Answer: C. $ 2,750 net increase in operating income
Explanation:
Income if Blackberry syrup is sold as is;
= Sales price * No. of units
= 2.90 * 1,900
= $5,510
Income if Blackberry Syrup is processed further;
= (Sales price * No. of units) - Processing costs
= ( 5.4 * 1,900) - 2,000
= 10,260 - 2,000
= $8,260
Difference;
= 8,260 - 5,510
= $2,750
For Sheridan Company, sales is $1200000, fixed expenses are $340000, and the contribution margin ratio is 36%. What is net income?
Answer:
the net income is $92,000
Explanation:
The computation of the net income is shown below:
Net income = Contribution margin - fixed expenses
where,
Contribution margin is
= Sales × contribution margin ratio
= $1,200,000 × 36%
= $432,000
And, the fixed expenses is $340,000
So, the net income is
= $432,000 - $340,000
= $92,000
hence, the net income is $92,000
Which one of the following is not something to look for yin identifying the key features of a company's corporate culture?
a) The values, business principles, and ethical standards that management preaches and practices
b) The company's revered traditions and oft-repeated stories about "heroic acts" and "how we do things around here and why we do them that way."
c) The actions and behaviors management explicitly encourages and rewards in the form of compensation and promotion and those that are frowned upon (and sometimes punished)
d) The company's strategic intent, the type of competitive strategy it is employing, the company's code of ethics, and the company's approach to compensating and rewarding employees
e) The company's approach to people management and the official policies, procedures, and operating practices that paint the white lines for the behavior of company personnel
Answer:
Correct Answer:
d) The company's strategic intent, the type of competitive strategy it is employing, the company's code of ethics, and the company's approach to compensating and rewarding employees
Explanation:
This is not something to look to in order to identify features of a company's corporate culture. This is because, their competitive strategies it employs in business could vary from their culture due to the nature of the business they are engaged in.
A company corporate culture is something that is the beliefs and values that determine how the company employees and managers interact while handling business intends.
In order to identify the company's key characters that relate to the corporate world. The company's intent, the nature of competitive strategy used. The company's code of ethics, along with the approach to compensation and rewarding of employees.Hence the option D is correct.
Learn more about the not something to look for in identifying the key features.
brainly.com/question/17305254.
A project has an initial cost of $17,700 and produces cash inflows of $7,200, $8,900, and $7,500 over three years, respectively. What is the discounted payback period if the required rate of return is 16 percent
Answer: Never
Explanation:
Discounted payback period aims to find out how long it will take for a project to repay its investment given its discounted cashflows.
Year 1 = 7,200 / ( 1 + 0.16)
= $6,206.8965
= $6,206.90
Year 2 = 8,900 / ( 1 + 0.16) ²
= $6,614.149
= 6,614.15
Year 3 = 7,500 / ( 1 + 0.16)³
= $4,804.93
Year 1 + Year 2 + Year 3
= 6,206.90 + 6,614.15 + 4,804.93
= $17,625.98
It failed to pay back the $17,700
Which of the following tactics might public sector unions use to increase management's cost of disagreeing with the union position during bargaining?
A. Threatening to release information about the dollar amount of liquor bills for government officials that are paid by taxpayers.
B. Threating to not endorse or work on behalf of a candidate favored by management in a political campaign.
C. Malicious obedience to the published work rules.
D. All the above are legal tactics that the union can use to pressure management to accept the union's position on an issue.
Answer:
D. All the above are legal tactics that the union can use to pressure management to accept the union's position on an issue.
Explanation:
Each and everyone one of the options mentioned above are tactics adopted by the union in pressuring management to accept their position on most of the issues which they have or are arguing about.
The expected amount of time to recover the initial amount of an investment is called the: Multiple Choice Amortization period. Payback period. Interest period. Budgeting period. Discounted cash flow period.
Answer: Payback Period
Explanation:
Payback period refers to the length of time by which the initial cost of an investment is expected to be recovered or the break even point of which an investment expects to recoup the amount used up in an initial cost of investment.
A good payback period is one with the shortest Payback, time while longer payback periods are not desired for business investments.
To calculate Payback period, we use
amount of the investment / annual cash flow = Payback period.
Which of the following is not a feature or characteristic of subscription monitoring tools? Select one: a. Most moderate and high end monitoring services rely on an advertising business model similar to Google and offer their services for free. b. The most comprehensive social media monitoring tools require the user to pay a subscription or licensing fee. c. These tools monitor the social media environment for mentions of a company’s brand or name. d. These tools measure the tone or sentiment (e.g. positive, negative, neutral) of conversations.
Answer:
a. Most moderate and high-end monitoring services rely on an advertising business model similar to Google and offer their services for free.
Explanation:
Subscription management tools are employed by businesses to monitor the transaction activities of customers on their business pages. The software needed for this monitoring is provided by companies who charge some fees for their plans, especially, the most comprehensive plans.
Some services they render could be sales analytics, payment management, upgrade, and downgrade of plans. Also, search engine optimization makes the brand visible to customers who use social media. The tone of conversations can also be measured as positive, negative, or neutral with the aid of these monitoring tools.
During the month of June, Bramble Boutique had cash sales of $292,950 and credit sales of $125,265, both of which include the 5% sales tax that must be remitted to the state by July 15. Prepare the adjusting entry that should be recorded to fairly present the June 30 financial statements. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Answer:
Explanation:
Date Account Title and Explanation Debit Credit
30 June Sales Tax $19,915
($119,300 + $279,000) * 5%
Sales Tax payable $19,915
(To record sales tax payable)
Workings
Credit sales = $125,265 * 100/105 = $119,300
Cash sales = $292,950 * 100/105 = $279,000
An article in BusinessWeek in 2013 reported that Fed Chairman Ben Bernanke testified to Congress that: "If we see continued improvement and we have confidence that that is going to be sustained, then we could-in the next few meetings-we could take a step down in our pace of purchases." According to the article, Bernanke also told Congress that '"premature tightening' could 'carry a substantial risk of slowing or ending the economic recovery."' Source: Nick Summers, "Confusion about the Fed Slowing Its $85 Billion in Monthly Bond Buying Is Roiling the Markets," Bloomberg BusinessWeek, June 10-16,2013. The purchases Fed Chairman Bernanke is referring to are a) purchases of foreclosed homes. b) open market purchases of commercial bonds. c) purchases of foreign currencies. d) open market purchases of government securities.
Answer:
(B)
Explanation:
First of all, the Fed Chairman Ben Bernanke is talking about the government's moves to boost the economy or bring it out from recession. If the government sees continued improvement in the economy, it will reduce its pace of purchases. In other words, it will reduce government spending or the rate at which it pumps money into the economy.
Premature tightening of government spending (reducing government spending before the time when the economy recovers) could carry a substantial risk of slowing or ending economic recovery.
The purchases that Fed Chairman Bernanke is referring to are open market purchases of commercial bonds.
In fiscal policy, Open Market Operations (O.M.O.) are indulged in, to adjust the state of the economy.
In this case, the government purchases commercial bonds (especially from private institutions/bodies) instead of government securities; because its aim is to get the economy (aggregate production) functioning and directly increase money supply in the economy.
For a particular flight from Dulles to SF, USAir uses wide-body jets with a capacity of 430 passengers. It costs the airline $4,000 plus $60 per passenger to operate each flight. Through experience, USAir has discovered that if a ticket price is T, then they can expect (430 - 0.58T) passengers to book the flight. Determine the ticket price, T, that will maximize the airline's profit.
Answer:
$370.69
Explanation:
Given the following :
Capacity (n) = 430
Cost incurred by airline per flight = $4000 + $60 per passengers
If ticket price = T ; (430 - 0.58T) are expected to book.
Determine the ticket price, T, that will maximize the airline's profit.
Profit = Revenue earned - cost incurred
Revenue earned = capacity * price = nT
Cost incurred = $4000 + $60n
Profit = nT - (4000 + 60n)
If ticket price = T ; (430 - 0.58T) are expected to book. Then n = (430 - 0.58T)
Profit = (430 - 0.58T)T - ($4000 + 60(430 - 0.58T))
Profit = 430T - 0.58T^2 - ($4000 + 25800 - 34.8)
Profit = 430T - 0.58T^2 - 4000 - 25800 + 34.8
Profit (P) = - 0.58T^2 + 430T −29834.8
Taking the first derivative of P
P' = 2(-0.58T) + 430
P' = - 1.16T + 430
Hence solve for price (T) when P' = 0
0 = - 1.16T + 430
1.16T = 430
T = 430 / 1.16
T = 370.68965
Price = $370.69
the market capitalization rate for firm x is 10% it expected roe is 11% and its expected eps is $4 the firms plowback ratio is 68% what is the p/e ration for tthis firm
Answer:
The p/e ratio for this firm is 12.70.
Explanation:
The price-to-earnings ratio (P/E ratio) refer to the ratio that is employed to value a company as it measures current price of share of the company relative to the earnings per share (EPS) of the company.
From the question, we are given the following:
r = Market capitalization rate = 10%
roe = Expected return on equity = 11%
eps = Expected earning per share = $4
pb = Plowback ratio = 68%
Therefore,
po = payout ratio = 100% - pb = 100% - 68% = 32%
To calculate the price earning (P/E), we use the P/E ratio formula as follows:
P/E ratio =Price / EPS .............................. (1)
Where;
Price = d / (r - g) ........................................ (2)
d = Expected dividend = eps * pb = $4 * 32% = $1.28
g = growth rate = pb * roe = 68% * 11% = 7.48%
Substituting for d, r and d into equation (2), we have:
Price = $1.28 / (10% - 7.48%) = $1.28 / 2.52% = $50.79
Substituting for Price and eps into equation (1), we have:
P/E ratio = $50.79 / $4 = 12.70
Therefore, p/e ratio for this firm is 12.70.
Primus Corp. is planning to convert an existing warehouse into a new plant that will increase its production capacity by 45%. The cost of this project will be $7,125,000. It will result in additional cash flows of $1,875,000 for the next eight years. The company uses a discount rate of 12%. 1. What is the payback period? 2. What is the NPV for this project? 3. What is the IRR?Annual Cash Flows
Answer:
1. 3 years and 9 months
2. $16,439,325
3. 20.33 %
Explanation:
The Summary of the Cash Flows for this project will be as follows :
Year 0 - $7,125,000
Year 1 $1,875,000
Year 2 $1,875,000
Year 3 $1,875,000
Year 4 $1,875,000
Year 5 $1,875,000
Year 6 $1,875,000
Year 7 $1,875,000
Year 8 $1,875,000
Payback Period
$7,125,000 = Year 1 ($1,875,000) + Year 1 ($1,875,000) + Year 1 ($1,875,000) + $1,500,000 / $1,875,000
= 3 years and 9 months
Net Present Value (NPV)
Calculation using a financial calculator :
- $7,125,000 CFj
$1,875,000 CFj
$1,875,000 CFj
$1,875,000 CFj
$1,875,000 CFj
$1,875,000 CFj
$1,875,000 CFj
$1,875,000 CFj
$1,875,000 CFj
I/YR 12%
Shift NPV $16,439,325
Internal Rate of Return (IRR)
Calculation using a financial calculator :
- $7,125,000 CFj
$1,875,000 CFj
$1,875,000 CFj
$1,875,000 CFj
$1,875,000 CFj
$1,875,000 CFj
$1,875,000 CFj
$1,875,000 CFj
$1,875,000 CFj
Shift IRR 20.33 %
A company has three product lines, one of which reflects the following results: Sales $235000 Variable expenses 135000 Contribution margin 100000 Fixed expenses 130000 Net loss $ (30000) If this product line is eliminated, 60% of the fixed expenses can be eliminated and the other 40% will be allocated to other product lines. If management decides to eliminate this product line, the company’s net income will
Answer:
If management decides to eliminate this product line, the company’s net income will reduce by $22,000
Explanation:
A product should be shut down if doing so would make the savings in fixed costs associated with the product to exceed the lost contribution. Other wise , the product should remain.
In a shut down decision , the following relevant cash flows should be considered:
Lost contribution from the product to be shut downSavings in fixed directly attributable to the product under consideration.$
Lost contribution from shut down (100,000)
Savings in fixed cost (60% × 130,000) 78,000
Net loss from shut down (22,000)
Net loss from shut down = $(22,000)
If management decides to eliminate this product line, the company’s net income will reduce by $22,000
If the demand for a newly released novel is less price-elastic than the demand for an older novel, which of the following pricing strategies would a price-discriminating publishing firm follow?
A) Sell newly released novels and older novels for the same price.
B) Set price according to the marginal cost of printing the novels.
C) Charge a higher price for newly released novels.
D) Charge a higher price for older novels.
Answer:
C
Explanation:
Price elasticity of demand measures the responsiveness of quantity demanded to changes in price of the good.
If the demand for a newly released novel is less price-elastic than the demand for an older novel, it means that the demand for the new novel is less price sensitive when compared to the older novel.
A price discriminating firm would sell the new novel at a higher price than the older novel because demand is less sensitive to price. As a result, total revenue would increase.
To be considered unmarried on the last day of the tax year, a married person must meet which conditions:________
Answer and Explanation: The question refers to "married filing jointly" which is an income tax filing status available to any couple that has wed as of Dec. 31 of the tax year which is also the last day of the year. This type of filing offers numerous advantages, however, to be considered unmarried on the last day of the tax year, a married person must meet which conditions which include:
1. The couple having apart for the last six months of the tax year. This does not include temporary absences (business, school, military service, healthcare).
2. A condition where tax returns are filed separately.
3. Half the cost of keeping up your home during the tax year is paid by each spouse.
4. The main home of your child, stepchild, or foster child belongs to you for more than half of the tax year.
In any case, the married filing jointly is advantageous to couples that have a spouse who earns significantly more money than the other, allowing them to use only one tax return, even though both spouses are equally responsible for the return and any taxes and penalties owed.
The next two questions refer to the following fictional financial statement from Sharpie Markers, who sells their markers directly to consumers for $2/marker.
Revenue: $500,000
Plastic: $200,000
Ink: $1,000
Advertising: $5,000
Overhead: $1,000
Depreciation: $25
How many additional pens would Sharpie have to sell to maintain their current contribution to the organization if they invest $25,000 in advertising?
A. None of the above, but I could calculate this with the information I am given.
B. 20,904
C. 836
D. 21,259
Answer:
B. 20,904
Explanation:
For computing the additional pens first we have to determine the contribution per unit which is shown below:
Revenue $500,000
Less: Plastic cost -$200,000
Less: ink cost -$1,000
Contribution margin $299,000
Divided by Number of units sold ($500,000 ÷ $2) $250,000
Contribution per unit $1.196
Now the additional pens required is
= $25,000 ÷ $1.196
= $20,904
Is this following true?
Some franchisors claim that contracts are unfairly tilted toward the franchisees.
Answer:
False
Explanation:
A franchisee is a term used to describe an organisation that operates a franchise which he or she has obtained or paid for from a franchisor(the owner of a franchise).
A franchisor usually sets up the contract terms and conditions and presents them to the franchisee who if interested will take on the franchise. So in many cases it is not unfairly titled toward the franchisee.
What is a disadvantage of magazine advertising? It lacks flexibility in readership and advertising. It lacks immediacy that advertisers can get with newspapers or radio. It lacks authority and believability that enhances the commercial message. It lacks the permanence that gives a reader time to appraise ads in detail. It is unable to lend prestige to the products being advertised.
Answer:
The answer is: It lacks immediacy that advertisers can get with newspapers or radio.
Explanation:
One of the disadvantages of running an advertisement in a magazine is that it lacks the immediacy that advertisers can get with newspapers or the radio.
Because a magazine is a publication that, unlike a newspaper that is published daily, the magazine is published periodically, which can cause the lack of immediacy that an advertisement would have if it were published in a newspaper or radio for example.
As there is currently a very intense flow of information, depending on the type of product or service to be announced, the immediacy for publication may be more advantageous, as the market is very competitive.
At December 31, 2017, Windsor Corporation had a projected benefit obligation of $819,000, plan assets of $437,000, and prior service cost of $198,000, in accumulated other comprehensive income. Determine the pension asset/liability at December 31, 2017.
Answer:
$382,000
Explanation:
Calculation to Determine the pension asset/liability at December 31, 2017
Using this formula
Pension asset/liability =Projected benefit obligation - Plan assets
Let plug in the formula
Pension asset/liability=$819,000 - $437,000
Pension asset/liability=$382,000
Therefore the Pension asset/liability at December 31, 2017 will be $382,000
Wangerin Corporation applies overhead to products based on machine-hours. The denominator level of activity is 7,000 machine-hours. The budgeted fixed manufacturing overhead costs are $245,000. In April, the actual fixed manufacturing overhead costs were $249,900 and the standard machine-hours allowed for the actual output were 7,300 machine-hours. Required: a. Compute the budget variance for April. b. Compute the volume variance for April.
Answer and Explanation:
a. The computation of the budget variance of the month of April is shown below:
= Actual fixed manufacturing overhead costs - budgeted fixed manufacturing overhead costs
= $249,900 - $245,000
= $4,900 unfavorable
b. The volume variance is
= (Denominator machine-hours - Standard machine-hours allowed) × Budgeted fixed overhead rate
= (7,000 machine hours - 7,300 machine hours) × $245,000 ÷ 7,000 machine hours
= $10,500 favorable
please I need your help with this question. Thank you.
Explanation:
it's write tricky one...but if I get time I will solve it
In a sell or process further decision, which of the following costs is relevant?
I. A variable production cost incurred after split-off.
II. A fixed production cost incurred prior to split-off.
a) Only I
b) Both I and II
c) Neither I nor II
d) Only II
Answer: a. Only I
Explanation:
In a sell or process further decision, the only cost that is relevant is the variable production cost that is incurred after split-off.
It should be noted that a split-off is when the parent company of an organization uses specified terms to divests its business unit
intext:"On December 31, there were 26 units remaining in ending inventory. Using the periodic LIFO inventory costing method, what is the value of cost of goods sold"
Answer:
Hi, the question you have provided is missing data on the Purchases and Available Inventory for Sale on the Company :
Here are the important principles to consider when calculating the value of Cost of Goods Sold using LIFO periodic Inventory Costing System.
LIFO stands for Last - In - First - Out. This method assumes that the last goods purchased are the first ones to be issued to the final customer or requisition department.
This means the valuation of inventory will be at the value of the earliest goods purchased and that the cost of goods sold will be at the latest prices.
Units Sold Calculation
In this question we are provided with Ending Inventory Balance of 26 units. Since its Periodic system, calculation of sales units will simply be Total Balance Available for Sale (Opening Balance plus Purchases) less Ending Balance of Inventory units.
Cost of Sales Calculation
Now with the units sold having been calculated, we have to use the principles of LIFO to make sure that of those units sold, last goods purchased are the first ones to be issued to the final customer.
what process include devising and maintaining a workable scheme to ensure that the project addresses the organization's need
Answer:
Planning
Explanation:
Planning of a project is needed to provide a guide to sponsors, stakeholders, the team, and the project manager on project phases and schedule.
When planning is done it avoids delays, identifies desired goals, reduces risk, and effectively delivers expected result.
Lack of planning causes waste of resources and missed deadlines on the project.
Steps in a project plan can include the following:
- Meeting with stakeholders
- Set goals
- Define deliverables
- Create a schedule
- Perform risk assessment and identify issues
- Present the plan to stakeholders
Trying to reduce unemployment using expansionary monetary policy during stagflation will?
A) Make inflation worse.
B) Not affect prices at all
C) Make unemployment worse
D) Reduce inflation.
Answer:
A
Explanation:
A stagflation is a period of inflation , high unemployment and stagnation of the economy.
An expansionary monetary policy is a policy undertaken by the Central Bank of a country to increase the money supply in the economy.
Increasing money supply in a period of stagflation would make inflation worse.
Glacier Corporation discovered these errors in August of Year 3: Depreciation Overstated $2,500 4,000 Prepaid Expense Omitted $3,000 2,000 Assume all current items are two months in duration. Net Income for Year 2 was $18,000. Assume all errors are discovered in August of Year #3. The Year #2 books are closed. The net effect on Year #3 Beginning Retained Earnings caused by the August Year #3 correcting journal entries was:________. Select one:
a. $5,500
b. $6,500
c. $6,000
d. $8,500
e. $4,500
Answer:
e. $4,500
Explanation:
The net effect for the year 3 is shown below:
= Depreciation overstates in the year 1 + year 2 depreciation overstated - prepaid expenses omitted for the year 2 is
= $2,500 + $4,000 - $2,000
= $6,500 - $2,000
= $4,500
Therefore the net effect on the year 3 is $4,500
Hene, the correct option is e. $4,500
The other options are incorrect
The standard cost card for a product indicates that one unit of the product requires 5 kilograms of a raw material at $0.80 per kilogram. The production of the product in April was 660 units, but production had been budgeted for 640 units. During April, 7,000 kilograms of the raw material were purchased for $6,040 and 3,535 kilograms of the raw material were used in production. The material variances for April were:
Answer:
Price Variance $440 Unfavorable
Usage variance $188 unfavorable
Explanation:
A material price variance occurs where materials are purchased at a price either lower or higher than the standard price. A favorable variance is recorded where the actual total cost of materials is lower that the standard cost. While an adverse variance implies the opposite.
Price variance $
7000 kg should have cost (7000× $0.80) 5600
but did cost 6,040
Price Variance 440 Unfavorable
Price Variance $440 Unfavorable
Usage variance
A material usage variance occurs when the standard quantity required to active a particular level of production is higher or lower than than the actual actual quantity used. A favorable variance would mean than less quantity of materials were used than the standard to achieve a given output level. And an adverse variance would mean the opposite
Kg
640 units should have used (660× 5kg) 3,300
but did use 3,535
Usage variance in Kg 235 unfavorable
Standard price × $0.80
Usage variance in $ $188 unfavorable
Usage variance in $188 unfavorable
A coupon bond paying semiannual interest is reported as having an ask price of 117% of its $1,000 par value. If the last interest payment was made one month ago and the coupon rate is 6%, what is the invoice price of the bond? Assume that the month has 30 days
Answer:
$1,195
Explanation:
Calculation the invoice price of the bond
Using this formula
Invoice price of the bond =Clean price + Accrued interest
First step is to find the clean price using this formula
Clean price=Bond amount par value×Ask price percentage
Let plug in the formula
Clean price =$1,000×117/100
Clean price=$1,170
Second step is to calculate for the accrued interest.
Since Semiannually means 6 month, and we were told that the last interest payment was made a month ago which mean we have 5 months left. Now let find the accrued interest using this formula
Accrued interest = Number of days in month ×(5months/6months)
Let plug in the formula
Accrued interest=30× (5months/6months)
Accrued interest =30×0.83333
Accrued interest =30×0.83333
Accrued interest =$25
The last step is to calculate for invoice price of the bond using this formula
Invoice price of the bond =Clean price + Accrued interest
Let plug in the formula
Invoice price of the bond=$1,170+$25
Invoice price of the bond=$1,195
Therefore the Invoice price of the bond will be $1,195
The merchandise costing method that matches the most current cost of items purchased against the current sales revenue is called the
Answer: LIFO
Explanation: LIFO which stands for last-in-first out is an inventory management system that considers the last inventory as the one to be disposed first. In merchandise costing, it considers the most recent cost of items purchased from the market versus the most recent sales revenue when dealing with the costing of the merchandise.
LIFO is generally not realistic for business organisations as most will not want to leave the older stock to start dealing on the newer stocks.
Describe the general processes that should be followed in managing risks throughout a project. Be sure to include the general sequence in which these processes are carried out.
Answer:
The risk management process can be summarised into simple but effective steps.
1. Identification / Recognition of Risk: You can't manage risk if you haven't identified it. Project risks can be very overwhelming. But here are some steps that can help you do so:
Consider every aspect of the projectLook at worst-case scenarios with respect to each milestone/aspect of the project. Ask the question "what is the worst occurent that can take place?"Consulting an expert can also be a quick way to properly identify risks. This is so because they have many years of experience doing so. The downside to this is that it can be expensive.Carrying out internal and external research Getting regular feedback from employees. Employees are the ones who operate the process. Their experiences are invaluable.Documenting and examining complaints from customers. This is one of the best ways of protecting one's brand for loss of equity. Customers are a strong gauge of whether or not the company is doing it right.Once risks have been identified, they can be inserted into a Project Risk Register.
A project risk register is can be a hard document or an electronic document which itemizes all the risks relating to a project as well as their nature. It helps the project manager to keep an eye on all regulatory and compliance risks.
2. Risk Analysis
Risk analysis refers to the process of grouping risks according to their probability of occurence as well as their potential impact on the Project.
3. Risk Evaluation
This refers to the categorization of the risks according to the size of potential damage to the project if they occurred. Some of them will require urgent and or serious attention, others, on the balance of probability will require little or no treatment as their likelihood of occurrence and consequences are very low.
4. Transfer, Mitigate, or Eliminate the Risk
There are several ways to remove or reduce risks. Some of them are:
Use of policies: Policies modify and guide human behaviour within an organisation. When people do the right thing, there is less risk to worry about.Use of contracts: Many of the risks which can affect a project can arise from the contract. Having a legal professional go through a contract can help to reduce risks associated with entering into the same.Insurance: This is a risk transfer mechanism which allows an insurance company to take on the risks of a project or a business in exchange for a premium.5. Continously review and monitor the Risks
The Project Risk Register is a good tool for reviewing and monitoring risks.
When there is a new development with the project, it is important to ask the question "how does this modify our risk exposure".
If for instance, the geographical location for a construction project has changed, this may significantly alter the risks universe of the project and needs to be reviewed/managed using steps 1-4 above.
Cheers!
"A customer who is long 1 ABC Jan 40 Call wishes to create a "bear call spread." The second option position that the customer must take is:"
Answer:
Short 1 ABC Jan 30 Call
Explanation:
Investors create a "bear call spread" by first purchasing a call option at a certain price (in this case 40), and then selling an equal amount of calls with a lower price (in this case 30). Both call options expire must expire at the same date. The investors will do this because they believe that the price of an asset will decrease, that is why it is called a bear spread.