You decide to invest in a portfolio consisting of 30 percent Stock A, 30 percent Stock B, and the remainder in Stock C. Based on the following information, what is the expected return of your portfolio? State of Economy Probability of State Return if State Occurs of Economy Stock A Stock B Stock C Recession .17 - 18.8 % - 3.9 % - 22.8 % Normal .45 10.2 % 8.5 % 17.1 % Boom .38 28.6 % 15.8 % 31.7 %

Answers

Answer 1

Answer:

Portfolio return = 0.127744 or 12.7744% rounded off to 12.77%

Explanation:

The portfolio return is a function of the weighted average of the individual stocks returns' that form up the portfolio. The formula for portfolio return is,

Portfolio return = wA * rA  +  wB * rB  +  ...  +  wN * rN

Where,

w represents the weight of each stockr represents the return of each stock

To calculate the expected return of portfolio, we first need to calculate the individual stock returns.

The expected rate of return of individual stocks can be calculated as follows,

r = pA * rA  +  pB * rB + ... + pN * rN

Where,

pA, pB and so on represents the probability of an event or return to occur rA, rB and so on are the return in different events

For Stock A

rA = 0.17 * -0.188  +  0.45 * 0.102  +  0.38 * 0.286

rA  = 0.12262 or 12.262%

For Stock B

rB = 0.17 * -0.039  +  0.45 * 0.085  +  0.38 * 0.158

rB  = 0.09166 or 9.166%

For Stock C

rC = 0.17 * -0.228  +  0.45 * 0.171  +  0.38 * 0.317

rC  = 0.15865 or 15.865%

Portfolio return = 0.3 * 0.12262  +  0.3 * 0.09166  +  0.4 * 0.15865

Portfolio return = 0.127744 or 12.7744% rounded off to 12.77%


Related Questions

100 million diluted shares outstanding trading at $37.50 per share. The company has $1 billion of debt outstanding with a cost of debt at 6.5% at a marginal tax rate of 40%. The company has $100 million of cash on its balance sheet. What is the enterprise value of Correct Inc.

Answers

Answer:

$4,650,000,000

Explanation:

We will use the formula below to calculate the enterprise value of Correct inc.

Enterprise value = Market value capital and debts - Cash and investments

= 100 million diluted shares × 37.50 per share + $1 billion of debt outstanding - $100 million cash

= $3750m + $1000m - $100m

= $4,650,000,000.

Prepare journal entries to record the following four separate issuances of stock. A corporation issued 9,000 shares of $10 par value common stock for $108,000 cash. A corporation issued 4,500 shares of no-par common stock to its promoters in exchange for their efforts, estimated to be worth $49,500. The stock has a $1 per share stated value. A corporation issued 4,500 shares of no-par common stock to its promoters in exchange for their efforts, estimated to be worth $49,500. The stock has no stated value. A corporation issued 2,250 shares of $25 par value preferred stock for $105,750 cash.

Answers

Answer: Please see answer in explanation column

Explanation:

1. Being issued in excess of par value

Account titles & Explanations              Debit             Credit  

Cash                                           $108,000    

Common stock(9,000 x 10)                                      $90,000  

paid in capital in excess of par value

Common Stock(108,000 - 90,000)                          $18,000

2.Being issued to promoters at stated value

Account titles & Explanations     Debit           Credit  

Organisational expense           $49,500  

common stock (4500 x 1 )                                          $4,500  

paid in capital in excess of stated value

Common stock   (49,500 -4,500)                                   $45,000  

3 Being issued to promoters at no stated value

Account titles & Explanations              Debit                Credit  

        organisational expense          $49,500

Common stock of no par value                                 $49,500  

         

4 Being issued  of preferred shared in excess of par value

Account titles & Explanations           Debit                 Credit  

               Cash           $105,750  

Preferred Stock(2,250 X $25)                                   $56,250  

paid in capital in excess of par value

of preferred stock (  $105,750-  $56,250)                $49,500                  

Joe must pay liabilities of 1,000 due 6 months from now and another 1,000 due one year from now. There are two available investments: \,1. Bond I: a 6-month bond with face amount of 1,000, a 8% nominal annual coupon rate convertible semiannually, and a 6% nominal annual yield rate convertible semiannually; and \,2. Bond II: a one year bond with face amount of 1,000, a 5% nominal annual coupon rate convertible semiannually, and a 7% nominal annual yield rate convertible semiannually Calculate the amount of each bond Joe should purchase in order to exactly match the liabilities.

Answers

Answer:

future liabilities:

$1,000 in 6 months

$1,000 in 1 year

Present value of bond I (due in 6 months):

PV = $1,000 / (1 + 3%) = $970.87

Present value of bond II (due in 1 year):

PV = $1,000 / (1 + 3.5%)² = $933.51

The price of the bonds is determined by the annual yield rate (YTM), not the coupon rate. Joe will pay $970.87 for bond I and $933.51 for bond II.

What is the present value​ (PV) of an investment that pays $60,000 every year for four years if the interest rate is 9​% ​APR, compounded​ quarterly?

Answers

Answer:

PV= $798,757.88

Explanation:

Giving the following information:

Cf= $60,000

i= 0.09/4= 0.0225

n= 4*4= 16

First, we need to calculate the future value using the following formula:

FV= {A*[(1+i)^n-1]}/i

A= annual cash flow

FV= {60,000*[(1.0225^16) - 1]} / 0.0225

FV= $1,140,323.89

Now, the present value:

PV= FV/(1+i)^n

PV= 1,140,323.89/(1.0225^16)

PV= $798,757.88

If United Airlines acted as a "price leader" and all other airlines simply charged the same prices

that United Airlines charged, then could this action be illegal because it is a form of "silent collusion?"

A. There is no such term in microeconomics known as "tacit" or "silent collusion."

B. Matching the prices of the price leader firm is a good example of a competitive market.

C. The U.S. Anti-Trust Department has always considered this business behavior as suspicious

and it does consider this pricing strategy to be illegal.

D. The famous 1982 anti-monopoly IBM court case said that this pricing strategy within an

industry is legal as long as the firms fill out quarterly reports to keep the U.S. Anti-Trust

Answers

Answer:

D

Explanation:

The airline industry is an example of an oligopoly

An Oligopoly is when there are few large firms operating in an industry. While, a monopoly is when there is only one firm operating in an industry.

Oligopolies are characterised by :

price setting firms

product differentiation

profit maximisation

high barriers to entry or exit of firms

downward sloping demand curve

the action taken by the other airlines is known as tacit collusion.

Tacit collusion is when other companies adopt the price of the price leader

Tacit collusion is not illegal while the explicit collision is illegal.

Which of the following represents a difference in the process by which a monopolistic competitor and a monopolist make their respective decisions about quantity and price?a. only the monopolist competitor faces a downward-sloping demand curve.b. the monopolist's perceived demand curve is market demandc. the monopolist competitor's perceived demand curve is market demandd. a monopolist need not fear entry and also selection b above

Answers

Answer:

a monopolist need not fear entry and also selection b above

Explanation:

A monopolistic competition is when there are many firms selling differentiated products in an industry.  A monopoly has characteristics of both a monopoly and a perfect competition. the demand curve is downward sloping. it sets the price for its goods and services.

examples of monopolistic competition are restaurants

A monopoly is when there is only one firm operating in an industry. there is usually high barriers to entry of firms. the demand curve is downward sloping. it sets the price for its goods and services.

An example of a monopoly is an utility company

Stock splits can be used to: C) increase the par value per share while decreasing the market price per share. A) adjust the market price of a stock so it falls within a preferred trading range B) decrease a company's excess cash thereby lowering agency costs. E) adjust the debt-equity ratio to its preferred level D) increase the total equity of a firm.

Answers

Answer:

A) adjust the market price of a stock so it falls within a preferred trading range

Explanation:

A stock split is when a company increases the number of its shares outstanding.

for example if a company has 6 million shares outstanding at a price of $10, earning per share is $1 and dividend per share is $2. this company announces a 2 for 1 split :

the number of outstanding shares becomes 2 x 6 million = 12 million

stock price becomes = $10 / 2 =$5

earning per share = $1 / 2 = $0.50

dividend per share = $2 / 2 = $1

After a stock split, the price of the shares falls. so it can be used to adjust the market price of a stock so it falls within a preferred trading range.

A stock split doesn't affect the balances in shareholders equity account.

Stock split doesn't affect the cash holdings of the firm.

Market capitalisation doesn't change after a split, so stock value doesn't change.

The bookkeeper prepared a check for $48 but accidently recorded it as $95. When preparing the bank reconciliation, this should be corrected by:

Answers

Answer:

Adding $47 to the book balance.

Explanation:

The above is an example of transposition error, which is caused by substituting two or more sequential digits ; mistake would be corrected by adding $47 ($95 -$48) to the book balance.

TB MC Qu. 8-174 LBC Corporation makes and sells ... LBC Corporation makes and sells a product called Product WZ. Each unit of Product WZ requires 2.0 hours of direct labor at the rate of $16.00 per direct labor-hour. Management would like you to prepare a Direct Labor Budget for June. The company plans to sell 39,000 units of Product WZ in June. The finished goods inventories on June 1 and June 30 are budgeted to be 610 and 110 units, respectively. Budgeted direct labor costs for June would be:

Answers

Answer:

Direct labor cost= $1,232,000

Explanation:

Giving the following information:

Each unit of Product WZ requires 2 hours of direct labor at a rate of $16 per direct labor-hour.

Sales= 39,000 units

Beginning inventory= 610 units

Desired ending inventory= 110 units

First, we need to calculate the production required:

Production= sales + desired ending inventory - beginning inventory

Production= 39,000 + 110 - 610

Production= 38,500

Now, the direct labor budget:

Direct labor hours= 38,500*2= 77,000 hours

Direct labor cost= 77,000*16= $1,232,000

Demand characteristics can threaten internal validity because the results ____ can be explained by reactivity instead of the treatment conditions correlate with those that threaten external validity may be specific to the experimenter who has the expectations may not generalize to situations where demand characteristics are different

Answers

Answer: can be explained by reactivity instead of the treatment conditions

Explanation:

Internal validity is the degree of confidence that a researcher has when he or she believes that the causal relationship that is not being influenced by other variables and therefore trustworthy.

Demand characteristics can threaten internal validity because the results can be explained by reactivity instead of the treatment conditions.

A company was moving from one part of the city to another. During the move, a truck carrying computer equipment worth more than $250,000 was trapped in a flooded underpass, and the equipment was destroyed. Fortunately, the company was insured under several policies. The policy that would most likely cover the computer equipment during the move from one facility to another is

Answers

Answer:

Causality policy

Explanation:

This policy makes provision for an organization or individual to be insured against any damage to property as a result of negligent acts or omissions.

In this case the property–$250,000 worth of computer equipment held inside the truck was trapped in a flooded underpass, and the circumstances shows there may have likely been negligence on the part of the truck driver.

Members of the board of directors of have received the following operating income data for the year ended: May 31, 2018:
Members of the board are surprised that the industrial systems product line is not profitable. They commission a study to determine whether the company should drop the line. Company accountants estimate that dropping industrial systems will decrease fixed cost of goods sold by and decrease fixed selling and administrative expenses by $10,000.
Requirements:
1. Prepare a differential analysis to show whether Safety Point Safety Point should drop the industrial systems product line.
2. Prepare contribution margin income statements to show Safety Point's Safety Point's total operating income under the two alternatives: (a) with the industrial systems line and (b) without the line. Compare the difference between the two alternatives' income numbers to your answer to Requirement 1.
3. What have you learned from the comparison in Requirement 2?
Product Line
Industrial Household
Systems Total
Net Sales Revenue $340,000 $370,000 $710,000
Cost of Goods Sold:
Variable 36,000 46,000 82,000
Fixed 250,000 69,000 319,000
Total Cost of Goods
Sold 286,000 115,000 401,000
Gross Profit 54,000 255,000 309,000
Selling and Administrative Expenses:
Variable 65,000 72,000 137,000
Fixed 45,000 22,000 67,000
Total Selling and Administrative
Expenses 110,000 94,000 204,000
Operating Income
(Loss) ($56,000) $161,000 $105,000

Answers

Question Completion:

Safety Point Company accountants estimate that dropping industrial systems will decrease fixed cost of goods sold by $50,000 and decrease fixed selling and administrative expenses by $10,000.

Answer:

Safety Point Company

1. Differential Analysis, showing Safety Point Dropping the Industrial Systems Product Line:

Net Sales Revenue                     $370,000

Cost of Goods Sold:

 Variable                                         46,000

 Fixed                                           269,000

Total Cost of Goods  Sold             315,000

Gross Profit                                    55,000

Selling and Administrative Expenses:

 Variable                                       72,000

 Fixed                                           57,000

Total Selling and Administrative

 Expenses                                  129,000

Operating Income  (Loss)         ($74,000)

2. Safety Point Company's Contribution Margin Income Statements for the year ended May 31, 2018, under the two alternatives:

                                                     Without                 With

                                                        Industrial Systems

Net Sales Revenue                     $370,000          $710,000

Variable costs:

 Cost of Goods Sold                      46,000               82,000

 Selling and Administrative           72,000              137,000

Total Cost of Goods  Sold              118,000            219,000

Contribution Margin                    252,000            491,000

Fixed Expenses:

 Cost of goods sold                   269,000            319,000

 Selling and Administrative         57,000              67,000

Total  Fixed Expenses                326,000           386,000

Operating Income  (Loss)         ($74,000)         $105,000

3. The comparison in requirement 2 shows that eliminating the Industrial Systems Product Line makes Safety Point Company unprofitable with an operating loss of $74,000.  This loss cannot be compared to the total operating income of $105,000 which is made with the industrial systems.  So, it is not the Industrial System Product line that is causing Safety Point Company to record a loss of $56,000.  It is the fixed cost of $60,000 which cannot be eliminated with the elimination of the Industrial System product line that causes the loss and reduces total operating for the company.

Explanation:

a) Data:

Safety Point

Income Statement for the year ended May 31, 2018:

                                                              Product Line

                                                      Industrial      Household

                                                      Systems        Systems           Total

Net Sales Revenue                     $340,000      $370,000      $710,000

Cost of Goods Sold:

 Variable                                         36,000          46,000          82,000

 Fixed                                           250,000          69,000        319,000

Total Cost of Goods  Sold            286,000          115,000        401,000

Gross Profit                                    54,000         255,000       309,000

Selling and Administrative Expenses:

 Variable                                       65,000            72,000        137,000

 Fixed                                            45,000           22,000         67,000

Total Selling and Administrative

 Expenses                                    110,000           94,000      204,000

Operating Income  (Loss)          ($56,000)       $161,000     $105,000

Booher Book Stores has a beta of 1.0. The yield on a 3-month T-bill is 3% and the yield on a 10-year T-bond is 6%. The market risk premium is 4.5%, and the return on an average stock in the market last year was 10.5%. What is the estimated cost of common equity using the CAPM

Answers

Answer:

Cost of equity =  10.5%

Explanation:

The capital asset pricing model is a risk-based model. Here, the return on equity is dependent on the level of reaction of the the equity to changes in the return on a market portfolio. These changes are captured as systematic risk. The magnitude by which a stock is affected by systematic risk is measured by beta.

Under CAPM, Ke= Rf + β(Rm-Rf)  

Rf-risk-free rate (long-term i.e 10 year treasury bill rate), β= Beta, Rm= Return on market., Ke- Return on equity (cost of equity)

This model can be used to work out the cost of equity as follows:

Ke= Rf + β (Rm-Rf)

Rf- 6%, β= 1.0, Rm- 10.5, E(r)- ?

Ke = 6% + 1.0× (10.5 -6)% = 10.5%

Ke  = 10.5%

Cost of equity =  10.5%

Which of the following is not a global economic forum of nations?
G-8
O G650
+ 5
G-20

Answers

Answer:

c

Explanation:

answer is c

For an automobile company, the total overhead applied was $48,000,000 at the end of the year. Actual overhead was $52,850,000. Closing over/under applied overhead into cost of goods sold would cause net income to:

Answers

Answer:

Net income decreased by $4,850,000.

Explanation:

Given total overhead applied = $48000000

The actual overhead = $52850000

Over/under Applied overhead = total overhead applied - Actual overhead at the end of the year.

Over / under Applied overhead = 48000000-52850000

Over / under Applied overhead = -$4850000

From the calculation, it can be seen that the overhead is underapplied therefore when under applied overhead allocated to cost of goods sold then cost of goods sold decreased by $4850000.

Walnut has received a special order for 2,700 units of its product at a special price of $200. The product normally sells for $260 and has the following manufacturing costs: Per unit Direct materials $ 64 Direct labor 34 Variable manufacturing overhead 44 Fixed manufacturing overhead 103 Unit cost $ 245 Walnut is currently operating at full capacity and cannot fill the order without harming normal production and sales. If Walnut accepts the order, what effect will the order have on the company’s short-term profit?
a. $162,000 decrease
b. $121,500 increase
c. $121,500 decrease
d. Zero.

Answers

Answer:

a. $162,000 decrease

Explanation:

Sales                                                                          $540,000

(2700 unit * $200)

Less:

Direct materials                                  $172,800

(2700 unit * 64)

Direct labor                                         $91,800

(2,700 unit * $34)

Variable manufacturing overhead     $118,800

(2700 unit * $44)

Contribution loss from existing sale  $318,600       $702,000

2700 unit * ($260-$64-$34-$44)

Effect on Net operating income                              -$162,000

Bronn tells Jaime, "I really like your armor." Jaime responds, "I will sell it to you for $800." Bronn states, "Sure, and throw in your sword too." Jaime then writes out the contract, detailing only that he will sell Bronn his armor and the sword. He also lists the delivery date for next Wednesday. The next week on the day of performance, Jaime fails to deliver the armor and sword. Bronn sues him for breach of contract, but Jaime claims the contract is not enforceable because it was missing the price. When Bronn filed his lawsuit, which of the following needed to be included in the written contract for enforceability?
a. signature of both parties
b. price subject
c. matter
d. delivery
e. performance

Answers

Answer:

B. price subject

Explanation:

For this contract to be enforceable, it must include price, matter and delivery date. These aspects are all best essential and should be included in the contract. From the question when Jaime wrote the contract he failed to detail the price they agreed upon. Even though the rest were included. Therefore this contract cannot be enforced since it is missing this important aspect. Option b is the answer to the question

In this module, you learned about the risks or costs associated with financial goals. What are the risks or costs associated with your goal, and how can you overcome these challenges

Answers

Answer with Explanation:

My goal is to start a business totally based on a new idea with great potential to influence the lives of the people of America. For this I had worked on a startup idea for couple of years and continuously reforming it.

The biggest risks associated with this goal is funding problems, business risks, market research, innovation issues and Software designing issues.

Now these are some risks that I face but I overcome these challenges by:

Risks                        Solution

Funding Risk:           By presenting my startup idea on a international                                                     competition by writing business proposal based on well researched market, product innovation and the financial prospect of the business. There are numerous accelerator programs operated by the state and other organizations that encourage startups and helps with numerous facilities. So I will also present my idea here to secure funding from a wider number of investors.

Business Risks:        Giving special considerations to business risks and their mitigation strategies.

Innovation:               The products will be innovative enough to generate handsome amount of profit and must be capable of giving tough time to its competitors.

Market Research:     The best performing businesses know who their customers are and what they are desiring from them. So market research would capable of identifying my potential customers and that it must be representative of the sample taken.

Software Designing: The software design must be user friendly and must effectively resolve users issues. Furthermore, it must be continuously updated with better features and friendly functioning.

Nordquist Company's net income last year was $44,000. The company did not sell or retire any property, plant, and equipment last year. Changes in selected balance sheet accounts for the year appear below:
Increases
(Decreases)
Asset and Contra-Asset Accounts:
Accounts receivable $17,500
Inventory $(4,400)
Prepaid expenses $13,000
Accumulated depreciation $32,000
Liability Accounts:
Accounts payable $17,000
Accrued liabilities $(8,900)
Income taxes payable $3,500
Based solely on this information, the net cash provided by operating activities under the indirect method on the statement of cash flows would be:
a) $78,600
b) $113,700
c) $61,500
d) $26,500

Answers

Answer:

Explanation:

c) $61,500

   Particulars                                                      Amount$

Net Income                                                        44,000

Add Decrease in Inventory                                4,400

Add Accumulated Depreciation                       32,000

Add Increase in Accounts Payable                   17,000

Add Increase in Taxes Payable                         3,500

Less Increase in Accounts Receivables            (17500)

Less Increase in Prepaid Expenses                   (13,000)

Less Decrease in Accrued Liabilities                 (8,900)

Net cash provided by operating activities      $61,500

under the indirect method

The labor cost to produce a certain item is $8.50 per hour. Job setup costs $50 and material costs are $20 per unit. The item can be purchased for $88.50 per unit. The learning rate is 90 percent. Overhead is charged at a rate of 50 percent of labor, materials, and setup costs.

Required:
a. Determine the average unit cost for 20 units, given that the first unit took 5 hours to complete.
b. What is the minimum production quantity necessary to make production cost less than purchase cost?

Answers

Answer:

Explanation:

Given

Setup cost =$50

Material cost = $20

= $20×$20

= $400

Purchased cost = $88.50

Learning rate (P) = 90%

Labor cost is $8.50, and it requires 5 hours to produce the first unit. Total time required for the production of 20 units is

= 5×14.608

= $73.04

The value 14.608 is the total time factor which has been taken from table 7S.1 and the time required for the production of 20 units at the rate of 90% is 14.608. Hence, the labor cost for the production of 20 units will be calculated using the following method.

Cost of labor for production of 20 units

= 8.50×73.04

= $620.84

Hence,

In the problem, it has been given that the overhead cost is 50% of the labor material, and setup cost. Hence,

= 50/100 (620.84+50+400)

= 0.5×(1070.84)

= $535.42

Hence total cost

$535.42 +$1070.84

=$ 1606.26

Hence, the cost of production of 20 units is calculated by the following method.

= $1606.26÷20

=$80.313

Therefore, the unit cost is $80.313/unit.

Ans B:

The minimum production quantity important to make the production cost less than the purchase cost is calculated by the trial-and-error method. Now, let's take average unit cost when the 10 units are produced.

Setup cost =$50

Material cost = $20

= $20×$10

= $200

Labor cost is $8.50, and it requires 5 hours to produce the first unit. Total time required for the production of 10 units is

=5×7.994

= $39.97

The value 7.994 is the total time factor which has been taken from table 7S.1 and the time required for the production of 10 units at the rate of 90% is 7.994. Therefore, the labor cost for the production of 10 units will be calculated by the following method.

The cost of production of 20units

8.50×7.994×5

= $339.745

Phoenix Agency leases office space for $7,000 per month. On January 3, Phoenix incurs $65,000 to improve the leased office space. These improvements are expected to yield benefits for 8 years. Phoenix has 5 years remaining on its lease. Compute the amount of expense that should be recorded the first year related to the improvements.

Answers

Answer:

$13,000

Explanation:

The computation of the expense recorded in the first year is shown below:

Here the leasehold improvement should be depreciation by considering the lease term left or the estimated useful life whichever is lesser

Now the depreciation expense is

= Improvement cost ÷ lease term left

= $65,000 ÷ 5 years

= $13,000

hence, the amount of expense for the first year is $13,000

Location Score

Factor
(100 points each) Weight A B C
Convenience .15 89 78 84
Parking facilities .20 75 93 98
Display area .18 92 90 87
Shopper traffic .27 92 93 82
Operating costs .10 93 97 84
Neighborhood .10 90 96 95
1.00


a.
Using the above factor ratings, calculate the composite score for each location. (Do not round intermediate calculations. Round your final answers to 2 decimal places.)



Location Composite Score
A
B
C


b.
Determine which location alternative (A, B, or C) should be chosen on the basis of maximum composite score.

B
C
A

Answers

Answer and Explanation:

The computation of composite score for each location is shown below:-

Composite score for A is

= 0.15 × 89 + .20 × 75 + 0.18 × 92 + 0.27 × 92 + 0.10 × 93 + 0.10 × 90

= 88.05

 Composite score for B is

= 0.15 × 78 + .20 × 93 + 0.18 × 90 + 0.27 × 93 + 0.10 × 97 + 0.10 × 96

= 90.91

Composite score for C is

= 0.15 × 84 + .20 × 98 + 0.18 × 87 + 0.27 × 82 + 0.10 × 84 + 0.10 × 95

= 87.90

Therefore for computing the composite score for each location we simply multiply weight with A location and in the same manner of A, B and C

b. The maximum composite score from A, B and C is B

At the beginning of 2023, the Mackinac Company purchased a machine for $510,000 (salvage value of $60,000) that had a useful life of 6 years. The bookkeeper used straight-line depreciation, but failed to deduct the salvage value in computing the depreciation base. Depreciation has been recorded through 2025. The errors were discovered on 1/10/26; the 2025 books are still open. Correcting journal entries would include what entry to 1/1/25 Retained Earnings?

Answers

Answer:

$10,000 credited

Explanation:

DATA

Machine cost = 510,000

Salvage value = $60,000

Useful life = 6 years

Depreciation = $60,000/6years

Depreciation = $10,000

It means that we have overstated depreciation expense for the year with the amount of $10,000.

Retained earnings will be credited by $10,000 As the depreciation expense was overstated mistakenly by $10,000

If the Fed increases the discount rate, which of the following accurately describes the sequence of events that will follow in the banking system, finally leading to a decline in money supply?
A. Reserves ↓: Excess reserves ↓; Loans ↓; Deposits ↓; Money supply ↓
B. Loans ↓; Deposits ↓; Reserves ↓; Excess reserves ↓; Money supply ↓
C. Deposits ; Reserves: Excess reserves; Loans ↓; Money supply ↓
D. Excess reserves ↓; Reserves ↓; Loans ↓; Deposits ↓; Money supply ↓

Answers

Answer: A. Reserves ↓: Excess reserves ↓; Loans ↓; Deposits ↓; Money supply ↓

Explanation:

The discount rate is the rate at which the Fed lends money to banks and other depository type institutions. Normally banks have a reserve requirement that the Fed requires of them which states how much they are to leave with the Fed as a reserve. Banks tend to fall short of this reserve sometimes and so can borrow from the Fed to balance it off.

If the Fed increase the rate at which these banks can borrow, they will not want to do so thus leaving their Reserves at the Fed lower than it should be. They will then use their excess reserves which is money kept in reserve more than the Fed requires, to balance off their reserve at the Fed.

As a result of this reduction in their Excess reserve, they will have less money to give out as loans. With less loans being made, people will not have as much money to deposit after taking the loans. Money supply will then fall as a whole.

Bank's Balance Sheet Assets Liabilities and Owners' Equity $1,600 $250 Securities $1,000 Capital (owners' equity) $150 Reserves$200 Deposits Loans $800 Debt Suppose the owners of the bank borrow $100 to supplement their existing reserves.
This would increase the reserves account and ______ the ______ account.
This would also bring the leverage ratio from its initial value of __________ to a new value of_______
Which of the following is true of the capital requirement?
a. The higher the percentage of assets a bank holds as loans, the higher the capital requirement.
b. A minimum leverage ratio for all banks.
c. Its intended goal is to protect the interests of those who hold equity in the bank.

Answers

Answer:

1. This would increase the reserves account and increase the debt account.

Borrowing refers to debt and so it will increase the debt account.

2. This would also bring the leverage ratio from its initial value of 13.33 to a new value of 14.

The bank leverage ratio refers to its Assets divided by Capital (Owners equity).

Before the $100 was borrowed, the leverage ratio was;

= (Reserves + loans + securities)/Capital

= ( 200 + 800 + 1,000) / 150

= 13.33

After the $100 was borrowed

= ( 200 + 800 + 1,000 + 100) /150

= 14.

3. a. The higher the percentage of assets a bank holds as loans, the higher the capital requirement.

The capital requirement is meant to protect depositors in case the loans are defaulted on as the loans are created from the funds depositors bring in. Should the loans be defaulted on, they will be paid from the capital therefore if the bank holds more loans, it will have to hold more capital to ensure it can cover those loans.

Which of the following statements are TRUE regarding the sale of a long position in a restricted long margin account?

I. 50% of the proceeds of the sale are credited to SMA
II. 100% of the proceeds of the sale are credited to SMA
III. There is a 0% retention requirement of the sale for a restricted account
IV. There is a 50% retention requirement of the sale for a restricted account

a. I and III
b. I and IV
c. II and III
d. II and IV

Answers

Answer:

b

Explanation:

50% of the proceeds of the sale are credited to SMA

and

There is a 50% retention requirement of the sale for a restricted account

M&C Merchants is offering $2.5 million of new securities to the general public. Which SEC regulation governs this offering?

Answers

Answer:

Regulation A

Explanation:

E-tailers, such as Amazon and Expedia, that sell products and services directly to final buyers exclusively over the Internet are known as ________.

Answers

Answer:

E-tailers

Explanation:

E-tailers are also known as e-retailers. Where you can purchase things via the internet.

Glad I could help you!

While making organizational decisions, managers should take into consideration the needs and interests of the employees, suppliers, and customers, who are the organization's _____.

Answers

Answer:

Stakeholders.

Explanation:

Stakeholders are the group of people who may be interested in the processes of a particular company. They are formed by the group of employees, suppliers and customers, who are the stakeholders in the organization.

Therefore, it is necessary that strategic actions and business processes are aimed at satisfying the interests and needs of stakeholders, who are the company's public, that is, the reason for the existence of a company.

It is important for the company to identify who its stakeholders are and how they directly impact the business, so that it can shape a strategy that is aligned with its interests and what they expect from the company.

Satisfying stakeholders and adopting corporate governance, contributes to the company having a strong market position and achieving several competitive and strategic advantages in the market, increasing its results and profitability.

Household members tend to have different preferences, but empirical evidence shows that overall, most households are Pareto efficient.

a. True
b. False

Answers

a. true b is not your answrrr
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