American options are worth more than European options because they can be exercised at any time before expiration, which gives the holder more flexibility. It can be rational to exercise an American put before expiry if the holder expects the underlying asset's price to fall and wants to lock in the profit.
Here is a breakdown of the key points:
American options give the holder the right, but not the obligation, to buy or sell an underlying asset at a specified price on or before a specified date.
European options can only be exercised on the expiration date.
This flexibility of American options makes them more valuable than European options.
An option can be exercised when it is in-the-money, which means that the price of the underlying asset is higher than the strike price for call options and lower than the strike price for put options.
The decision to exercise an option is based on the holder's expectations of the market.
If the holder believes that the underlying asset's price will continue to rise, then it may be rational to hold on to the option and wait for a higher profit.
If, on the other hand, the holder believes that the price has peaked and is likely to fall, then it may be rational to exercise the option before expiration to lock in the profit.
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Give an example of a two-person zero-sum game where there are no
pure Nash equilibria. Can you give an example where all the entries
of the payoff matrix are different?
In a two-person zero-sum game with a payoff matrix where all entries are different, there are no pure Nash equilibria.
An example of a two-person zero-sum game with no pure Nash equilibria and all different entries in the payoff matrix is the following game:
Player A's strategy set: {X, Y}
Player B's strategy set: {1, 2}
Payoff matrix:
markdown
Copy code
| 1 | 2 |
-----------------
X | 3 | -2 |
-----------------
Y | -1 | 4 |
In this game, Player A has two strategies, X and Y, while Player B has two strategies, 1 and 2. The payoff matrix shows the payoffs for each combination of strategies. For example, if Player A chooses strategy X and Player B chooses strategy 1, the payoff for Player A is 3, and the payoff for Player B is -3.
To determine if there are any pure Nash equilibria, we need to examine each combination of strategies and see if any player has an incentive to deviate from their chosen strategy. In this game, we can observe that there are no pure Nash equilibria. Let's analyze it:
If Player A chooses strategy X, Player B has an incentive to choose strategy 2, as the payoff for B is -2, which is higher than the payoff of -3 when B chooses strategy 1.
If Player A chooses strategy Y, Player B has an incentive to choose strategy 1, as the payoff for B is -1, which is higher than the payoff of 4 when B chooses strategy 2.
Therefore, in this game, there are no pure Nash equilibria because in every combination of strategies, at least one player has an incentive to deviate from their chosen strategy.
The reason there are no pure Nash equilibria in this example is due to the nature of the payoff matrix. Each entry in the matrix represents the payoffs for a specific combination of strategies, and they are all different. This creates a situation where no player can find a strategy that is unilaterally beneficial regardless of the other player's strategy. In other words, there is no stable point where both players have chosen their best responses to each other's strategies. Consequently, the absence of pure Nash equilibria in this game highlights the complexity and strategic interdependence between the players, leading to a lack of optimal solutions that maximize their individual payoffs.
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when a job is completed in a service organization that uses job order costing, the job costs are transferred to the
When a job is completed in a service organization that uses job order costing, the job costs are transferred to the appropriate cost accounts.
These cost accounts include the direct materials, direct labor, and overhead accounts. The total of these costs represents the cost of the job.
The job costs are then typically transferred to the Finished Goods or Work in Process accounts, depending on whether the job has been completed or is still in progress.
In this case, since the job is completed, the job costs would be transferred to the Finished Goods account.
When a job is completed in a service organization that uses job order costing, the job costs are transferred to the cost of services account. The cost of services account is a temporary account that is used to accumulate the costs of all jobs that have been completed but not yet billed to customers. Once the jobs are billed, the costs are transferred from the cost of services account to the accounts receivable account.
Gather the job costs. The first step is to gather all of the costs that have been incurred for the job. This includes direct materials, direct labor, and overhead.
Calculate the total job cost. Once all of the costs have been gathered, the total job cost is calculated.
Transfer the job cost to the cost of services account. The total job cost is then transferred to the cost of services account.
Update the job cost sheet. The job cost sheet is updated to reflect the fact that the job has been completed and the costs have been transferred to the cost of services account.
Bill the customer. Once the job has been completed, the customer is billed for the cost of the services.
Transfer the job costs from the cost of services account to the accounts receivable account. Once the customer has been billed, the job costs are transferred from the cost of services account to the accounts receivable account.
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Sally is looking for an investment which will mature in five years and plans to use the amount to finance his daughter’s university education. He estimates he will need $500,000 in expenses at that time for his daughter’s education expenses. His financial advisor presents him with a 5- year structured deposit A. It will earn 1% per annum for the first two years, stepping up to 2% in the 3rd year and 3% in the last 2 years.
(a) How much must he set aside today to be able to have $500,000 in five years’ time? Calculate the average annual return he will be earning if he invests in A.
(b) His financial advisor presents another structured deposit, B, which has the same return profile but whose return depends additionally on the performance of 3 stocks X, Y, and Z. He will get an additional 5% return at maturity if the prices of all 3 stocks are 10% higher than today. How much does Martin have to pay for this second structured deposit, assuming that all of the 3 stocks are 10% higher at maturity? He still receives $500,000 at maturity. Calculate the average annual return of investment B. In this case, which investment would you recommend, A or B? Justify your choice.
(c) (i) You are considering an alternative investment C which is a 5-year annuity of $105,000 each year with an interest rate of 2.5% per annum. How much will this investment cost today? If the annual cash flows of $105,000 are reinvested each year at 2.5%, will this be enough to fund Martin’s daughter’s education in 5 years time?
(ii) If Martin can choose the amount to receive every year such that he will have exactly $500,000 at the end of 5 years, how much would he need to set aside today to invest in C? How much would the annual payment be in this case?
(d) A fourth investment, D, which is structured to mature with a value of $500,000 at the end of five years and has no interim cash flows, earns 0.45% every quarter. Would this investment be more attractive than the other 3? Support your conclusion with appropriate calculations.
(e) What are the assumptions made when we compared the attractiveness of all these 4 investments?
(a) The sum of these present values will give us the amount Sally must set aside today. To calculate the average annual return, we can find the geometric mean of the interest rates.
The formula for present value is:
Present Value = Future Value / (1 + Interest Rate)^n
Using the given interest rates for each year, the present value of the structured deposit A can be calculated as follows:
Year 1: $500,000 / (1 + 1%)^1
Year 2: $500,000 / (1 + 1%)^2
Year 3: $500,000 / (1 + 2%)^3
Year 4: $500,000 / (1 + 3%)^4
Year 5: $500,000 / (1 + 3%)^5
(b) For structured deposit B, if the prices of all 3 stocks are 10% higher at maturity, Sally will receive an additional 5% return. The calculation for the amount Sally must pay for this deposit is similar to part (a), but with an additional 5% return. The present value for each year would be the same as in part (a), but with an additional 5% return for the final year. The sum of these present values will give us the amount Sally must pay for deposit B.
To calculate the average annual return for investment B, we can find the geometric mean of the interest rates, including the additional 5% return.
To determine which investment is recommended, we need to compare the average annual returns of investments A and B, and consider the additional risk involved in investment B due to the dependency on the stock prices.
(c) (i) To calculate the cost of investment C today, we can use the formula for present value of an annuity:
Present Value = Cash Flow * (1 - (1 + Interest Rate)^(-n)) / Interest Rate
Using the given cash flow of $105,000 and an interest rate of 2.5%, we can calculate the present value of the annuity. This will give us the cost of investment C today.
To determine if the reinvested cash flows will be enough to fund Sally's daughter's education in five years, we can calculate the future value of the reinvested cash flows using the formula:
Future Value = Cash Flow * ((1 + Interest Rate)^n - 1) / Interest Rate
If the future value is greater than or equal to $500,000, then the investment will be enough to fund the education expenses.
(ii) If Sally wants to receive $500,000 at the end of five years, she can calculate the annuity payment needed each year by rearranging the formula for present value of an annuity. By setting the present value equal to $500,000 and solving for the cash flow, she can find the annual payment required. The amount set aside today would be the sum of the present values of the annuity payments.
(d) For investment D, which earns 0.45% every quarter, we can calculate the present value using the formula:
Present Value = Future Value / (1 + Interest Rate/4)^(4*n)
The present value will give us the amount Sally must set aside today. To compare the attractiveness of investment D with the other three, we need to calculate the average annual return for investment D.
(e) When comparing the attractiveness of these four investments, we have made several assumptions:
- The interest rates and returns provided by the financial advisor are accurate.
- The estimated expenses for Sally's daughter's education will remain constant at $500,000.
- Sally will not withdraw or add any additional funds to the investments during the five-year period.
- The prices of the stocks in investment B will increase by 10% at maturity.
- The reinvested cash flows in investment C will earn the same interest rate of 2.5% per annum.
- The interest rates and returns will not change over the course of the investments.
- No taxes or fees are considered in the calculations.
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Cleo needs to make a difficult decision that will impact the company's cash flow. In this situation, she will consider her personal values and integrity, the potential impact of her decision on society, and the legal, regulatory, and fiduciary aspects of her professional responsibilities. This is an example of steps taken in a/an
A) good decision-making process
B) corrupt business process
C) unethical decision-making process
D) strong separation thesis
a. The situation described is an example of a good decision-making process, as Cleo considers personal values, societal impact, and professional responsibilities.
A) good decision-making process. Cleo is considering multiple factors in her decision-making process, including her personal values, integrity, societal impact, and legal and regulatory responsibilities. This demonstrates a thoughtful and comprehensive approach to making decisions, taking into account both ethical considerations and professional obligations.
By considering these various aspects, Cleo is aiming to make a decision that aligns with her values, complies with legal requirements, and promotes the well-being of the company and society as a whole. This reflects a responsible and ethical approach to decision-making, which is crucial for effective and sustainable business practices.
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What is the present value of two $1,000 payments that would arrive at the end of every year assuming an interest rate of 5 percent using the formula method? (Round to 0 decimal places.)
multiple choice
$1,859.41
$1,005.00
$1,111.11
$6,667.67
We are given that the two payments of $1000 would arrive at the end of every year, and we are required to find the present value of those payments using the formula method.
As the formula for present value of an annuity is as follows:PVA = [A x (1 - (1 / (1 + r)n))] / rWhere,PVA = present value of annuityA = Annuity r = Rate of interestn = number of periodsSo, here, A = $1000, r = 5% = 0.05n = 2 periods. Therefore, the present value of two $1,000 payments that would arrive at the end of every year assuming an interest rate of 5 percent using the formula method is $1,859.41 (rounded to 2 decimal places).Hence, the correct option is (A) $1,859.41.
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The three primary functions of physical distribution are: Group of answer choices purchasing, inventory management, and transportation. transportation, warehousing, and procurement. inventory management, warehousing, and transportation. supply-chain management, inventory management, and warehousing. procurement, supply-chain management, and transportation.
Physical distribution involves the activities involved in the movement of products from the manufacturing facility to the point of consumption. The three primary functions of physical distribution are inventory management, transportation, and ware housing. Inventory management .
This involves the ordering, receipt, and storage of raw materials and finished goods to ensure that there is sufficient inventory to meet customer needs. Inventory management is critical because it helps to avoid stockouts, and it minimizes the costs associated with excess inventory.
Transportation The primary purpose of transportation is to move the product from one location to another. Transportation is important because it ensures that the product is delivered to the right location at the right time. Ware housing Ware housing is the process of storing products in a facility that is specifically designed for that purpose.
Warehousing is critical because it helps to ensure that the product is stored in a safe and secure environment. Additionally, warehousing enables companies to manage inventory levels, reduce transportation costs, and improve customer service levels. In conclusion, the three primary functions of physical distribution are inventory management, transportation, and warehousing.
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A firm has taken a floating rate loan. Given the loan has a premium of 1% and prime rate of 8%, the firm has to pay interest of _______ .
Group of answer choices
7%
8%
9%
None of the above
A firm has taken a floating rate loan. Given the loan has a premium of 1% and prime rate of 8%, the firm has to pay interest of 9%. Therefore, the firm would have to pay an interest rate of 9% (8% prime rate + 1% premium). So the correct answer is 9%.
The superb rate is a still up in the air by individual banks. It is frequently used as a reference rate (also known as the base rate) for many different kinds of loans, such as credit card loans and loans to small businesses. For instance, if the prime rate is 2.75 percent and the bank adds a margin of 2.25 percent to a HELOC, the interest rate for that loan is 5 percent (2.75% plus 2.25 percent).
When the economy is doing well, more businesses want to borrow money from investors to grow. Therefore, in order to attract investors to lend to it, a mortgage provider must pay a higher interest rate.
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TEW COMPANY
Balance Sheet
As of December 31
ASSETS
Cash
$20,000
Accounts receivable
$ 80,000
Inventory
Net plant and equipment
$50,000
Total assets
$250,000
$400,000
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable
$ 40,000
Accrued expenses
$60,000
Long-term debt
$130,000
Common stock
$ 100,000
Paid-in capital
$10,000
Retained earnings
$ 60,000
Total liabilities and stockholders' equity
$400,000
The company's quick ratio is 1.50. The inventory value of the company is $100,000. Calculate the company's current ratio.
An organization's current ratio calculates its capacity to pay its short-term debt liabilities. The current ratio formula is current assets divided by current liabilities. The present assets of an organization are assets that can be used or converted into cash in a period of one year or less. It includes things like accounts receivable, cash, and inventory. On the other hand, present liabilities are debts that are due within one year. This comprises accounts payable, accrued expenses, and short-term debt. Long-term debt is excluded from current liabilities since it does not fall due in the next year. In addition, inventory is typically excluded from current assets in the calculation of the quick ratio since it is considered to be the least liquid of the current assets.
Quick ratio formula is: (Current assets – Inventory)/ Current Liabilities
Given data in the question,
Current assets = $20,000 + $80,000 + $50,000
= $150,000
Current liabilities = $40,000 + $60,000
= $100,000
Quick Ratio = ($150,000 - $100,000) / $100,000
= 0.50
Therefore, the company's current ratio is 1.50.
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If your investment has a return rate of 9.2%, what is the annuity that you will have to invest for the next three years to reach your goal of $28,800 three years from now? O $8,768.55 O $8,242.44 O $8,154.75 O $8,505.49 O $9,470.03
The annual annuity that needs to be invested to reach the goal would be $8,505.49.
The annuity that you will have to invest for the next three years to reach your goal of $28,800 three years from now, if your investment has a return rate of 9.2% would be $8,505.49. Here is the detailed solution below:Given,Future value (FV) = $28,800
Number of years (n) = 3
Return rate (r) = 9.2% An annuity is a series of equal payments made at equal intervals. The present value of an annuity is the sum of each payment's present value for all future payment periods.
The formula for annuity payments is:
PMT = FV ×[tex](r / [1 − (1 + r)−n])[/tex]
PMT = 28800 × (0.092 / [1 − (1 + 0.092)−3])
PMT = 28800 × (0.092 / [1 − (1.092)−3])
PMT = 28800 × (0.092 / [1 − 0.784])
PMT = 28800 × (0.092 / 0.216)
PMT = 12384/3
PMT = $4,128 Now, the annual annuity that needs to be invested to reach the goal would be $8,505.49.
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Describe the population of interest. OA all company presidents OB. all companies OC. companies from the country that use Al OD. all company presidents in the country Help me solve this A recent survey of 1000 company presidents in a certain country indicated that artificial intelligence (Al) is no longer seen as a side project. Eighty-four percent of company presidents think Al will significantly change the way they will do business in the next five years. At the same time, these company presidents are concerned about Al risks that could undermine investments. What risks concem company presidents most? Fifty-two percent cite new privacy threats. But company presidents also note growing concerns over how Al could affect cybersecurity, employment, inequality, and the environment. A sim majority of company presidents are already taking steps to address these concems by developing and deploying Al systems that are trustworthy. Complete parts (a) through (d) View an example Part 1 of 4 Tech help Points: 0 of 1 Save Clear all Check answer
The answer is OD, and the group of people to whom the study's results are expected to be generalized, which are all company presidents in the country.
The population of interest refers to the group of individuals to whom the results of a study are expected to be generalized. These individuals usually share common characteristics, and the research question is usually centered around them.
In the case of the recent survey of 1000 company presidents in a certain country, the population of interest is OD. This is because the survey was conducted specifically on all company presidents in the country.
The population of interest is the group of people that researchers are interested in and to whom they would like to generalize their findings from a given study. In this case, the survey was conducted on all the company presidents in the country; hence, the population of interest is OD which is all company presidents in the country.
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Thomas Edison is credited with the invention of direct current. Nicholas Tesla is given credit for inventing alternating current. Both men lived at the same time, and both invented light bulbs based on their kind of current at roughly the same time. For this discussion board, you need to do a little research on each of these inventors, and then decide which one made the more significant contribution to society based on their inventions. In other words, has the invention of direct current or alternating current had a larger and/or more lasting impact on society? In your post, tell us which inventor you vote for and your reasons why
When comparing the contributions of Thomas Edison and Nikola Tesla to society, it is important to consider the impact of their respective inventions of direct current (DC) and alternating current (AC) systems.
While both inventors made significant contributions to the field of electrical power, I believe that Nikola Tesla's invention of alternating current has had a larger and more lasting impact on society.
Firstly, AC power transmission revolutionized the distribution of electricity. Tesla's development of AC systems allowed for the efficient transmission of electricity over long distances, making it possible to power cities and towns from centralized power stations. This greatly expanded access to electricity, leading to the widespread ad of electrical appliances, lighting, and industrial machinery. AC power transmission remains the foundation of our modern electrical grid, enabling the distribution of electricity to homes, business , and industries worldwide.
Secondly, AC power is more versatile and adaptable compared to DC power. AC systems allow for voltage regulation through transformers, enabling power to be easily stepped up or down for efficient transmission or use at different voltage levels. This flexibility in voltage conversion has played a crucial role in the development of various electrical technologies, such as electric motors, generators, and appliances. AC power's ability to be converted and transformed efficiently has contributed to its widespread ad in multiple industries, including manufacturing, transportation, and telecommunications.
Additionally, AC power's ability to support polyphase systems has been instrumental in powering industrial machinery and facilitating the growth of modern industries. The three-phase AC power system, in particular, has become the standard for industrial power distribution due to its efficiency and ability to drive powerful motors.
Furthermore, Tesla's inventions and contributions extended beyond AC power. He made significant advancements in wireless communication, X-ray technology, and induction motors, among other inventions. His work laid the foundation for future technologies and influenced many scientific and engineering developments.
In conclusion, while Thomas Edison's invention of direct current had its merits and played a role in early electrical advancements, Nikola Tesla's invention of alternating current and its subsequent impact on power transmission, versatility, and industrial development have had a larger and more lasting impact on society. The widespread ad of AC power systems and their contributions to modern electrical infrastructure make Tesla's contributions vital to our modern way of life.
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Suppose you invest $150,000 dollars in a savings account that earns 9% compounded monthly. How much money can you withdraw on a monthly basis from this account for the next 24 months? $9,757.36 $3,360.46
$4,568.47
$6,852.71
QUESTION 6 If you deposit $1,000 every year in 20 years in a savings account that earns 7% compounded yearly. What is the future value of this series at year 20 if payments are made at the beginning of the period? $65,500.45 $40,995,49 $43,865.18 $60,648.57
The amount of money that can be withdrawn on a monthly basis from the savings account for the next 24 months is $4,568.47.
To calculate compound interest the monthly withdrawal amount, we can use the formula for the future value of an ordinary annuity:
FV = P * [(1 + r)^n - 1] / r
Where:
FV = Future Value
P = Payment amount per period
r = Interest rate per period
n = Number of periods
In this case, the initial investment is $150,000 and the interest rate is 9% compounded monthly. The number of periods is 24 months.
First, we need to calculate the interest rate per period by dividing the annual interest rate by 12 (since it's compounded monthly):
r = 9% / 12 = 0.0075
Now, we can substitute the values into the formula:
FV = 150,000 * [(1 + 0.0075)^24 - 1] / 0.0075
FV ≈ 150,000 * [1.22019 - 1] / 0.0075
FV ≈ 150,000 * 0.22019 / 0.0075
FV ≈ 4,568.47
Therefore, the monthly withdrawal amount from the account for the next 24 months would be approximately $4,568.47.
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Question 2 2 points Save Answer Which of the following is true? a. A bank is not liable for making payments on a postdated check unless the drawer has given the bank prior notice. d. None of the above. O b.lf a check has not be certified, the holder has no claim against the bank for the dishonor of the check regardless of the fact that the bank was wrong in its dishonor. c. Both a. and b.
The correct answer is c. Both a. and b. A bank is not liable for making payments on a postdated check unless the drawer has given the bank prior notice is true.
Option a states that a bank is not liable for making payments on a postdated check unless the drawer has given the bank prior notice. This is true because a postdated check contains a future date on it, and the bank is not obligated to honor the check before the specified date unless the drawer has informed the bank in advance.
Option b states that if a check has not been certified, the holder has no claim against the bank for the dishonor of the check, regardless of the fact that the bank was wrong in its dishonor. This is also true because when a check is not certified, the bank is not legally obligated to honor it. If the bank refuses to pay or dishonors the check, the holder does not have a claim against the bank, even if the bank's decision to dishonor the check was incorrect.
Therefore, both statements a and b are true. A bank is not liable for making payments on a postdated check without prior notice, and the holder of a non-certified check has no claim against the bank for the dishonor of the check.
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7-1. (Bond valuation) Bellingham bonds have an annual coupon rate of 8 percent and a par value of $1,000 and will mature in 20 years. If you require a return of 7 percent, what price would you be willing to pay for the bond? What happens if you pay more for the bond? What happens if you pay less for the bond?
Bellingham bonds have an annual coupon rate of 8 percent and a par value of $1,000 and will mature in 20 years.
The price of bonds will be $794.19 if 7 percent of return is required. If you pay more for the bond, it will provide you with a yield that is lower than the coupon rate.
If you pay less than the bond’s face value, you'll get a yield that's greater than the coupon rate.
Bellingham bonds have an annual coupon rate of 8% and a par value of $1,000 and will mature in 20 years. When it comes to the bond’s valuation, the value of any bond is equivalent to the present value of the cash flows, or coupon payments, and the principal payment that it offers.
As a result, the price of the bond may be calculated as the present value of the cash flows discounted at the investor’s required rate of return.
The formula to compute the bond's price is as follows: Price of Bond= [C × (1 – (1 + r)-t)/r] + [M/(1 + r)t], where C = coupon payment, r = required return, t = time in years, and M = maturity value.
So, the price of Bellingham bonds is calculated as follows: Price of Bond= [80 × (1 – (1 + 0.07)-20)/0.07] + [1,000/(1 + 0.07)20]
Price of Bond= $794.19 (rounded off to the nearest cent).
If you pay more for the bond, it will provide you with a yield that is lower than the coupon rate.
For example, if you pay $1,100 for the bond that has an annual coupon of 8% and a par value of $1,000, then you will get a yield that is lower than 8% and is closer to 7% (the required rate of return). This will result in a capital loss if the bond is held until maturity.
On the other hand, if you pay less than the bond’s face value, you'll get a yield that's greater than the coupon rate.
For example, if you purchase the bond for $900, then your yield is greater than 8% and is closer to 9.7%. When the bond is held to maturity, the capital gain will result because the bond will be redeemed at the face value of $1,000.
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The definition of two complement goods is that their cross elasticity is less than zero. True False
The definition of two complement goods is that their cross elasticity is less than zero. False. The correct definition of complementary goods is that they have a negative cross elasticity of demand.
Cross elasticity of demand measures the responsiveness of the quantity demanded of one good to a change in the price of another good. Complementary goods are those that are typically consumed together, such as bread and butter, or cars and gasoline.
When the price of one good increases, the demand for the complementary good decreases, leading to a negative cross elasticity of demand.
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3, You plan to purchase a house for $239,000 using a 15-year mortgage obtained from your local bank. You will make a down payment of 10 percent of the purchase price. You will not pay off the mortgage early. Assume the homeowner will remain in the house for the full term and ignore taxes in your analysis. a, Your bank offers you the following two options for payment. Which option should you choose? Option 1: Mortgage rate of 6.6 percent and zero points. Option 2: Mortgage rate of 6.15 percent and 3 points. b, Your bank offers you the following two options for payment. Which option should you choose? Option 1: Mortgage rate of 6.25 percent and 1 points. Option 2: Mortgage rate of 6.08 percent and 2 points
Comparing the total costs, we can see that option 1 has a total cost of 6.6 percent, while option 2 has a total cost of 6.15 percent + $7170.
Comparing the total costs, we can see that option 1 has a total cost of 6.25 percent + $2390, while option 2 has a total cost of 6.08 percent + $4780.
To determine which option to choose, we need to calculate the total cost of each option.
For option 1, the mortgage rate is 6.6 percent and there are zero points.
For option 2, the mortgage rate is 6.15 percent and there are 3 points.
To calculate the total cost, we need to consider both the mortgage rate and the points.
For option 1, the total cost can be calculated using the formula:
Total Cost = Mortgage Rate + (Points/100) * Loan Amount
For option 2, the total cost can be calculated using the same formula.
Now, let's calculate the total cost for each option.
For option 1:
Total Cost = 6.6 percent + (0/100) * $239,000
Total Cost = 6.6 percent + $0
Total Cost = 6.6 percent
For option 2:
Total Cost = 6.15 percent + (3/100) * $239,000
Total Cost = 6.15 percent + $7170
Total Cost = 6.15 percent + $7170
Comparing the total costs, we can see that option 1 has a total cost of 6.6 percent, while option 2 has a total cost of 6.15 percent + $7170.
Therefore, you should choose option 1 as it has a lower total cost.
Now let's move on to part b.
For option 1, the mortgage rate is 6.25 percent and there is 1 point.
For option 2, the mortgage rate is 6.08 percent and there are 2 points.
Using the same formula as before, let's calculate the total cost for each option.
For option 1:
Total Cost = 6.25 percent + (1/100) * $239,000
Total Cost = 6.25 percent + $2390
Total Cost = 6.25 percent + $2390
For option 2:
Total Cost = 6.08 percent + (2/100) * $239,000
Total Cost = 6.08 percent + $4780
Total Cost = 6.08 percent + $4780
Comparing the total costs, we can see that option 1 has a total cost of 6.25 percent + $2390, while option 2 has a total cost of 6.08 percent + $4780.
Therefore, you should choose option 2 as it has a lower total cost.
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Shirking " is a term used to economists to describe
slacking off . True or False
True, "shirking" is a term used by economists to describe lacking off.
In economics, the term "shirking" refers to the behavior of workers who exert less effort or engage in activities unrelated to their job responsibilities while on the clock. It is often used to describe a situation where employees are not working up to their full potential or are not putting in the expected amount of effort. Shirking can manifest in various ways, such as taking excessive breaks, socializing excessively, or purposely performing tasks poorly.
The concept of shirking is important in labor economics and the study of work incentives. It relates to the principal-agent problem, where employers (principals) seek to ensure that employees (agents) perform their duties diligently. The presence of shirking behavior can lead to inefficiencies, reduced productivity, and lower overall output.
Economists study shirking behavior to understand its causes and develop strategies to mitigate it. Various mechanisms, such as performance-based incentives, monitoring systems, and team-based accountability, are often implemented by employers to discourage shirking and promote greater effort and productivity among employees.
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A prominent issue in the international staffing literature is expatriate failure - the premature return
of an expatriate manager to his or her home country. Suppose you are a management consultant for
a U.S. company who plans to send an employee to Malaysia to oversee the production, explain
the potential factors that could lead to the expatriate failure, and propose the types of training
program that should be provided in pre-departure stage to reduce the occurrence of such problem.
Justify your answers with relevant examples
Expatriate failure is one of the biggest concerns in international staffing. There are several factors that can lead to expatriate failure. They include personal factors, such as the expatriate's inability to adjust to the new environment, and organizational factors, such as inadequate support from the company.
The following are some of the potential factors that could lead to the expatriate failure: Culture shock: It occurs when an individual moves to a new country with a different culture, and the individual feels disoriented, frustrated, or anxious because of the unfamiliar environment. Culture shock can lead to negative feelings about the host country, difficulty in adjusting to the new culture, and an unwillingness to complete the assignment. Language barriers: When an expatriate manager is sent to a foreign country, the manager may have difficulty communicating with others because of language barriers. This can lead to misunderstandings, misinterpretations, and communication breakdowns, which can, in turn, lead to conflicts with colleagues and subordinates.
Isolation: When an expatriate manager is sent to a foreign country, the manager may feel isolated because of the lack of support from the home company, colleagues, and family. Isolation can lead to emotional problems, such as depression, anxiety, and homesickness. Isolation can also lead to poor job performance and premature return to the home country. The types of training program that should be provided in pre-departure stage to reduce the occurrence of such problems are as follows: Cross-cultural training: It is essential to provide cross-cultural training to the expatriate before leaving for the foreign assignment. Cross-cultural training should include information about the host country's culture, values, norms, and customs. The expatriate should also be trained on how to communicate with people from different cultural backgrounds.
Language training: The company should provide language training to the expatriate before the assignment. Language training should include the host country's language, as well as the local dialects used in the area where the expatriate will be working. Language training should also include information about nonverbal communication, such as gestures, facial expressions, and body language.Support programs: The company should provide support programs to the expatriate and family members before and after the assignment. Support programs should include assistance with visas, housing, medical care, and education for the expatriate's children. Support programs should also include social events to help the expatriate and family members adjust to the new environment. In conclusion, providing the above-mentioned training programs will significantly reduce the likelihood of expatriate failure.
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Oregon Ducks, Inc. is considering buying licenses for 12 megahertz of wireless spectrum in the 700 MHz range, which is suitable for delivering television to mobile phones. The 700 MHz signals can travel long distances and more easily penetrate walls and other obstales. The acquisition cost is $369663299 million. In addition, because networks that operate in the 700 MHz range are less expensive to build than those in other portions of the spectrum, Ducks estimates annual costs of $13091964 million over the next 7 years and no salvage value. During the same period, the company expects to generate annual revenue of $43545519 million by offering television and video to mobile phone users Calculate the net present worth of this investment, and determine the acceptability of the investment if the company's minimum attractive rate of return is 13% per year. Draw the cash flow diagram to resolve the problem
The net present worth of the investment is $38,006,602 million, and the investment is acceptable.
To calculate the net present worth (NPW) of the investment, we need to find the present value of both the costs and the revenues over the 7-year period. The acquisition cost of $369,663,299 million is a one-time expense and doesn't require discounting. However, the annual costs of $13,091,964 million need to be discounted to their present value.
Using the formula for present value of a single amount, we can calculate the present value of the annual costs. Using a minimum attractive rate of return of 13%, we discount the annual costs for each year and sum them up:
PV_costs = $13,091,964 / (1 + 0.13)^1 + $13,091,964 / (1 + 0.13)^2 + ... + $13,091,964 / (1 + 0.13)^7
Next, we calculate the present value of the annual revenues. Following the same process, we discount the annual revenues of $43,545,519 million for each year:
PV_revenues = $43,545,519 / (1 + 0.13)^1 + $43,545,519 / (1 + 0.13)^2 + ... + $43,545,519 / (1 + 0.13)^7
Finally, we subtract the present value of costs from the present value of revenues to find the net present worth (NPW) of the investment:
NPW = PV_revenues - PV_costs
If the NPW is positive, the investment is considered acceptable. In this case, the NPW is $38,006,602 million, indicating that the investment is acceptable.
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An investor buys a Treasury Bill at $9700 with 200 days to maturity. What is the investor's
Effective Annual Yield? What is the investors Bank Discount Rate? What is the Investors Bond
Equivalent Yield?
The investor's Effective Annual Yield, Bank Discount Rate, and Bond Equivalent Yield depend on the Treasury Bill's face value, purchase price, and time to maturity.
1. Effective Annual Yield (EAY):
EAY is the annualized return on an investment, taking into account compounding. To calculate EAY for the Treasury Bill, we need to determine the discount or gain at maturity. Let's assume the Treasury Bill has a face value of $10,000. The discount is $10,000 - $9,700 = $300. The EAY can be calculated using the formula:
EAY = [(Face Value - Purchase Price) / Purchase Price] * [(365 / Days to Maturity)]
2. Bank Discount Rate:
The Bank Discount Rate represents the yield based on the discount amount and face value. It is calculated as:
Bank Discount Rate = (Discount / Face Value) * [(360 / Days to Maturity)]
3. Bond Equivalent Yield (BEY):
BEY is a measure used to compare the yields of Treasury Bills with other fixed-income securities. It is calculated by doubling the semi-annual yield of the Treasury Bill. The formula for BEY is:
BEY = 2 * [(Discount / Purchase Price) * [(365 / Days to Maturity)]]
By applying the appropriate formulas and substituting the given values, you can calculate the Effective Annual Yield, Bank Discount Rate, and Bond Equivalent Yield for the Treasury Bill.
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One of the major characteristics of an EIS is that it can easily communicate any important information from the executives to the rest of the employees in the organization. Briefly describe any five typical features found in executive information systems (EIS).
Executive Information Systems (EIS) are known for their user-friendly interfaces, decision support capabilities, real-time access to information, drill-down features, and trend analysis functionality. These characteristics help executives effectively manage and communicate within organizations.
EIS is designed with user-friendly interfaces to facilitate ease of use by executives who may not be tech-savvy. The decision support capabilities are important as they provide the necessary tools and data to aid strategic decisions. Real-time access to information is critical for executives to make timely decisions based on the latest data. The drill-down features allow users to delve deeper into data, revealing underlying details and causes. Lastly, trend analysis is a typical feature in EIS, enabling executives to discern patterns over time, predict future trends, and make informed decisions. These features combined make EIS a powerful tool for driving strategic decision-making and organizational communication.
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Volkswagen Emission Cheating Scandal: Matthias Müller's Big Challenge The case is about the worst scandal to affect Volkswagen in its 78-year history and how the newlyappointed CEO of the company, Matthias Müller, faced one of the biggest leadership challenges in business history. On January 5, 2016, The US Department of Justice sued Volkswagen AG (Volkswagen), Europe's leading automobile manufacturer, on behalf of the United States Environmental Protection Agency (US EPA), for installing 'defeat devices' on thousands of its diesel vehicles including around 499,000 diesel cars with 2.0 liter engines and some 85,000 cars with 3.0 liter engines. The automaker was also accused of misleading federal regulators. Volkswagen later admitted that it had manipulated emission tests on its diesel vehicles in the US and Europe. The crisis wiped billions of euros off the company's shares and affected its credentials as well as brand image. The case describes in detail the emission cheating scandal and its different aspects. Müller faced a particularly tough challenge as he strove to bring Volkswagen out of this crisis. At stake was not just the survival of the company but something bigger - Germany's pride, its global economic brand, its engineering. With the regulators in different countries relentlessly and vigorously pursuing the company, Müller had his work cut out for him. What could he do to win back the confidence of the shareholders and millions of customers in different countries? What could he do to boost the morale of the 600,000 employees he was leading who were feeling personally disgraced by this scandal? How was Volkswagen to be restored to its former glory? Questions: B. Discuss the factors that led to the ethical breaches and how this could have been averted?
The factors that led to the ethical breaches in the Volkswagen emission cheating scandal can be attributed to several key factors within the organization. These factors include:
1. Pressure for Results: There was a strong focus within the company on sales figures and market share, particularly in the highly competitive automobile industry. This pressure for results may have led to a willingness to take shortcuts or engage in unethical practices to meet targets.
2. Organizational Culture: There appeared to be a culture within Volkswagen that prioritized results and profitability over ethical considerations. This culture may have created an environment where employees felt compelled to achieve targets at any cost, including manipulating emissions tests.
3. Lack of Oversight and Accountability: There seemed to be a lack of effective oversight and accountability mechanisms within the company. This allowed the manipulation of emissions tests to go undetected for a significant period of time. There may have been inadequate checks and balances in place to prevent such ethical breaches.
4. Lack of Ethical Leadership: The absence of strong ethical leadership at the top level of the organization may have contributed to the ethical breaches. Leaders play a crucial role in setting the ethical tone and values of an organization, and their failure to prioritize ethical behavior can have far-reaching consequences.
To avert such ethical breaches, several measures could have been taken:
1. Strong Ethical Framework: Establishing a robust ethical framework within the organization that clearly defines the values, principles, and expected behavior of all employees. This framework should be communicated and reinforced at all levels of the organization.
2. Ethical Training and Education: Providing comprehensive training and education programs on ethics and compliance to all employees. This would ensure that employees are aware of the ethical standards expected of them and understand the potential consequences of unethical behavior.
3. Whistleblower Mechanisms: Implementing effective whistleblower mechanisms that allow employees to report any unethical practices or concerns without fear of reprisal. This would create a culture of transparency and accountability, encouraging employees to come forward with any information related to ethical breaches.
4. Strengthening Oversight and Controls: Implementing robust internal controls and oversight mechanisms to detect and prevent unethical practices. Regular audits and checks should be conducted to ensure compliance with ethical standards and regulatory requirements.
5. Ethical Leadership: Fostering a culture of ethical leadership throughout the organization, where leaders lead by example and prioritize ethical behavior. This includes holding leaders accountable for their actions and promoting ethical decision-making at all levels.
By addressing these factors and implementing preventive measures, organizations can reduce the likelihood of ethical breaches and create a culture of ethical conduct and responsibility.
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Two Firms Compete In A Market To Sell A Homogeneous Product With Inverse Demand Function P=200−Q. Each Firm Produces At A Constant Marginal Cost Of S50 And Has No Fixed Costs Assuming The Firms Collude And Act As A Monopolist, Calculate The Following A) Equatibnum Price P B) Equilbrium Quantity Q : 2 C) Total Proht: D) Total Welfare Loss Relative To Perfect
A) Equilibrium price (P) = 200 - 2Q = 200 - 2*50 = $100
B) Equilibrium quantity (Q) = 50
C) Total profit = $5000
D) Total welfare loss relative to perfect competition = $1250
To calculate the equilibrium price and quantity when two firms collude and act as a monopolist, we need to find the point where the market demand equals the combined quantity produced by both firms.
Given:
Inverse demand function:
P = 200 - Q
Marginal cost (MC) = $50
No fixed costs for each firm
Equilibrium price (P):
To find the equilibrium price, we set the market demand equal to the combined quantity produced by both firms:
P = 200 - Q1 - Q2
Since both firms have the same marginal cost and produce the same quantity (Q1 = Q2 = Q), we can rewrite the equation as:
P = 200 - 2Q
Equilibrium quantity (Q):
To find the equilibrium quantity, we set the market demand equal to the combined quantity produced by both firms and solve for Q:
Q1 + Q2 = Q + Q = 2Q
200 - 2Q = 2Q
200 = 4Q
Q = 50
Total profit:
To calculate the total profit, we need to subtract the total cost from the total revenue.
Since the firms have no fixed costs and produce at a constant marginal cost,
the total cost is simply the marginal cost multiplied by the quantity produced:
Total cost = MC * Q = $50 * 50 = $2500
Total revenue = P * Q = (200 - 2Q) * Q = (200 - 2*50) * 50 = $7500
Total profit = Total revenue - Total cost = $7500 - $2500 = $5000
Total welfare loss relative to perfect competition:
To calculate the total welfare loss, we need to compare the total surplus in a monopoly situation to the total surplus in a perfectly competitive market.
In a perfectly competitive market, the equilibrium quantity would be where the marginal cost equals the market price, i.e., MC = P.
Since MC = $50,
we can substitute this into the inverse demand function and solve for the equilibrium quantity in perfect competition:
P = 200 - Q
$50 = 200 - Q
Q = 150
The total surplus in perfect competition is given by the area under the demand curve up to the equilibrium quantity:
Total surplus in perfect competition = 0.5 * (150) * (200 - 150) = $3750
The total welfare loss relative to perfect competition is the difference between the total surplus in monopoly and perfect competition:
Total welfare loss = Total surplus in monopoly - Total surplus in perfect competition
Total welfare loss = $5000 - $3750 = $1250
In summary:
A) Equilibrium price (P) = 200 - 2Q = 200 - 2*50 = $100
B) Equilibrium quantity (Q) = 50
C) Total profit = $5000
D) Total welfare loss relative to perfect competition = $1250
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Which best describes the purpose of recording past income in spending in a budget?
To know the historic cost of goods?
To serve as the basis for future planning?
To learn why having savings is important?
To learn why expenditures are likely to increase?
Answer:
To serve as the basis for future planning.
Explanation:
Recording past income and spending in a budget allows individuals or organizations to analyze their financial history and patterns. By understanding how money was earned and spent in the past, it becomes easier to make informed decisions and create realistic plans for the future.
Analyzing past income and spending helps identify trends, areas of overspending, and opportunities for savings. It provides insights into which expenses are necessary, which can be reduced, and where adjustments need to be made to achieve financial goals.
By examining past financial data, individuals and organizations can make more accurate projections, set realistic budgets, and allocate resources effectively. It serves as a foundation for planning and helps in making informed financial decisions moving forward.
Recording past income and spending in a budget is primarily for future planning. It helps to understand financial habits, anticipate future income and expenses accurately, and make informed decisions about managing money.
Explanation:The primary purpose of recording past income and spending in a budget is to serve as the basis for future planning. By understanding your past income and expenses, you can make informed decisions about your financial future. For example, if you consistently spent too much on dining out last year, you might decide to budget less for this category next year. Conversely, if you had a high income one month due to overtime work, you might not factor this into your regular income planning.
This process helps to identify trends and anticipate future income and expenses accurately. It doesn't primarily offer insight into the historical cost of goods, the importance of saving, or why expenditures are likely to increase. These are side benefits or different aspects of budgeting and financial planning.
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3.1Propose and discuss an appropriate risk classification system for the organisation to establish pertinent risk facing the organisation?
3.2 Determine the organisation’s objectives, stakeholder expectations & key dependencies using an appropriate risk identification structure?
3.1 A suitable risk classification system for the organization can be based on the likelihood and impact of risks.
3.2 To determine the organization's objectives, stakeholder expectations, and key dependencies.
3.1 Categorize risks as high, medium, or low based on their probability and potential consequences. This helps prioritize risks and allocate resources effectively.
3.2 To determine the organization's objectives, stakeholder expectations, and key dependencies using a risk identification structure, consider conducting a comprehensive risk assessment. This involves identifying potential risks, evaluating their impact on objectives and stakeholders, and identifying dependencies between various aspects of the organization's operations. This analysis will provide insights into the organization's risk landscape and help inform decision-making and risk mitigation strategies.
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How can you use the career to-do list assignment to learn how majors relate to career choices? group of answer choices
The career to-do list assignment can be a useful tool to explore how majors relate to career choices. It provides an opportunity for individuals to reflect on their career aspirations, interests, and skills, and align them with the academic disciplines and majors that can support their goals.
By creating a career to-do list, individuals can identify the specific steps they need to take to achieve their career objectives. This can involve researching different majors and their corresponding career paths, evaluating the skills and knowledge required for each field, and considering the potential job prospects and opportunities associated with different majors.
Additionally, individuals can use this assignment to explore internship or job shadowing opportunities related to their desired career fields, seek guidance from career counselors or professionals in those fields, and develop a plan to acquire the necessary skills and experiences through their chosen major or academic program.
Overall, the career to-do list assignment serves as a practical exercise to connect majors with career choices by encouraging individuals to take a proactive approach in exploring their interests, researching potential career paths, and developing a plan to bridge the gap between their academic pursuits and their desired professional outcomes.
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You are the treasurer at Ohio Wire, a medium-size manufacturer of cable and wire used in building and bridge construction. Since most construction is seasonal, Ohio Wire tends to have far more cash inflows during the summer months. Further, during the winter their cash outflows are often greater than their inflows. How do you manage the excess cash accumulated during the summer months knowing that cash will be needed during the winter?
As a treasurer at Ohio Wire, a medium-sized manufacturer of cable and wire used in building and bridge construction, to manage the excess cash accumulated during the summer months knowing that cash will be needed during the winter, there are several ways that can be adopted which are as follows:
Invest the excess cash in short-term financial instruments such as Treasury bills, commercial paper, and certificates of deposit. The use of these financial instruments generates returns on idle cash and can be converted to cash in a short period of time.
Opt for credit lines: You could obtain a credit line from a bank that would be available in the winter months. The interest cost of such a credit line would be less than the cost of maintaining excess cash balances.
Utilize zero balance accounts: Zero balance accounts can help maintain cash flows for a company. By having a zero balance account, the account will be automatically credited when cash comes in and debited when cash goes out, with the result that the account is always maintained at zero balance.
Ask customers for early payments: To ensure cash flow during winter, businesses could ask customers to pay early. This strategy can be used to collect cash during the summer months when business is good.
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Stella deposits $45,000 in a savings account at a bank that
offers interest of 7.5% on such accounts. What is the value of the
money in her savings account in 25 years’ time?
The value of the money in Stella's savings account in 25 years' time with an initial deposit of $45,000 and an interest rate of 7.5% per annum would be $236,114.24.
The value of the money in Stella's savings account after 25 years with an initial deposit of $45,000 at an interest rate of 7.5% per annum can be determined using the compound interest formula.Compound interest is calculated on the principal sum as well as the interest earned on that sum over time. It's calculated by dividing the rate of interest by the number of compounding periods per year.
It is then raised to the power of the total number of compounding periods (number of years multiplied by the number of compounding periods). The resulting number is then multiplied by the principal amount (initial deposit) to get the total amount.The formula for compound interest is as follows:
FV = P(1+r/n)^(n*t)Where,FV = Future valueP = Principal or initial depositr = Rate of interest per annumn = Number of times interest is compounded per year (annually = 1, semi-annually = 2, quarterly = 4, monthly = 12, daily = 365)t = Time period in years.
Principal amount (P) = $45,000Rate of interest per annum (r) = 7.5%Number of compounding periods per year (n) = 1 (annually)Time period in years (t) = 25Plugging these values into the formula:
FV = 45,000(1+0.075/1)^(1*25)FV = $236,114.24Therefore, the value of the money in Stella's savings account in 25 years' time with an initial deposit of $45,000 and an interest rate of 7.5% per annum would be $236,114.24.
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when they are granted preemptive rights. Shareholders obtain the right
When shareholders are granted preemptive rights, they obtain the right to maintain their proportionate ownership in a company by purchasing additional shares before they are offered to the public or other investors. Preemptive rights give existing shareholders the opportunity to maintain their relative ownership stake and prevent dilution.
Here are some key points to understand about preemptive rights:
1. Purpose: Preemptive rights are designed to protect existing shareholders from dilution of their ownership when new shares are issued. Dilution occurs when new shares are issued without the participation of existing shareholders, which reduces their percentage ownership in the company.
2. Exercise: When a company plans to issue new shares, existing shareholders are typically offered the opportunity to purchase a proportionate number of those shares. This allows them to maintain their ownership percentage and prevent dilution. The price at which the shares are offered is usually based on a predetermined formula or the market price at the time.
3. Proportional ownership: Preemptive rights ensure that existing shareholders have the chance to maintain their proportional ownership in the company. For example, if a shareholder owns 10% of the company before the new shares are issued, they will have the right to purchase 10% of the new shares.
Overall, preemptive rights give shareholders the ability to protect their ownership percentage and prevent dilution when a company issues new shares. It ensures fairness and helps maintain shareholder value by allowing them to participate in future capital increases.
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4. (8 pts) Find the future value of a savings account that was opened with $2000 at 1.5% compounded semi-annually for 6 years.
Given that the savings account was opened with $2000 at 1.5% compounded semi-annually for 6 years. We need to find the future value of the savings account.Solution
Here, Principal = $2000 Rate of interest = 1.5%Compounding frequency = semi-annually Number of years = 6 Formula used FV = P × (1 + r/n)^(nt)Where,P is the principal,r is the rate of interest n is the number of times interest is compounded per year,t is the number of years FV is the future value of the account Putting the values in the above formula, we get,FV = P × (1 + r/n)^(nt)FV = $2000 × (1 + 0.015/2)^(2 × 6)FV = $2000 × (1.0075)^(12)FV = $2000 × 1.095FV = $2190 Therefore, the future value of the savings account is $2190. Answer: $2190
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