Answer:
1. The slope is negative.
2. 0.81
Explanation:
The slope of the regression line is definitely negative
A linear equation has its regression line as
T = a + bc
The slope of the regression line is known as b.
From the question, b = -0.9
Therefore the slope of the regression line is negative.
B. Coefficient of determination = r²
r =(-0.90)
r² = 0.81
Terry Dactel is considering the purchase of an asset having the following cash flows (in 000's):CF Prob.5 20%12 30%18 30%20 20%What is the asset’s standard deviation (in 000's)?
Answer: b. $5.4
Explanation:
First calculate the Expected return;
Expected cashflow = ∑ (Probability of cashflow * cashflow)
Expected cashflow = (5 * 0.2) + (12*0.3) + (18*0.3) +(20*0.2)
=$14
Standard deviation = √∑ [Probability * (CF - Expected CF)^2]
Standard deviation= √[(0.2*(5 - 14)^2) + (0.3*(12-14)^2) + (0.3*(18-14)^2) + (0.2*(20-14)^2)
Standard deviation = $5.4
An investor has a $1,000,000 portfolio that is split evenly between "blue chip" stocks and Treasury securities. The current economic environment is characterized by low interest rates and flat stock prices - and this is expected to remain unchanged for a number of years. However, the residential and commercial real estate market is expected to be strong. The investor would like to diversify the portfolio and enhance returns without adding much additional risk. Which of the following investment purchase recommendations would help achieve this objective?A. Mortgage REITsB. Mortgage BondsC. Equity REITsD. Fannie Mae Pass-Through Certificates
Answer:
Correct Answer:
B. Mortgage Bonds
Explanation:
Since residential and commercial real estate market is expected to be strong for a number of years, the best investment would be a mortage bond.
A mortgage bond is a bond in which holders have a claim on the real estate assets put up as its collateral. The lender might sell a collection of mortgage bonds to an investor, who then collects the interest payments on each mortgage until it's paid off. If the mortgage owner defaults, the bondholder gets her house.
Lay Outline, the advankage of income and expenditure account as amporal with recephe and payment accounts Clonks)
Answer:
One of the major advantage of this account that it helps the concern to know about its revenues. It gives the concern about their past records and the current trends. Moreover, it will provide the concern relevant information for their futuristic course of action.
Explanation:
Seadrill Engineering licenses software to oil-drilling firms for 5 years. In addition to providing the software, the company also provides after sales consulting services and support to ensure smooth operation of the software over the license period of 5 years. The total transaction price is $420,000. Based on standalone values, the company estimates the consulting services and support have a value of $120,000 and the software license has a value of $300,000. Assuming the performance obligations are not interdependent, the journal entry to record the transaction on the date software is sold includes
Answer:
Dr Cash 420,000
Cr Sales Revenue (software) 300,000
Cr Unearned Service Revenue 120,000
Explanation:
software license $300,000
consulting services and support $120,000
total transaction cost $420,000
The recorded transaction should be:
Dr Cash 420,000
Cr Sales Revenue (software) 300,000
Cr Unearned Service Revenue 120,000
Cash account should be debited, since it's an asset. Sales revenue should be credited since it increases equity. Unearned revenue is a type of liability, so it should be credited.
Morganton Company makes one product:The budgeted selling price per unit is $70. Budgeted unit sales for June, July, August, and September are 8,500, 16,000, 18,000, and 19,000 units what is the estimated cost of raw materials purchases for July?
Answer:
Missing information:
"The ending raw materials inventory equals 10% of the following month’s raw materials production needs. Each unit of finished goods requires 4 pounds of raw materials. The raw materials cost $2.50 per pound."
raw materials needs for July:
Units produced 16,000 x 4 = 64,000 pounds
ending inventory (18,000 x 4) x 10% = 7,200 pounds
- beginning inventory (16,000 x 4) x 10% = 6,400 pounds
total raw materials purchases 64,800 pounds
cost of raw materials for July = 64,800 x $2.50 = $162,000
Assume the government has a balanced budget and that the economy is experiencing a period of growth higher than predicted. The tax revenue collected by the government is likely to ________, which would lead to a ________.
The tax revenue that is collected by the government is likely to increase which would then lead to a budget surplus.
A budget reveals the expenditure and the revenue of the government for a particular fiscal year.
Since there is a balanced budget such that the revenue and the expenses for the given year is thesame, then due to the higher growth, there'll be an increase in the tax revenue.
The increase in tax revenue will then lead to a situation whereby the revenue is more than the expenditure, therefore this will lead to a budget surplus.
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Buckson Framing's cost formula for its supplies cost is $1,350 per month plus $18 per frame. For the month of June, the company planned for activity of 716 frames, but the actual level of activity was 713 frames. The actual supplies cost for the month was $14,820. The supplies cost in the flexible budget for June would be closest to:
Answer:
c. $ 14,238
Explanation:
Computation of costs in the flexible budget
Planned activity 716 units
Budgeted cost per unit $ 18 per frame
Total planned variable cost - 716 units * $ 18 $ 12,888
Fixed monthly cost $ 1,350
Total supplies cost in flexible budget for June $ 14,238
The other information regarding the actual costs and actual production are not required for determining the budgted cost for supplies.
The Busby Corporation had a share price at the start of the year of $26.20, paid a dividend of $0.56 at the end of the year, and had a share price of $29.00 at the end of the year. Which of the following is closest to the rate of return of investments in companies with equal risk to The Busby Corporation for this period?
A) 5%
B) 7%
C) 9%
D) 13%
Answer:
D) 13%
Explanation:
Calculation for the percentage that is closest to the rate of return of investments
First step is to find the balance amount of the share price using this formula
Share price =(End of the year Share price + End of the year dividend)-Start of the year Share price
Let plug in the formula
Share price =($29.00+$0.56)-$26.20
Share price =$29.56-$26.20
Share price =$3.36
Second step is to find the rate of return of investments
Using this formula
Rate of return of investments= Share price/Start of the year Share price
Rate of return of investments
Let plug in the formula
Rate of return of investments=$3.36/$26.20
Rate of return of investments=0.13*100
Rate of return of investments=13%
Therefore the percentage that is closest to the rate of return of investments in companies with equal risk to The Busby Corporation for this perio will be 13%
What happens to the Purchasing Power of Money, Prices and the Nominal Rate of Interest in CASE 1: the case of an increasing supply of money and credit? CASE 2: the case of a decreasing supply of money and credit? CASE 3: the case of an increasing demand for money and credit? CASE 4: the case of a decreasing demand for money and credit?
Answer:
Case 1: The purchasing power of money will decrease, prices will increase and nominal interest rate will decrease.
Case 2: The purchasing power of money will increase, prices will decrease and nominal interest rate will increase.
Case 3: The purchasing power of money will increase, prices will decrease and nominal interest rate will increase.
Case 4: The purchasing power of money will decrease, prices will increase and nominal interest rate will decrease.
Explanation:
Case 1: The purchasing power of money will decrease, prices will increase and nominal interest rate will decrease.
Case 2: The purchasing power of money will increase, prices will decrease and nominal interest rate will increase.
Case 3: The purchasing power of money will increase, prices will decrease and nominal interest rate will increase.
Case 4: The purchasing power of money will decrease, prices will increase and nominal interest rate will decrease.
a. Identify the major general liability loss exposures of business firms
b. Provide at least one example of each type of loss exposure identified in Part 1.
Answer:
Please refer to the below for explanations
Explanation:
a) Premises and operations liability . This type of liability loss exposures arises from ownership and general maintenance of the premises where the firm is carrying out it's business. It is also the possibility that a firm will be held liable because of bodily injury or property damage caused by an accident which occurred in the firm's premises.
• Products liability. Sometimes products that have been manufactured and sold by the firm could result into liability loss exposure if the products causes injury to the buyers or consumers after purchase.
• Completed operations liability. This type of liability loss exposure occurs due to faulty work done in another place other than the premises( where the firm usually carry out its business activities) after the work or operation has been performed. It arises out of the entity's completed work including defective parts or materials.
• Contractual liability. The liability loss exposure arises when there are assumption of legal liability in a contract, whether written or oral hence contact must be properly understood by the parties involved.
• Contingent liability. Sometimes, work done by independent contractors could cause liability loss exposures if they are not properly executed. It exist when the insured is held liable for the actions or failure of the others.
b) • Premises and operations liability
Example is when an employee suffers bodily injury through an accident in the premises where the firm is situated in carrying out its business operation.
• Products liability
Example is when a child or children got injured while playing with a defective toys manufactured by Kid smart, which specializes in manufacturing children toys.
• Competed operations liability
Example is when County janitor service contracted local bars and taverns to clean their restrooms daily.
• Contractual liability
Example is when Party A to a contract agreement reads different meaning to the contract signed with party B, hence suffer losses.
• Contingent liability
Example is when a potential loss could possibly occur in the future due to the occurrence of certain events.
On November 19, Nicholson Company receives a $25,800, 60-day, 10% note from a customer as payment on account. What adjusting entry should be made on the December 31 year-end
Answer:
adjusting entry should be :
Note Receivable $1,806 (debit)
Interest Income $1,806 (credit)
Explanation:
On Issuance of the note the entries recorded are :
Note Receivable $25,800 (debit)
Sales Revenue $25,800 (credit)
At year end, December 31, 42 days would have expired, thus the interest of 42 days accrues on the Note Receivable. Entries are as follows :
Note Receivable $1,806 (debit)
Interest Income $1,806 (credit)
Interest Calculation = $25,800 × 10% × 42/60
= $1,806
Budgeted variable overhead for the year is $150,000. Expected activity is 30,000 standard direct labor hours. The actual hours worked were 15,000 and the standard hours allowed for actual production were 18,000. The variable overhead efficiency variance is:
Answer:
-$15,000 favorable variance
Explanation:
variable overhead efficiency variance = standard overhead rate x (actual hours - standard hours)
standard variable overhead rate = $150,000 / 30,000 = $5actual hours 15,000standard hours 18,000variable overhead efficiency variance = $5 x (15,000 - 18,000) = $5 x (-3,000) = -$15,000 favorable variance
How would you respond to the argument that it is impossible to judge how successful a project like this one would have been unless you actually do it
Answer:
Explain forecasting
Explanation:
This implies that I will have to let the other person know that it possible to judge how successful a project would be by doing what is called forecasting.
Forecasting allows one to project to a reasonable extent what the success level of a project would be, especially in terms of it's revenue, overall expenses before the project is carried out. A good forecasting tool is Forecast web application which provides future estimates of budget and task duration.
The 7 percent bonds issued by Modern Kitchens pay interest semiannually, mature in eight years, and have a $1,000 face value. Currently, the bonds sell for $987. What is the yield to maturity? B) 6.92 percent D) 7.22 percent A) 6.97 percent C) 6.88 percent E) 7.43 percent
Answer:
The answer is D. 7.22 percent
Explanation:
Interest payments are being made semiannually, this means it is being paid twice in a year
N(Number of periods) = 16 periods ( 8 years x 2)
I/Y(Yield to maturity) = ?
PV(present value or market price) = $987
PMT( coupon payment) = $35 ( [7 percent÷ 2] x $1,000)
FV( Future value or par value) = $1,000.
We are using a Financial calculator for this.
N= 16; PV = -987 ; PMT = 35; FV= $1,000; CPT I/Y= 3.61
3.61 percent is the Yield-to-maturity for semiannual
Therefore, the Yield-to-maturity of the bond annually is 7.22 percent (3.61 percent x 2)
Data pertaining to a company's joint production for the current period follows
Quantities produced 310 lbs. 260 lbs
Market value at split-off point . $10.2/lb. $20.4/lb
Compute the cost to be allocated to Product L for this period's $792 of joint costs if the value basis is used. (Do not round intermediate calculations.)
a. $295.81.
b. $49619.
c. $39600.
d. $2,926.00.
e. $962.19.
Answer: a. $295.81.
Explanation:
Using the value basis would mean that the product's share of the total market value will be used to determine it's share of the cost.
Total Market Value = Product L Market Value + Product M Market Value
= (310 lbs * 10.2) + ( 260 lbs * 20.4)
= 3,162 + 5,304
= $8,466
Product L's share of total market value
= 3,162/8,466
Product L's share of the $792 based on share of total market value
= (3,162/8,466) * 792
= $295.8072
= $295.81
Identify factors that could prevent an older, established company from effecting an enterprise-wide, customer-centric culture.
Answer:
A more established company may find it difficult to implement an enterprise-wide, customer-centric culture due to the following reasons:
A) Existence of a Multi-Product Business Model
A business entity that is well established with a lot of years under its belt will find it a tough challenge to shift from a product-oriented business model to a customer-oriented business model.
To be product-focused simply means that that a company has woven its organisational structure around products. For examples, a company that is into the gaming business may have teams for their Sports Betting Section, another for their online gaming section, game hardware section, gaming apps section etc.
First, for these various teams, their performance metric will largely depend on how functionally efficient their products are.
Second, techy or geeky staff are seldom efficient when it comes to emotional intelligence - a key requirement for being customer efficient.
One way to handle this is to ensure that there is a central Customer Relationship Management team that oversees the customers for each product.
B) Organisational Inflexibility
As direct to the point as it sounds, getting market intelligence for with the intention to use them for decision making is challenging. What is tougher is the ability to implement the insights from such intelligence to effect a turn around in the way customers perceive and respond to a company's offerings.
The ability to quickly take gather market intel, agree on a strategic direction based on same and execute can be referred to organisational agility.
The more bureaucratic and hierarchical an organisation is (this, by the way, characterises older and more established business systems) the less agile it is likely to be.
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A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term government and corporate bond fund, and the third is a T-bill money market fund that yields a sure rate of 5.5%. The probability distributions of the risky funds are: Expected Return Standard Deviation Stock fund (S) 15 % 32 % Bond fund (B) 9 % 23 % The correlation between the fund returns is 0.15. What is the Sharpe ratio of the best feasible CAL?
Answer:
0.296875
Explanation:
Given the following :
Probability distribution of risky funds :
- - - - - - - - - - - - - - stock fund(S) - - bond fund(B)
Expected return - - - 15% - - - - - - - - - - 9%
Std - - - - - - - - - - - - - 32% - - - - - - - - - - 23%
Correlation between funds return = 0.15
Sure rate = 5.5%
To calculate the Sharpe ratio we use the formula :
Sharpe Ratio = (Expected Return of Investment - Risk Free Rate) / Standard Deviation of excess return of investment
For the stock fund :
Expected return = 15%
Risk free rate = market sure rate = 5.5%
Standard deviation = 32%
Sharpe ratio of stock fund :
(15% - 5.5%) / 32%
= 9.5% / 32%
= 0.296875
For Bond fund :
Expected return = 9%
Risk free rate = market sure rate = 5.5%
Standard deviation = 23%
Sharpe ratio of bond fund :
(9% - 5.5%) / 23%
= 3.5% / 23%
= 0.1521739
Therefore the Sharpe ratio of the best feasible CAL is the higher of the two ratios which is 0.296875
What are the benefits and risks associated with social networks? Support your answers with relevant examples
Answer:
Explanation:
There are many benefits as well as risks to social networks. The greatest benefit is that they allow us to connect with individuals from anywhere in the world, at any distance, and in a seconds notice. This is incredibly powerful and opens the door for many opportunities in all types of markets. Social networks also come with risks, since everyone is on it people tend to share all of their information which can cause problems for that individual if it falls into the wrong hands. For example, an individual connects with a family member who lives in Brasil and has casual conversations with that family member every other day. A hacker may be able to access that information and extract all the valuable information needed to steal that individual's identity.
Sell Inc.'s stock has a 25 percent chance of producing a 30% return, a 50 percent chance of producing a12% return, and a 25 percent chance of producing a 5% return. What is the firm's expected rate of return?
Answer:
r = 0.1475 or 14.75%
Explanation:
The expected rate of return or r is the average return that is expected from the stock. It is the expected rate of profit or loss that an investor can anticipate on an investment whose returns are known or anticipated.
The expected rate of return of 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 occuringrA, rB and so on are the return in different eventsr = 0.25 * 0.3 + 0.5 * 0.12 + 0.25 * 0.05
r = 0.1475 or 14.75%
Which of the following would increase the likelihood that a company would increase its debt ratio, other things held constant? a. The company's stock price hits a new low. b. An increase in costs incurred when filing for bankruptcy. c. An increase in the personal tax rate. d. The Federal Reserve tightens interest rates in an effort to fight inflation. e. An increase in the corporate tax rate.
Answer:
Option e: An increase in the corporate tax rate
Explanation:
Corporate income tax rate is used to know how much people are willing to invest their new capital and also where they will place that new capital.
An increase in it is likely to encourage a company to use more debt in its capital structure.
The lower the corporate tax rate, the more it drives or leads to growth in capital stock, wages, jobs and others while the higer(increase) in corporate income tax rate, the more it affects economic decisions.
An Increase in a company's debt ratio will therefore lead to an increase in the marginal cost of both debt and equity financing. Also this action may lower the company's WACC
Polychromasia Company sold inventory costing $30,000 to its subsidiary, Simply Colorful, for double its cost in 2009. Polychromasia owns 80% of Simply Colorful. Simply resold $50,000 of this inventory for $60,000 to outsiders in 2009. How much unrealized profit exists at the end of the year?
a) $20,000
b) $8,000
c) $10,000
d) $5,000
Answer:
D.
Explanation:
30000 x 2 = 60000
60000 - 50000 = 10000
10000/2
= 5000
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
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
Average Rate of Return
Determine the average rate of return for a project that is estimated to yield total income of $148,500 over five years, has a cost of $300,000, and has a $30,000 residual value.
%
Answer:
22%
Explanation:
The formula to compute the accounting rate of return is shown below:
= Average net income ÷ average investment
where,
Average net income is
= Total income ÷ number of years
= $148,500 ÷ 5 years
= $29,700
And, the average investment would be
= (Cost - salvage value) ÷ 2
= ($300,000 - $30,000) ÷ 2
= $270,000 ÷ 2
= $135,000
Now put these values to the above formula
So, the rate would equal to
= $29,700 ÷ $135,000
= 22%
A division of a manufacturing company has a return on investment of 24%. The division has an opportunity to accept a project that is expected to earn a return on investment of 22%. The company’s hurdle rate is 20% which of the following statements is true?
a) A division reports the following figures: Profit margin =20% Investment turnover = 0.5. The division return on investment is
b) If a company has $2,000,000 invested in buildings, equipment, and other assets and desires to earn a return on investment of 30%, the company will need to earn a net income of $ .
Answer:
Return on Investment
The statement that is true is:
b) If a company has $2,000,000 invested in buildings, equipment, and other assets and desires to earn a return on investment of 30%, the company will need to earn a net income of $600,000 (30% of $2,000,000).
Explanation:
The company's Return on Investment is a financial performance measure that calculates the efficiency of the use of investment resources by dividing the returns generated by an investment by the cost of the investment during a period of time. It can be used to evaluate a divisional manager's performance based on the returns generated from the investments made in the division.
True or False: The modern view of the Phillips curve indicates that to keep the unemployment rate low, policymakers should aggressively fight inflation to rapidly lower the inflation rate.
Answer:
False
Explanation:
False, the given statement is false because the Philips curve shows the inverse relationship between the inflation rate and unemployment. If the curve represents the inflation on the verticle axis and unemployment on the horizontal axis, then we can see that if the inflation rises, then unemployment falls. However, if inflation falls, then unemployment rises. Therefore, if the government wants to keep the unemployment low then it should fight with inflation.
Kelley Company reports $1,250,000 of net income for 2017 and declares $175,000 of cash dividends on its preferred stock for 2017. At the end of 2017, the company had 380,000 weighted-average shares of common stock. 1. What amount of net income is available to common stockholders for 2017
Answer:
Net Income available to common stockholders = $1075000
Explanation:
The preferred stock holders have a preference over the common stockholders in the distribution of dividends as they are paid before the common stock holders and receive a fixed amount of dividend. However, the net income that is available to common stock holders is all the net income that is left after deducting the preferred stock dividend from it.
Thus, the net income available to common stockholders can be calculated as,
Net Income available to common stockholders = Net Income - Preferred stock dividend
Net Income available to common stockholders = 1250000 - 175000
Net Income available to common stockholders = $1075000
Shares in prince and nice have a beta of 0.9. The expected returns to the market are 10% and the risk free rate of return is 4%. What is the cost of equity capital for prince and nice?
Answer:
9.4%
Explanation:
using the CAPM formula, the cost of equity (Re) is:
Re = Rf + B(Rm - Rf)
Rf = risk free rate = 4%Rm = market risk = 10%B = beta = 0.9Re = 4% x [0.9 x (10% - 4%)] = 4% x (0.9 x 6%) = 4% x 5.4% = 9.4%
The cost of equity (Re) refers to the required rate of return that investors expect to receive from a certain investment, e.g. stocks or any particular project
Which of the following is not one of the benefits of outsourcing, whether domestically or internationally, value chain activities presently performed in-house? A. Preventing a company from hollowing out its technical know-how, competencies, or capabilities. B. Streamlining company operations in ways that improve organizational flexibility and cut the time it takes to get new products into the marketplace. C. Allowing a company to concentrate on its core business, leverage its key resources, and do even better what it already does best. D. Helping a company assemble diverse kinds of expertise easily and efficiently. E. Improving a company’s ability to innovate.
Answer: A. Preventing a company from hollowing out its technical know-how, competencies, or capabilities.
Explanation:
Outsourcing is the practice whereby organizations hire an outside party to help do certain functions wguvg could have been done by the workers in the organization but outsourced in order to focus on other production areas.
Out of the options given in the question, the one which is not a benefits of outsourcing, whether domestically or internationally, value chain activities presently performed in-house is that "preventing a company from hollowing out its technical know-how, competencies, or capabilities".
Preventing a company from hollowing out its technical know-how, competencies, or capabilities is not benefits of outsourcing, hence option A is correct.
Outsourcing is the process of hiring an outside party to assist with some duties that might have been performed by employees within the firm but were outsourced in order to focus on other areas of production.
"Preventing a company from hollowing out its technical know-how, competencies, or capabilities" is not a benefit of outsourcing, whether domestically or internationally, value chain tasks now conducted in-house.
Thus, the option A is correct.
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An exchange-rate policy in which the government usually allows the exchange rate to be set by the market, but sometimes intervenes is called a __________________ exchange rate system.
Answer: Managed Float
Explanation:
Also called "Dirty Float", the Managed float is an exchange rate system that allows for the currency of a country to be set by the forces of demand and supply in the market.
However, unlike in a clean float, the Central bank will occasionally intervene in the market to influence the how fast the currency is changing value or to control the direction it is going.
This is usually done to protect the domestic economy from sudden shocks in the global economy.
Calculate the future value of an investment of $463 for 10 years earning an interest of 9%? (Round your answers to 2 decimal places.)
Answer:
$1,096.09
Explanation:
The computation of the future value by using the following formula is shown below:
As we know that
Future value = Present value × (1 + interest rate)^number of years
= $463 × (1 + 0.09)^10
= $463 × 2.367363675
= $1,096.09
We simply applied the above formula so that the future value could arrive and the same is to be considered