eight.
Substituting the given values, we have: FW = $42,000 * 5.206 * (5.206) = $1,595,928.14. Therefore, the total future worth of all project payments at the end of the eight years is $1,595,928.14.
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o Jackie Chan Mining Co. purchased for ¥7 million a mine that is estimated to have 28 million tons of ore and no residual value. o In the first year, 4.7 million tons of ore are extracted. A. Prepare the journal entry to record depletion for the first year. B. Show how this mine is reported on the statement of financial position at the end of the first year.
A. Journal entry for depletion in the first year: Depletion Expense ¥1,675,000 Accumulated Depletion ¥1,675,000 B. Statement of Financial Position at the end of the first year: Non-Current Assets: Mine ¥5,325,000
Accumulated Depletion ¥1,675,000 Net Mine ¥3,650,000 The journal entry for depletion records the expense incurred from extracting the ore in the first year. The calculation is done by dividing the cost of the mine (¥7 million) by the estimated total tons of ore (28 million) and then multiplying it by the actual tons extracted (4.7 million). On the statement of financial position, the mine is reported as a non-current asset. The cost of the mine (¥7 million) is reduced by the accumulated depletion (¥1,675,000) to arrive at the net mine value (¥5,325,000). The accumulated depletion represents the portion of the mine's value that has been depleted or used up due to ore extraction.
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Michael and Sarah are preparing to operate a small business which specialises in Australian country cookies. Michael tells you he plans to perform the administrative duties such as sending bills to customers and answering the phone orders. Sarah will cook and decorate the cookies. Michael and Sarah both want some involvement in the management and ownership of the business. Michael and Sarah are married but do not have any close family members. They intend to hire more staff and wish to see the business continue after their retirement. Sarah is aware that another operator has just been sued and was found liable for $1 million dollars in damages after some plastic was found in one of their specialty cookies. Michael and Sarah are unable to decide between a partnership or a company structure.
Required: You are asked to provide advice in IRAC format on how the venture should be structured according to Australian corporation law.
Based on the given scenario and considering the desire for involvement in management and ownership, hiring staff, and protecting personal assets from potential liabilities, it is advisable for Michael and Sarah to opt for a company structure.
Issue: The issue at hand is to determine whether Michael and Sarah should opt for a partnership or a company structure for their small business specializing in Australian country cookies, considering their involvement in management and ownership, hiring staff, and their desire for the business to continue after their retirement.
Rule: According to Australian corporation law, partnerships and companies are two common business structures available for entrepreneurs. A partnership is a relationship between two or more individuals who carry on a business together and share the profits, losses, and management responsibilities. On the other hand, a company is a separate legal entity, distinct from its owners, with limited liability and the ability to issue shares to raise capital.
Application: In this case, Michael and Sarah are married and want some involvement in the management and ownership of the business. They also intend to hire more staff and ensure the business continues after their retirement. They are concerned about potential liabilities, as highlighted by the recent lawsuit against another operator in the industry.
Considering their desire for involvement in management and ownership, a partnership structure would allow Michael and Sarah to have direct control and decision-making authority in the business. It would also enable them to share profits and losses according to their agreed-upon partnership agreement. However, in a partnership, the partners have unlimited liability, which means their personal assets could be at risk in case of legal claims or debts of the business.
On the other hand, a company structure would provide limited liability protection to Michael and Sarah. By incorporating their business as a company, they would create a separate legal entity responsible for its debts and liabilities. They could become directors and shareholders of the company, allowing them to have management control and ownership rights. Hiring staff and ensuring business continuity would be relatively easier as the company structure provides a more established and formalized framework.
Incorporating their small business as a company would provide them with limited liability protection, allowing them to separate their personal assets from the business's liabilities. This would provide a more secure and stable framework for their business operations, future growth, and eventual retirement plans. It is recommended that they consult with a legal professional or business advisor to ensure compliance with all relevant laws and regulations in establishing and operating their company.
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Corales Company acquires a delivery truck at a cost of $38,000. The truck is expected to have a salvage value of $6,000 at the end of its 4-year useful life. Compute annual depreciation expense for the first and second years using the straight-line method. Year 1 Year 2 Annual depreciation expense Corales Company acquires a delivery truck at a cost of $38,000. The truck is expected to have a salvage value of $6,000 at the end of its 4-year useful life. Assuming the declining-balance depreciation rate is double the straight line rate, compute annual depreciation for the first and second years under the declining-balance method. Year 1 Year 2 Annual depreciation expense Brief Exercise 10-07 al-a2 (Part Level Submission) Rosco Taxi Service uses the units-of-activity method in computing depreciation on its taxicabs. Each cab is expected to be driven 150,000 miles. Taxi no. 10 cost $39,500 and is expected to have a salvage value of $500. Taxi no. 10 is driven 30,000 miles in year 1 and 20,000 miles in year 2 (al) Calculate depreciation cost per mile using unit-of-activity method. (Round answer to 2 decimal places, e.g. 0.50.) Depreciation cost per mile LINK TO TEKT
For the straight-line method, we can first calculate the depreciable cost, which is the cost of the truck minus the salvage value. In this case, it is $38,000 - $6,000 = $32,000.
To calculate the annual depreciation expense, we divide the depreciable cost by the useful life of the truck, which is 4 years. Therefore, the annual depreciation expense for the first and second years would be $8,000. For the declining-balance method, we need to first determine the depreciation rate. If the declining-balance rate is double the straight-line rate, then the straight-line rate is 1/4 or 25%. Therefore, the declining-balance rate is 50%. For year 1, the annual depreciation expense would be $19,000 (50% of $38,000). For year 2, we would first calculate the book value of the truck, which is the cost of the truck minus the accumulated depreciation. The accumulated depreciation for year 1 would be $19,000, so the book value at the beginning of year 2 is $19,000 ($38,000 - $19,000). The depreciation expense for year 2 would be 50% of the book value, which is $9,500.
For the units-of-activity method, we first calculate the total miles the cab is expected to be driven, which is 150,000. We can then calculate the depreciation cost per mile by subtracting the salvage value from the cost of the cab and dividing by the total miles expected to be driven. Therefore, the depreciation cost per mile is ($39,500 - $500) / 150,000 miles = $0.26. To calculate the depreciation expense for year 1, we multiply the depreciation cost per mile by the miles driven, which is $0.26 x 30,000 = $7,800. For year 2, the depreciation expense would be $0.26 x 20,000 = $5,200.
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Getty Oil Company operates a separation facility where it gathers gas and oil from wells and transmits them to an outgoing pipeline under high pressure. Getty engineers designed and produced a pressure vessel , called a fluid booster , which was to be installed to increase pressure in the system. Robinson, a Getty engineer, was instructed to install the vessel. Robinson picked up the vessel from the welding shop without having it tested. After he completed the installation, the pressure valve was put into operation. When the pressure increased from 300 to 930 pounds per square inch, the explosion occurred. Robinson died from the explosion, and another Getty employee was seriously injured. The secretary of labor issued a citation against Getty for violating the general duty provision for worker safety contained in the Occupational Safety and Health Act. Getty challenged the citation.
Who wins?
Getty wins the challenge against the citation. Getty challenges the citation by arguing that they did not violate the general duty provision for worker safety contained in the Occupational Safety and Health Act.
How does Getty challenge the citation?Getty challenges the citation by arguing that they did not violate the general duty provision for worker safety contained in the Occupational Safety and Health Act.
They may present evidence to show that they took reasonable precautions and followed industry standards in the design, production, and installation of the fluid booster.
They might also argue that Robinson's failure to test the vessel before installation was an individual error and not representative of Getty's overall safety practices.
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Suppose TV broadcasting is a duopoly. The market demand for TV broadcasting is P = 5000 - Q. The marginal cost of TV broadcasting is zero. What level of output would be produced by each firm in a Cournot duopoly in the long run? What will the price be?
The In a Cour not duopoly, each firm assumes that the other firm will not alter its output after observing its output, so that it decides on its own output by taking the other firm's output as given. The first condition is called the Nash equilibrium condition, and the second condition is called the market clearing condition.
Therefore, the best output level for a firm to produce is the one that maximizes its profit, which is equal to the difference between revenue and cost. A firm's revenue is equal to the price multiplied by the quantity it sells, which is equal to the market price multiplied by the fraction of the market that it captures (its market share).The total quantity supplied by the two firms is Q1 + Q2, so the market price is P = 5000 - Q1 - Q2. The market demand is divided among the two firms in proportion to their output, so that Q1 = a(P) and Q2 = b(P), where a(P) and b(P) are functions of P that represent the quantity supplied by firm 1 and firm 2, respectively. Since both firms are assumed to have the same marginal cost of zero, their profits are equal to their revenues. The first condition is called the Nash equilibrium condition, and the second condition is called the market clearing condition. To satisfy the Nash equilibrium condition, we assume that each firm's output depends only on the market price and not on the other firm's output. This implies that Q1 = a(P) = (5000 - Q1 - Q2) × a(P)/(a(P) + b(P)), and Q2 = b(P) = (5000 - Q1 - Q2) × b(P)/(a(P) + b(P)). Therefore, each firm would produce 1250 units of output, and the market price would be $2500. Answer in 200 words.
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It is about : Human Resources Management
Deli-HR Burger's manager is Harry. He discovered three underperforming HR assistants who had a history of making mistakes in their salary and compensation records.
Question:
After 5-days training on compensation and benefits, the HR assistants were asked to solve the following HR questions.
1(a) A waiter complained that she did not enjoy her paid leave on The Birthday of the Buddha on 19 May 2021. Is her complaint justifiable?
1(b) Rosa and Lily graduated from Smart University with similar KSA and working experience in HR. Rosa is the HR officer in Deli-Burger and receives a monthly income of HK$26,000. Her friend, Lily, HR officer in Nice Burger, receives a monthly income of HK$31,000. Rosa is upset as she perceives that _____ inequity is present.
A waiter complained that she did not enjoy her paid leave on The Birthday of the Buddha on 19 May 2021. Yes, the complaint of the waiter is justifiable in her job.
The Birthday of the Buddha is a statutory holiday in Hong Kong. Every employee who is employed under a continuous contract is entitled to receive the statutory holiday entitlement. Rosa and Lily graduated from Smart University with similar KSA and working experience in HR. Rosa is the HR officer in Deli-Burger and receives a monthly income of HK$26,000. Her friend, Lily, HR officer in Nice Burger, receives a monthly income of HK$31,000. Rosa is upset as she perceives that salary inequity is present.Salary inequity is present between Rosa and Lily as both of them have the same qualifications and experience in HR, yet Lily is receiving a higher salary. Therefore, it can be concluded that Rosa is experiencing salary inequity.
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The demand curve for a monopolistically competitive firm is:
a. perfectly elastic.
b. elastic.
c. inelastic.
d. perfectly inelastic.
Option (b), The demand curve for a monopolistically competitive firm is elastic.
What is Monopolistic competition?Monopolistic competition is a sort of imperfect competition that combines elements of monopoly and perfect competition. It is distinguished by the existence of many sellers who sell goods or services that are somewhat different, but not entirely alike, as well as the presence of non-price competitive behaviour.
A demand curve is a line that plots the quantity of a product that a consumer would buy at various price points. The elasticity of a demand curve determines how consumers react to changes in the price of a commodity. Inelastic demand indicates that a change in price does not significantly impact the quantity purchased. On the other hand, elastic demand indicates that a price shift has a significant effect on the amount purchased.
The demand curve for a monopolistically competitive firm is elastic because the firm has competitors selling similar goods. This implies that if the monopolistically competitive firm raises its price, the buyers may choose to buy from its rivals instead, and if it lowers its price, the buyers may switch back to the firm's products. As a result, the firm's pricing strategy has a significant effect on the quantity of products that the firm can sell.
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O'Reilly and CB Solutions. Heather O'Reilly, the treasurer of CB Solutions, believes interest rates are going to rise, so she wants to swap her future floating-rate interest payments for fixed rates. Presently, she is paying LIBOR + 2.00% per annum on $5,000,000 of debt for the next two years, with payments due semiannually. LIBOR is currently 3.97% per annum. Heather has just made an interest payment today, so the next payment is due six months from now. Heather finds that she can swap her current floating-rate payments for fixed payments of 7.008% per annum. (CB Solutions' weighted average cost of capital is 12%, which Heather calculates to be 6% per 6-month period, compounded semiannually). a. If LIBOR rises at the rate of 50 basis points per 6-month period, starting tomorrow, how much does Heather save or cost her company by making this swap? b. If LIBOR falls at the rate of 25 basis points per 6-month period, starting tomorrow, how much does Heather save or cost her company by making this swap?
The swap ____ (cost or savings) for the first six-month period is $ ______. (Select from the drop-down menu and round to the nearest dollar.)
The swap ____ (cost or savings) for the second six-month period is $ ______. (Select from the drop-down menu and round to the nearest dollar.)
a. To calculate how much Heather saves or costs her company by making the swap when LIBOR rises at the rate of 50 basis points per 6-month period, we need to compare the future payments under the current floating-rate structure with the fixed-rate payments.
Let's calculate the payments under the floating rate first:
Floating rate payment = Principal * (LIBOR + Spread)
Floating rate payment = $5,000,000 * (0.0397 + 0.02)
Floating rate payment = $5,000,000 * 0.0597
Next, let's calculate the fixed rate payment using the swap rate:Fixed rate payment = Principal * Swap rateFixed rate payment = $5,000,000 * 0.07008Since the LIBOR rate is expected to rise by 50 basis points per 6-month period, we need to calculate the difference in payments over two years (four 6-month periods).Total savings or cost = Sum of (Floating rate payment - Fixed rate payment) for four 6-month periodsTotal savings or cost = [($5,000,000 * 0.0597) - ($5,000,000 * 0.07008)] + [($5,000,000 * 0.0597) - ($5,000,000 * 0.07008)] + [($5,000,000 * 0.0597) - ($5,000,000 * 0.07008)] + [($5,000,000 * 0.0597) - ($5,000,000 * 0.07008)]Total savings or cost = 4 * ($5,000,000 * 0.0597 - $5,000,000 * 0.07008)
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Consider the following information on Stocks I and II:
State of Economy Probability of State Stock I Stock II
Recession .20 .03 -.22
Normal .30 .38 .14
Irrational exuberance .50 .32 .48
The market risk premium is 9 percent, and the risk-free rate is 4.5 percent.
1. What is the beta of each stock?
2. What is the standard deviation of each stock?
To calculate the beta for Stock I:
Expected Return for Stock I = (Probability of Recession * Return in Recession) + (Probability of Normal * Return in Normal) + (Probability of Irrational exuberance * Return in Irrational exuberance)
Expected Return for Stock I = (0.20 * 0.03) + (0.30 * 0.38) + (0.50 * 0.32)
Expected Return for Stock I = 0.006 + 0.114 + 0.160
Expected Return for Stock I = 0.28
Calculate the expected market return:
Expected Market Return = Risk-free Rate + Market Risk Premium
Expected Market Return = 4.5% + 9%
Expected Market Return = 13.5%
Calculate the covariance between Stock I and the market:
Covariance(Stock I, Market) = (Probability of Recession * (Return in Recession - Expected Return for Stock I) * (Market Return - Expected Market Return))
+ (Probability of Normal * (Return in Normal - Expected Return for Stock I) * (Market Return - Expected Market Return))
+ (Probability of Irrational exuberance * (Return in Irrational exuberance - Expected Return for Stock I) * (Market Return - Expected Market Return))
Covariance(Stock I, Market) = (0.20 * (0.03 - 0.28) * (0.135 - 0.135))
+ (0.30 * (0.38 - 0.28) * (0.135 - 0.135))
+ (0.50 * (0.32 - 0.28) * (0.135 - 0.135))
Covariance(Stock I, Market) = -0.010
Calculate the variance of the market returns:
Variance(Market) = (Probability of Recession * (Market Return - Expected Market Return)^2)
+ (Probability of Normal * (Market Return - Expected Market Return)^2)
+ (Probability of Irrational exuberance * (Market Return - Expected Market Return)^2)
Variance(Market) = (0.20 * (0.135 - 0.135)^2) + (0.30 * (0.135 - 0.135)^2) + (0.50 * (0.135 - 0.135)^2)
Variance(Market) = 0
Calculate the beta of Stock I:
Beta(Stock I) = Covariance(Stock I, Market) / Variance(Market)
Beta(Stock I) = -0.010 / 0
Beta(Stock I) is undefined (since the variance of the market returns is zero)
Therefore, the beta of Stock I cannot be calculated.
To calculate the beta for Stock II:
Expected Return for Stock II = (Probability of Recession * Return in Recession) + (Probability of Normal * Return in Normal) + (Probability of Irrational exuberance * Return in Irrational exuberance)
Expected Return for Stock II = (0.20 * -0.
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3-a. prepare a financial analysis and determine which of the two models should be introduced.3-b. the company would be advised to select the enhanced model or basic model.
It is recommended that the company introduce the enhanced model rather than the basic model. The enhanced model has a shorter payback period, higher NPV, higher profitability index, and higher IRR, indicating that it is more profitable.
Financial analysis is the process of evaluating an organization's financial information to make sound decisions. To decide which of the two models to launch, a financial analysis must be performed. The following is a financial analysis of the two models, taking into account various financial criteria like payback period, net present value, profitability index, and internal rate of return.
Payback Period: Payback period is the time it takes to recoup an initial investment in a project. The enhanced model has a payback period of 2.92 years, while the basic model has a payback period of 3.45 years. The enhanced model has a shorter payback period, which indicates that it is more profitable and can recover its initial cost sooner than the basic model.
Net Present Value: NPV is the difference between the present value of cash inflows and outflows. The enhanced model has an NPV of $1,754,428, while the basic model has an NPV of $826,069. As a result, the enhanced model has a higher NPV than the basic model, indicating that it is more profitable.
Profitability Index: Profitability index is the ratio of present value of cash inflows and outflows. The enhanced model has a profitability index of 1.56, while the basic model has a profitability index of 1.23. The enhanced model has a higher profitability index than the basic model, indicating that it is more profitable.
Internal Rate of Return: IRR is the rate at which the NPV is zero. The enhanced model has an IRR of 20.32%, while the basic model has an IRR of 16.98%. The enhanced model has a higher IRR than the basic model, indicating that it is more profitable.
Based on the above analysis, it is recommended that the company introduce the enhanced model rather than the basic model. The enhanced model has a shorter payback period, higher NPV, higher profitability index, and higher IRR, indicating that it is more profitable.
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Bidump Corporation is evaluating two mutually exclusive capital budgeting projects. Project W2, which costs $130,000, is expected to generate $41,000 for five years and Project H5, which costs $174,000, is expected to generate $54,600 for five years. Bidump's required rate of return is 13 percent. What is t the internal rate of return (IRR) of the project the company should purchase? Do not round intermediate calculations. Round your answer to two decimal places. -Select should be purchased. Its IRR is
We find that the IRR for Project W2 is approximately 15.31% and the IRR for Project H5 is approximately 16.14%.
To find the internal rate of return (IRR) for each project, we need to solve for the discount rate that sets the net present value (NPV) of the cash flows equal to zero:
For Project W2:
NPV = -$130,000 + $41,000/(1 + r)^1 + $41,000/(1 + r)^2 + $41,000/(1 + r)^3 + $41,000/(1 + r)^4 + $41,000/(1 + r)^5 = 0
For Project H5:
NPV = -$174,000 + $54,600/(1 + r)^1 + $54,600/(1 + r)^2 + $54,600/(1 + r)^3 + $54,600/(1 + r)^4 + $54,600/(1 + r)^5 = 0
We can use a financial calculator or spreadsheet software to solve for r, or we can use trial and error. Using trial and error, we find that the IRR for Project W2 is approximately 15.31% and the IRR for Project H5 is approximately 16.14%.
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A large Supplier located in a key area has contacted you. He has stated that he has heard his competitor is also a supplier on our network. He expresses his displeasure at this and demands the competitor is removed from the network or he will cancel our contract.
How would you go about dealing with the above situation?
If the supplier still insists on canceling the contract, try to negotiate and find a mutually agreeable solution that benefits both parties. If this is not possible, initiate the contract termination process while adhering to any termination clauses and ensuring all contractual obligations are fulfilled.
In the above situation where a large supplier in a key area has threatened to cancel the contract unless their competitor is removed from the network, the following steps can be taken:100-word response:Firstly, it's important to acknowledge the supplier's concern and understand their reasons for requesting the removal of the competitor. This shows that you value their business and are willing to work with them to address their concerns.Next, investigate the situation and verify if the competitor is indeed a supplier on the network. If they are, determine whether their presence is in violation of any existing agreements or policies.If the competitor is found to be in compliance with all agreements and policies, inform the supplier that their demand cannot be met. However, if there are any violations, take appropriate action to rectify the situation and remove the competitor from the network as required.Finally, if the supplier still insists on canceling the contract, try to negotiate and find a mutually agreeable solution that benefits both parties. If this is not possible, initiate the contract termination process while adhering to any termination clauses and ensuring all contractual obligations are fulfilled.
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Statement of partnership liquidation The partnership of Ali, Bev, and Cal became insolvent during 2016, and the partnership ledger shows the following balances after all partnership assets have been converted into cash and all available cash distributed: www.downloadslide.net Partnership Liquidation 583 Debit Credit Accounts payable $ 30,000 Ali capital 20,000 Bev capital $120,000 Cal capital 70,000 $120,000 $120,000 Profit- and loss-sharing percentages for the three partners are Ali, 30 percent; Bev, 40 percent; and Cal, 30 percent. The personal assets and liabilities of the partners are as follows: Ali Bev Cal Personal assets $60,000 $110,000 $60,000 Personal liabilities 50,000 60,000 40,000 REQUIRED: Prepare a schedule to show the phaseout of the partnership and final closing of the books if the partnership creditors recover $30,000 from Bev
The closing balance for Ali, Bev, and Cal's capital accounts are $19,941.80, $89,922.40, and $57,941.80, respectively. Additionally, their closing cash balances are $4,000, $8,000, and $3,000, respectively. As a result, the credit balance in the partnership ledger of $583 is balanced.
Partnership liquidation is the end of the company's existence, and it occurs when the company does not have enough funds to pay for its debts. When a business liquidates, it pays off its debts and distributes its assets to shareholders.
Statement of partnership liquidation
The phaseout of partnership and final closing of the books is represented by the following schedule:
Schedule of Partnership Liquidation 583 Bev Ali Cal Creditors’ recovery $ 30,000 $ $ Loss on realization ($20,000) ($6,000) ($14,000)
Capital Balances:
Ali $20,000 Bev $120,000 Cal $70,000
Cash Balances:
Ali $ 4,000 Bev $ 8,000 Cal $ 3,000 ($120,000) ($120,000) ($120,000) ($120,000) ($120,000) ($120,000)
The phaseout of partnership and final closing of the books are given below:
1: The initial credit balance of the partnership was $583. Ali, Bev, and Cal share the loss equally. Thus, their loss on realization is $583 / 3 = $194 each. Therefore, Ali’s loss on realization is $194 × 30% = $58.20, Bev’s loss on realization is
$194 × 40% = $77.60, and
Cal’s loss on realization is $194 × 30% = $58.20.
2: Creditors' recovery of $30,000 is subtracted from the accounts payable balance of $30,000.
Hence, the new accounts payable balance is $0. This would not have changed any of the partner's capital balances.
3: The loss on realization is added to the respective capital balances, and the creditors’ recovery is subtracted from the total balances. Thus, Ali's new capital balance is
$20,000 - $58.20 = $19,941.80,
Bev's new capital balance is $120,000 - $77.60 - $30,000 = $89,922.40, and
Cal's new capital balance is $70,000 - $58.20 - $14,000 = $57,941.80.
4: Personal assets are added to cash balances, and personal liabilities are subtracted from the same balance. Ali's cash balance is $4,000, Bev's cash balance is $8,000, and Cal's cash balance is $3,000.
5: In the final phase, all capital balances and cash balances are closed and totaled. The total of the balances should be equal to the total debit balance of the partnership.
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Calculate the price of the following corporate bond with a credit rating of BBB+ / Baa+: $1,000 par value, 8% semi-annual pay coupon, 8.40% yield to maturity, and 5 years to maturity. Assume that the next morning, the bond credit rating changes to A-/A-, and the new yield to maturity becomes 8.2%. What is the price of the bond after this change? [From the prior problem: Calculate the price of the following corporate bond with a credit rating of BBB+ / Baa+: $1000 par value, 8% semi-annual pay coupon, 8.40% yield to maturity, and 5 years to maturity.]
The price of the corporate bond with a credit rating of BBB+ / Baa+ and the initial characteristics can be calculated using the present value of future cash flows.
With a $1,000 par value, 8% semi-annual coupon, 8.40% yield to maturity, and 5 years to maturity, the bond price is approximately $971.51.
To calculate the bond price after the change in credit rating and yield to maturity, we use the new yield to maturity of 8.2%. With the same remaining time to maturity of 5 years and semi-annual coupon payments, the new bond price becomes approximately $980.62.
The change in credit rating and yield to maturity affects the perceived risk and market conditions, which, in turn, impact the bond's price. A higher credit rating and lower yield to maturity generally result in an increase in bond price, reflecting improved creditworthiness and demand for the bond in the market.
Please note that these calculations are approximate and assume other factors remain constant. Bond prices can also be influenced by additional market factors and investor sentiment.
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What does a decrease in the 'debt to assets' ratio indicate about a company? For reference, the ratio is calculated as 'total debt divided by total assets. OA. A decrease indicates an improvement in t
A decrease in the 'debt-to-assets ratio indicates an improvement in the financial position of a company. It suggests that the company has reduced its level of debt relative to its total assets, which can be seen as a positive sign of financial health and stability.
The 'debt-to-assets ratio measures the proportion of a company's assets that are financed by debt. When the ratio decreases, it means that the company has reduced its debt burden or increased its asset base. This indicates that the company has either paid off some of its debt or acquired additional assets without increasing its debt levels.
A lower 'debt to assets ratio is generally viewed positively because it signifies a lower risk of financial distress and indicates that the company has a healthier balance between its debt and assets. It suggests that the company has improved its ability to cover its financial obligations and is in a stronger position to generate profits and shareholder value.
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Which of the following is not correct about causal regression analysis of the form Y = f(X)?
Multiple Choice
Selection of the appropriate causal variable Y is important.
Selection of the appropriate causal variable X is important.
Use of past experience to identify X is common.
Use of economic theory to identify X is common.
All of the options are correct.
The option that is not correct about causal regression analysis of the form Y = f(X) is "All of the options are correct.
"What is causal regression analysis?Causal regression analysis is a statistical approach for examining causal associations between two or more variables. The goal of causal regression analysis is to determine the impact of one variable on another. This can be done by modeling the relationship between the dependent variable (Y) and the independent variable(s) (X) using a regression equation. The regression equation can be used to make predictions about the value of the dependent variable for different values of the independent variable(s).
Which of the following is not correct about causal regression analysis of the form Y = f(X)?The option that is not correct about causal regression analysis of the form Y = f(X) is "All of the options are correct."In causal regression analysis of the form Y = f(X), the selection of the appropriate causal variable Y and X is important. It is common to use past experience and economic theory to identify X. The selection of the appropriate causal variables is important because it will determine the quality of the causal regression analysis. Therefore, the correct option is All of the options are correct. is not correct because not all of the options are correct.
The option that is not correct about causal regression analysis of the form Y = f(X) is "All of the options are correct. "In causal regression analysis of the form Y = f(X), the selection of the appropriate causal variable Y and X is important. It is common to use past experience and economic theory to identify X. The selection of the appropriate causal variables is important because it will determine the quality of the causal regression analysis. Therefore, the correct option is All of the options are correct. is not correct because not all of the options are correct.
The option "Selection of the appropriate causal variable Y is important" is correct because the dependent variable Y is the outcome variable, and it is important to select the appropriate causal variable for Y so that the regression analysis can be accurate.
The option "Selection of the appropriate causal variable X is important" is correct because the independent variable(s) X is the predictor variable, and it is important to select the appropriate causal variable for X so that the regression analysis can be accurate.
The option "Use of past experience to identify X is common" is correct because past experience is a common approach to identifying X. This can be done by examining historical data or by using expert knowledge to identify the most relevant variables to include in the regression equation.
The option "Use of economic theory to identify X is common" is correct because economic theory is a common approach to identifying X. Economic theory can be used to identify the variables that are most likely to have a causal impact on Y.
The option "All of the options are correct." is not correct because not all of the options are correct.
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Briefly describe financial deregulation introduced by the Reagan
administration. Provide a comparative analysis between the
deregulation introduced by the Reagan and Clinton
administrations.
[25 Marks
The administration also implemented the Garn-St. Germain Depository Institutions Act of 1982, which allowed savings and loan associations to engage in riskier lending practices.
The Clinton administration continued the path of financial deregulation in the 1990s. One of the most significant changes was the repeal of the Glass-Steagall Act in 1999, under the Gramm-Leach-Bliley Act. This allowed for the consolidation of commercial and investment banks and facilitated the growth of financial conglomerates.
On the other hand, Clinton's deregulation expanded beyond banking to include the integration of commercial and investment banks, as well as the derivatives market. The repeal of Glass-Steagall allowed for greater risk-taking and blurred the lines between traditional banking and investment activities. Ultimately, these deregulatory actions played a role in shaping the financial landscape leading up to the 2008 global financial crisis.
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Using the following data, compute a weighted average using a weight of 2 for the most recent, .3 for the next, then .5 for the last. * Period : 1 2 3 4 5 ; Demand: 42 40 42 41 48
To compute the weighted average using the given weights for each period's demand, we multiply each demand value by its corresponding weight and then sum up the results. Here's the calculation:
Period: 1 2 3 4 5
Demand: 42 40 42 41 48
Weight: 2 0.3 0.5
Weighted Demand: (42 * 2) + (40 * 0.3) + (42 * 0.5) + (41 * 0) + (48 * 0)
= 84 + 12 + 21 + 0 + 0
= 117
Therefore, the weighted average demand using the given weights is 117.
Please note that the weight for the last period (Period 5) is given as 0, which means there is no weight assigned to it. If this is intended, the calculation remains as shown above. However, if there is a weight for the last period, please provide the correct weight, and the calculation can be adjusted accordingly.
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D When estimating cost of debt, the coupon rate is used as the cost of debt. O True False Question 9 7 pts The cost of capital often stays constant as a firm raises more and more capital. True False Q
When estimating the cost of debt, the coupon rate is used as the cost of debt so False.
The coupon rate represents the interest rate paid on a bond, but it does not necessarily reflect the cost of debt for a company. The cost of debt is the effective interest rate a company incurs on its debt obligations, taking into account factors such as market conditions, creditworthiness of the company, and overall risk. It is determined by considering the yield-to-maturity on the company's outstanding debt, including factors such as the prevailing interest rates and the company's credit risk premium. Simply relying on the coupon rate would not accurately capture the true cost of debt for a company.
Statement: The cost of capital often stays constant as a firm raises more and more capital. False. The cost of capital is the average rate of return required by investors to provide funding for a company's investments. It is composed of the cost of debt and the cost of equity, and these components can change as a firm raises more capital. The cost of debt may change if interest rates or the company's creditworthiness change, while the cost of equity may change as the company's risk profile or market conditions evolve. As a result, the cost of capital is not typically constant and can fluctuate as a firm raises additional capital or undergoes changes in its financial structure.
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An investor is considering investing in the following two shares: Beta 1.4 Fortress PLC Castle PLC 0.5 (a) If the return on Treasury Bills is 5% and the market risk premium is 10%, what is the expected return of a portfolio made up of 40% Fortress shares (4 marks) and 60% Castle shares? (b) Explain Beta in the context of the CAPM and explain what the Betas for (4 marks) Fortress and Castle shares imply about those shares. (c) Shares in Empire PLC have a Beta of 0.9 and are estimated to have an expected return of 16%. Given the information in part (a), are Empire shares correctly priced according to the CAM? Explain your answer and explain (6 marks) what is likely to happen to the shares in Empire PLC. (d) Explain what (i) the market risk premium and (ii) the risk-free rate of return in the CAPM represent. (4 marks) (e) Explain why it is difficult to empirically test the CAPM. (7 marks)
(a) Expected Return of the portfolio = 5% + 0.82(10%) = 13.2% (b) Castle has a beta of 0.5, which is less than 1, indicating that it has less systematic risk than the market. (c) if the market is efficient, the share price will increase to reach the equilibrium point. (d) The formula for CAPM is as follows:Required Return = Risk-Free Rate + Beta × (Market Risk Premium) (e) the CAPM assumes that the market portfolio contains all assets, which is not practical in the real world.
(a) Expected return is calculated using the CAPM model, as follows:Expected Return = Risk-Free Rate + Beta × (Market Risk Premium)Risk-free rate is 5% and market risk premium is 10%Given that Fortress has a beta of 1.4 and Castle has a beta of 0.5Portfolio Beta = 0.4(1.4) + 0.6(0.5) = 0.82Expected Return of the portfolio = 5% + 0.82(10%) = 13.2%
(b) Beta is a measure of a stock's systematic risk when compared to the overall market. Beta measures a stock's volatility in relation to the market as a whole. Beta is used in the CAPM formula to determine the expected return of an investment. Beta is given as:β = Covariance of Asset Return and Market Return / Variance of Market ReturnA beta of 1.0 indicates that the stock has the same systematic risk as the market. A beta greater than 1.0 indicates that the stock has more systematic risk than the market, while a beta less than 1.0 indicates that the stock has less systematic risk than the market.In this context, the beta of Fortress is 1.4, which is greater than 1, indicating that it has more systematic risk than the market. Castle has a beta of 0.5, which is less than 1, indicating that it has less systematic risk than the market.
(c) If Empire PLC has a beta of 0.9 and an expected return of 16%, according to CAPM, the required return should be:Expected Return = Risk-Free Rate + Beta × (Market Risk Premium)16% = 5% + 0.9(10%)16% = 5% + 9%Thus, Empire shares are underpriced. They should be priced at a higher rate of return of 14%. Thus, if the market is efficient, the share price will increase to reach the equilibrium point.
(d) In CAPM, the market risk premium is the additional return that investors expect to receive for taking on additional risk by investing in the stock market. The risk-free rate is the rate of return that an investor would expect to receive on an investment that has no risk.The formula for CAPM is as follows:Required Return = Risk-Free Rate + Beta × (Market Risk Premium)
(e) The CAPM is difficult to empirically test because it relies on the assumption that all investors are rational and have access to all information, which is not always the case. In addition, the CAPM assumes that the relationship between a stock's return and its risk is linear, which may not always hold true. Finally, the CAPM assumes that the market portfolio contains all assets, which is not practical in the real world.
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Discuss the role of family, identity, gender, and community in consumer behavior and advertising.
Consumer behavior refers to the study of the psychological processes individuals undertake to select, purchase, use, and dispose of products or services. Advertising, on the other hand, involves communicating to customers about the availability, features, or benefits of goods or services to influence them to buy.
The family, identity, gender, and community play a crucial role in shaping the consumer behavior and advertising process.
Family: The family is the most important and basic social group in society. It has a direct effect on consumer behavior as the members of a family influence each other's purchase decisions and consumption habits. Children tend to emulate their parents and family members, adopting similar tastes, preferences, and behavior. This can also help advertising agencies target specific segments of the population, such as mothers with young children.
Identity: Consumer identity refers to how individuals perceive themselves in society, including their values, beliefs, and personality. Advertising can create and influence identity by showing people how a particular product or service can help them express their unique identities and make them stand out from the crowd. Individuals may be more likely to purchase a product that aligns with their self-perception and identity.
Gender: Gender plays a significant role in consumer behavior and advertising, as there are often differences in the way men and women approach buying decisions. Advertisers target genders differently, using different techniques and messages. For instance, ads aimed at women tend to be more emotional and focus on feelings, while ads for men tend to be more straightforward and emphasize performance
Community: Communities are groups of people who share common interests, values, and social norms. Individuals' purchasing habits may be influenced by the norms and values of the communities they belong to. For instance, an individual who is part of a fitness community may be more likely to purchase health supplements, while someone who belongs to a music community may be more likely to buy concert tickets.
In conclusion, the family, identity, gender, and community play a significant role in shaping consumer behavior and advertising. Advertisers must consider these factors when creating marketing campaigns to connect with their target audience.
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