If the pure expectations theory is correct (that is, the maturity risk premium is zero), which of the following is CORRECT? a. A 5-year T-bond would always yield less than a 10-year T-bond. b. The yield curve for corporate bonds may be upward sloping even if the Treasury yield curve is flat. c. An upward-sloping Treasury yield curve means that the market expects interest rates to decline in the future. d. The yield curve for stocks must be above that for bonds, but both yield curves must have the same slope. e. If the maturity risk premium is zero for Treasury bonds, then it must be negative for corporate bonds.

Answers

Answer 1

Answer:

The answer is A

Explanation:

I know this because i did this awhile back have a good day:)


Related Questions

20 POINTS AND BRAINLIEST!!! Explain the relationship between financing and marketing strategies. Choose a product or service you use often. Having learned about both marketing and finance, describe the financial decisions that you believe have gone into marketing this product or service.

Answers

Answer:

The relationship between marketing and finance is arguably one of the most important within any business. Traditionally perceived as an adversarial tug of war between marketing on one side spending the money and finance on the other trying to save it, this relationship has evolved into a modern marriage of equals.

Explanation:

I can't think of the product anymore, I've already answered the first one

The amount you pay for an insurance policy; can be paid monthly, quarterly, semi-annually, or annually.

Answers

Answer:

Premium

Explanation:

premium is the term used to describe payment made for insurance coverage. Premiums are paid by the policyholder to the insurance company. It is the insurance company that determines how much premiums the insured will be paying. Premiums are paid every end month, bi-weekly, monthly, or yearly as stated in the policy document. In other words, premium is the cost of insurance.

The regular selling price for the product is $80. The annual quantity of units produced and sold is 40,000 units (the costs above relate to the 40,000 units production level). The company has excess capacity and regular sales will not be affected by this special order. There was no beginning inventory. What would be the effect on operating income of accepting a special order for 1,000 units at a sale price of $40 per product

Answers

Answer:

The correct option is d. Increase by $19,500.

Explanation:

Note: This question is not complete. The complete question is therefore provided before answering the question as follows:

Pluto Incorporated provided the following information regarding its single product:

Direct materials used = $240,000

Direct labor incurred = $420,000

Variable manufacturing overhead = $160,000

Fixed manufacturing overhead = $100,000

Variable selling and administrative expenses = $60,000

Fixed selling and administrative expenses = $20,000

The regular selling price for the product is $80. The annual quantity of units produced and sold is 40,000 units (the costs above relate to the 40,000 units production level). The company has excess capacity and regular sales will not be affected by this special order. There was no beginning inventory.

What would be the effect on operating income of accepting a special order for 1,000 units at a sale price of $40 per product? Note: The special order units would not require any variable selling and administrative expenses.

a. Decrease by $19,500

b. Decrease by $18,000

c. Increase by $18,000

d. Increase by $19,500

The explanation of the answer is now provided as follows:

We first calculate the expected total relevant cost of the special order as follows:

Direct materials cost per unit = Direct materials used / Annual units = $240,000 / 40,000 = $6.00

Direct labor cost per unit = Direct labor incurred / Annual units = $420,000 / 40,000 = $10.50

Variable manufacturing overhead per unit = Variable manufacturing overhead / Annual units = $160,000 / 40,000 = $4.00

Expected special order total relevant cost = (Direct materials cost per unit + Direct labor cost per unit + Variable manufacturing overhead per unit) * Special order units = ($6.00 + $10.50 + $4.00) * 1,000 = $20.50 * 1,000 = $20,500

Expected revenue from the special order = Special order units * Special order selling price per unit = 1,000 * $40 = $40,000

Expected profit from the special order = Expected revenue from the special order - Expected special order total relevant cost = $40,000 - $20,500 = $19,500

Since the expected profit from the special order is $19,500, it therefore implies that accepting it would increase operating income by $19,500.

Therefore, the correct option is d. Increase by $19,500.

During the first half of 2X13, the French corporate tax rate was 26%. At the end of 2013, the French Parliament announced a changed in the corporate tax rate from 25% (July 2X13 onward) to an expected 20%. The earnings before taxes (EBT) for Kansas Ltd (Fr) are 80 million Euros first half; 90 million Euros second half of 2X13. The CFO decides to use the 20% tax rate in 2X13, prior to the passing of legislation. He is:

Answers

Answer:

d. Manipulating data

Explanation:

In the given case since it is mentioned that in the first half of the year 2013 there is a corporate tax of 26% now at the end of the year 2013 there is a change in the corporate tax i.e. 20%

Also the earning before tax would be 80 million in the first half and in the second half it would be 90 million

So this represent the data is manipulated as it would be considered the same for the whole year i.e. for 2013 but it keeps changing

Therefore the last option is correct

Transactions On September 1 of the current year, Joy Tucker established a business to manage rental property. She completed the following transactions during September: Opened a business bank account with a deposit of $36,000 in exchange for common stock. Purchased office supplies on account, $1,800. Received cash from fees earned for managing rental property, $6,750. Paid rent on office and equipment for the month, $5,000. Paid creditors on account, $1,375. Billed customers for fees earned for managing rental property, $9,500. Paid automobile expenses for month, $840, and miscellaneous expenses, $960. Paid office salaries, $3,600. Determined that the cost of supplies on hand was $350; therefore, the cost of supplies used was $1,450. Paid dividends, $3,000. Required: 1. Indicate the effect of each transaction and the balances after each transaction: For those boxes in which no entry is required, leave the box blank. For those boxes in which you must enter subtractive or negative numbers use a minus sign. (Example: -300)

Answers

Answer:

Joy Tucker

Indication of the effect of each transaction and the balances after each transaction:

1. Opened a business bank account with a deposit of $36,000 in exchange for common stock.

Assets increased + $36,000 (Cash $36,000) = Liabilities + Equity increased + $36,000 (Common stock $36,000)

2. Purchased office supplies on account, $1,800.

Assets increased + $1,800 (Cash $36,000, Supplies $1,800) = Liabilities increased + $1,800 (Accounts payable $1,800) + Equity (Common stock $36,000)

3. Received cash from fees earned for managing rental property, $6,750.

Assets increased + $6,750 (Cash $42,750 , Supplies $1,800) = Liabilities increased (Accounts payable + $1,800) + Equity increased + $6,750 (Common stock + $36,000 + Retained Earnings $6,750)

4. Paid rent on office and equipment for the month, $5,000.

Assets decreased - $5,000 (Cash $37,750, Supplies $1,800) = Liabilities increased (Accounts payable + $1,800) + Equity decreased - $5,000 (Common stock + $36,000 + Retained Earnings $1,750)

5. Paid creditors on account, $1,375.

Assets decreased - $1,375 (Cash $36,375, Supplies $1,800) = Liabilities decreased - $1,375 (Accounts payable $425) + Equity (Common stock + $36,000 + Retained Earnings $1,750)

6. Billed customers for fees earned for managing rental property, $9,500.

Assets increased +$9,500 (Cash $36,375, Supplies $1,800, Accounts receivable $9,500) = Liabilities decreased (Accounts payable $425) + Equity increased +$9,500 (Common stock + $36,000 + Retained Earnings $11,250)

7. Paid automobile expenses for month, $840, and miscellaneous expenses, $960.

Assets decreased -$1,800 (Cash $34,575, Supplies $1,800, Accounts receivable $9,500) = Liabilities decreased (Accounts payable $425) + Equity decreased -$1,800 (Common stock + $36,000 + Retained Earnings $9,450)

8. Paid office salaries, $3,600.

Assets decreased -$3,600 (Cash $30,975, Supplies $1,800, Accounts receivable $9,500) = Liabilities decreased (Accounts payable $425) + Equity decreased -$3,600 (Common stock + $36,000 + Retained Earnings $5,850)

9. Determined that the cost of supplies on hand was $350; therefore, the cost of supplies used was $1,450.

Assets decreased -$1,450 (Cash $30,975, Supplies $350, Accounts receivable $9,500) = Liabilities decreased (Accounts payable $425) + Equity decreased -$1,450 (Common stock + $36,000 + Retained Earnings $4,400)

10. Paid dividends, $3,000.

Assets decreased -$3,000 (Cash $27,975, Supplies $350, Accounts receivable $9,500) = Liabilities decreased (Accounts payable $425) + Equity decreased -$3,000 (Common stock + $36,000 + Retained Earnings $1,400)

Explanation:

The above transactions show their effects on the accounting equation, which states that assets = liabilities + equity.  Each transaction has some effects on the assets with equal effects on either the liabilities or equity.  This implies that the equation is always in balance.  It is the basis of the double-entry system of accounting.

A large nuclear power plant has a rated capacity of 1 GW electric. Its actual output is estimated to average about 80% of capacity due to the need for maintenance and imperfect match between supply and demand. Assuming that year-round average residential electricity needs are about 1 kW electric per housing unit and there are three residents per unit, estimate how many power plants would be needed to satisfy the demand of a metropolitan area with a population of 30 million.

Answers

Answer:

you need 13 nuclear plants to satisfy the needs of the entire population.

Explanation:

On average, 3 people live in each house. Since the population is 30 million, then the total number of houses should be 10 million. According to your estimate, 10 million house will require 10 million KW or 10 GW.

Each nuclear plant is able to produce 0.8 GW, so you need 10 / 0.8 = 12.5 ≈ 13 nuclear plants to satisfy the needs of the entire population.

Approximately what percentage of U.S. jobs are retail jobs,as of 2019?

Answers

Answer:

around 5 percent are retail jobs

Approximately 20-25% percent of U.S. jobs are retail jobs, as of 2019. Customer service abilities are a requirement for almost all retail positions so that you can help consumers with purchases and enquiries about products while remaining courteous, upbeat, patient, and professional.

What are retail jobs?

Selling goods to consumers is the primary responsibility of a retail position. There are many various types of shops, offices, and businesses where one can get retail work.

Opportunities in retail can include positions such as retail sales associate in a small neighborhood store, department sales manager in a name-brand retailer, and inventory specialist in an office. Careers in retail are a great method to progress in the position and make important decisions regarding the products and sales of the company.

Therefore, we can conclude that 20-25% are retail jobs in US as of 2019.

Learn more about retail jobs here:

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A demand curve reflects each of the following except the:________

a. highest price buyers are willing to pay for each quantity.
b. willingness to pay of all buyers in the market.
c. value each buyer in the market places on the good.
d. quantity that each buyer will ultimately purchase .

Answers

Answer:

ability of buyers to obtain the quantity they desire.

Explanation:

The demand curve shows the relation between the price and the quantity demanded of the product. It represent the high price that buyer is willing to pay for each and every quantity, their willingness, valued each buyer and but it does not represent the buyer ability for gaining the quantity as they want

Therefore the same is to be chosen

A demand curve does not reflect: d. quantity that each buyer will ultimately purchase.

What does the Demand Curve reflect?

The demand curve represents the relationship between price and quantity demanded in a market. It reflects the highest price buyers are willing to pay for each quantity (a), the willingness to pay of all buyers in the market (b), and the value each buyer places on the good (c).

However, the demand curve does not indicate the specific quantity that each individual buyer will ultimately purchase (d). It provides an aggregate view of the market's demand and does not provide information about the behavior of each individual buyer.

Learn more about Demand Curve on:

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In what situations is top-down planning likely to be superior to bottom-up emergent strategy development

Answers

Answer is given below :

Explanation:

Both strategies aim to convey and process knowledge between and within the organization. The top-down approach for sub-categories to gain insights at the senior management level breaks down a system. This is a great tool to help managers identify areas of improvement using quota and monthly matrix goals. There are flaws in this strategy, employees are not involved in the process and managers do not understand the full impact of the changes made. Morality can be affected because this strategy is motivated by fear and encouragement. The bottom line is that in some cases it is more complex, although employees feel motivated to provide more authority and quality work. The information is processed to a minimum and communicated to management. This may help in some areas because administrators may not fully understand the process. I should use the military as an example for a top down strategy. It works on the battlefield when there is no time to discuss or motivate employees. Top down is used when there is a slight change in environmental factors.

All of the related jobs you do during your life are called your
Ocareer
O lifestyle
O occupation
I leisure time

Answers

Answer:

Career.

Explanation:

Currently, there are a number of ways that people can use to define a career. Some people include working menial jobs as a career while some wouldn't include it in the category.

But for most people, Career represent the progress in someone's professional life. It recorded every pieces of opportunity, action, and achievements that we take up until this point. This record will continue to increase until we eventually decided to stop and retire.

Jarmon Company owns twenty-three percent (23%) of the voting common stock of Kaleski Corp. Jarmon does not have the ability to exercise significant influence over the operations of Kaleski. What method should Jarmon use to account for its investment in Kaleski

Answers

Answer: Cost method

Explanation:

The method that Jarmon should use to account for its investment in Kaleski is the cost method.

Since it's a cost method, Kaleski should record the investment in stocks at cost, that is the price that was paid for the stock. In this case, most stocks from the other investors are purchased through the brokers.

Assuming the Fashion line is discontinued, total fixed costs remain unchanged, and the space formerly used to produce the Fashion line is used to increase the production of Hiking boots by 250%, how will operating income be affected

Answers

Answer:

A) Increase $137,500

Explanation:

Calculation for how will operating income be affected

CHANGE IN OPERATING INCOME

Sales Revenue (Additional) $850,000

(250 %* 340,000)

Less Variable expenses (Additional) ($587,500)

(250 % *$ 235,000)

Contribution Margin $ 262,500

($850,000-$587,500)

Less Fixed Expenses ($76,000)

($262,500-$76,000)

Operating Income $ 186,500

( $ 262,500-$76,000)

Less Previous Operating Income ($49,000)

Operating Income $137,500 Increase

($ 186,500-$49,000)

Therefore the operating income will increase by $137,500

. Suppose disposable income increases more in South Africa than it does in the United States. What is the short-run impact of this change in disposable income on U.S. net exports, the value of the U.S. dollar, and the value of the South African rand

Answers

Answer: A. Increase / Appreciate / Depreciate

Explanation:

If disposable income increases more in South Africa than it does in the U.S., assuming the U.S. is a trading partner to SA, they will export more goods to SA because South Africans will demand more goods and services as they can afford to.

This will lead to a higher demand for the U.S. dollar which is the price that the U.S. goods will be denominated in and a higher demand for the dollar will make it appreciate.

The South Africa rand will depreciate because there is less demand for it relative to the U.S. dollar.

Answer:

Increase / Appreciate / Depreciate

Explanation:

took the test

Ping-Aye Tropical Fruits Company must choose between two transportation options: a contractual arrangement with a local carrier that costs $4,500 upfront plus $250 for each shipment, or leasing its own refrigerated trucks which will cost $20,000 plus $45 for each shipment. What is the indifference point

Answers

Answer:

The indifference point is 68 shipments.

Explanation:

First, we need to establish the total cost formula:

Local carrier:

Total cost= 4,500 + 250*x

Leasing:

Total cost= 20,000 + 20*x

x= number of shipments

Now, we equal both formulas and isolate x:

4,500 + 250x = 20,000 + 20x

230x = 15,500

x= 67.39 = 68

The indifference point is 68 shipments.

g TB MC Qu. 01-88 The area of accounting aimed... The area of accounting aimed at serving the decision making needs of internal users is:

Answers

Answer:

The correct option is (A) Managerial Accounting

Explanation:

Managerial accounting is the accounting that identifies, measures, analyze the financial information in order to accomplish the company goals and objectives. Its decisions such as identification cost per unit, fixation of the sales price etc. These decisions should be taken by the internal users

Therefore as per the given scenario, The correct option is (A) Managerial Accounting

vA $1,000 three-year par-value bond yields an effective annual interest rate of 6%. Coupons are paid on an annual basis at a rate of 5% per year. Determine the modified convexity of the bond

Answers

Answer:

10.00

Explanation:

We haven = 3

Pv = 1000

Rate if interest = 6%

Coupon = 5% x 1000

= 50

∆y = assumed to be 1%

The formula for convexity =

(V- + V+)-2Vo/Vo+(∆y)²

We first solve for Vo

Using the financial calculator

Vo = 973.26

Then we solve for V-

Pv = 1000

Pmt = 50

I = 5%

n = 3

V- = 1000

We solve for V+

I = 7%

Pmt = 50

N = 3

V+ = 947.51

Then the convexity is gotten by putting these values into the formula

= (1000+947.51)-2x973.26/973.26x(1%)²this is approximately

10

Please check attachment for more details

URSZINOT Borrowed $170,000 cash from a local bank, payable in two years. Record the transaction.​

Answers

Answer:

see below

Explanation:

This transaction will increase both assets and liabilities of URSZINOT. It will increase cash at the bank (asset account) by $170,000 and increase accounts payable (liabilities) by $170,000. An increase in liabilities credited while an increase in assets is debited.

The journal entry will be

Bank A/c Dr.  $170,000

Account Payable( loan)  C/r.  $170,000

1. What is the incremental manufacturing cost incurred if the company increases production from 29,750 to 29,751 units

Answers

Answer:

$17.90  

Explanation:

The below is missing from the question:

Kubin Company’s relevant range of production is 28,000 to 31,500 units. When it produces and sells 29,750 units, its average costs per unit are as follows:

Amount per Unit

Direct materials  $8.80

Direct labor $5.80

Variable manufacturing overhead $3.30

Fixed manufacturing overhead $ 6.80

Fixed selling expense $ 5.30

Fixed administrative expense $ 4.30

Sales commissions $ 2.80

Variable administrative expense $ 2.30

In order to determine the incremental manufacturing cost by increasing the volume of production from  29,750 to 29,751 units, we simply compute the extra variable cost of producing one extra unit since 29,751 units are still within the relevant range of output, no extra fixed costs would be incurred.

extra cost per unit=direct materials+direct labor+Variable manufacturing overhead

Sales commissions and Variable administrative expense are not included because they are not manufacturing costs

extra cost per unit= $8.80 +$5.80 +$3.30 =$17.90  

g purchased a 25% stake in for $486,000 on Jan 2, 2021. On Jan 1, 2021, Satisfactory had a book value of equity on its balance sheet of $1,944,000. What is the value that Perfection records in it's books on Jan 2, 2021 related to its investment in

Answers

Answer:

Perfection records in it's books an Investment in Associate of $486,000

Explanation:

Hi, your question has missing information, i tried to look for the full question online but I could not find it.

However, I have prepared below explanation to the problem.

When a firm has investments into another firm of less than 50% voting rights in stake but greater than 20% we say that firm has significant influent in the investee. The firm is said to have an Investment in an Associate.

Investments in Associates are always recorded using the Equity Method of Accounting.

Entries for Investment in Associate are :

Debit :Investment in Associate ($1,944,000 × 25%) $486,000

Credit : Share of profits of associate $486,000

Conclusion :

Perfection records in it's books an Investment in Associate of $486,000

The largest national herbal supplement store is running a sale on its excess supply of Vitamin C supplements. With this new price change what do you think will happen to the Vitamin C supplement market

Answers

Answer:

There will be an increase only in the quantity demanded.

Explanation:

Here are the options to this question :

There will be a shift if the demand curve as demand increases.

There will be a decrease in the quantity demanded.

There will be an increase only in the quantity demanded.

A sale reduces the price of a good. All things been equal, a price reduction increases the quantity demanded of a product. This is in line with the law of demand.

According to the law of demand, the higher the price, the lower the quantity demanded and the lower the price, the higher the quantity demanded.

An increase in demand leads to a downward movement along the demand curve and not a shift of the demand curve.

The Internet has lowered the entry barriers for smaller firms that wish to diversify into international markets. Why is this so

Answers

Answer:

Explanation:

The internet has provided these smaller firms with a wide range of tools that allows for this to be possible at almost no cost. Such tools include communication, information, partners, etc. The internet allows smaller firms that do not possess much capital to quickly find international clients, communicate with them, and even close deals with them all through the internet. They can also find logistics partners that will facilitate these international transactions even more. All of this was impossible for a small firm to accomplish before the internet.

Classical economists stress the importance of aggregate ________ and generally believe that the economy ________ to reach full-employment equilibrium on its own.

Answers

Answer: a. Supply

b. Adjust back

Explanation:

Classical economics explains the importance off aggregate supply, and the ability of an economy to adjust back to achieve it full employment equilibrium without help or assistance but by itself.

By attaining equilibrium it means that Owing to the fair operation of opposing forces, a state of rest or equilibrium. Equal balance of any forces, or factors.

. In the year 1985, a house was valued at $110,000. By the year 2005, the value had appreciated to $145,000. What was the annual growth rate between 1985 and 2005

Answers

Answer:

the annual growth rate between 1985 and 2005 is 1.38%

Explanation:

The computation of the annual growth rate between 1985 and 2005 is shown below:

Future value = Present value × e^(rate × time period)

$145,000 = $110,000 × e^(rate, 20)

$145,000 ÷ $110,000 = e^(rate, 20)

e^(rate, 20) = 1.318

Now take the log in both the sides

In(e^(rate, 20)) = ln(1.318)

r = ln(1.318) ÷ 20

= 1.38%

Hence, the annual growth rate between 1985 and 2005 is 1.38%

Certain workers are assigned the task of unpacking production materials received from suppliers. These workers place the material in a storage area pending subsequent use in the production process. The labor cost of such workers is normally classified as: Direct materials. Indirect labor. Direct labor. Indirect materials.

Answers

Answer:

Indirect labor

Explanation:

The indirect labor is the labor that supports the process of the production but it is directly not inlvolved in the conversion of products i.e. from raw material to the finished goods

So as per the given situation some particular workers assigned the unpacking the production material task that collected from suppliers so this represent the indirect labor

hence, the same is to be considered

Suppose that you are a U.S. producer of a commodity good competing with foreign producers. Your inputs of production are priced in dollars and you sell your output in dollars. If the U.S. currency depreciates against the currencies of our trading partners:

a. Your competitive position is likely worsened
b. Your competitive position is likely improved
c. Your competitive position is unchanged

Answers

Answer:

B)your competitive position is likely to improve.

Explanation:

From the question we are informed about an instance, whereby I'm a U.S. producer of a commodity good competing with foreign producers. My inputs of production are priced in dollars and you sell your output in dollars. In this case, If the U.S. currency depreciates against the currencies of our trading partners then my competitive position is likely improved. Competitive position can be regarded as value that is been offered by a product/service or it's band in regards to some offerings in a market. To model this, a simple graph is used which called "competitive position map" where one's offerings is plotted against the competition parameters.

The following information is available for the Noir Detective Agency. After closing entries are posted, what will be the balance in the Retained earnings account

Answers

Answer: $230,400

Explanation:

The Retained earnings account is mainly used to record how much the company retains from its past and present net incomes after paying out dividends to shareholders.

Ending Balance = Beginning balance + Net income - dividends

= 294,000 + (-27,600) - 36,000

= $230,400

Discuss the unique marketing characteristics a product or service required based on the specific phase of the product life cycle

Answers

Answer: The product life cycle of a unique marketing can be characterized by introduction, growth, maturity and decline.

Explanation:

The product life cycle of a unique marketing can be characterized by introduction, growth, maturity and decline.

Introduction; This is viewed as an entry level into the market. Where the goods begin to gain a little recognition

Growth; this is described as a movement from introduction to a fast or slow consistent rapid growth of the product in the market.

Maturity; is described as the growth from the growth category, where the product gain some market stability and is now known by the public.

Decline; is the stage of slow and loss of recognition in the market space which could be caused by lack of creativity or consistency drop

While some products may stay in a prolonged maturity state, all products eventually phase out of the market due to several factors including saturation, increased competition, decreased demand and dropping sales

The GDP price index is multiple choice 3 computed for each industry sector. a measure of the price of a specified collection of goods and services compared to the price of a highly similar collection of goods and services in a reference year. a measure of the price of a specified collection of goods and services compared to the average of the prices of a highly similar collection of goods and services for the last 10 years. a measure of nominal GDP adjusted for inflation. d. Which of the following statements is true

Answers

Answer:

a measure of the price of a specified collection of goods and services compared to the price of a highly similar collection of goods and services in a reference year.

Explanation:

The changes should be measured that made in the goods and services involved in GDP. The GDP price index would be treated as an indicator for inflation that has been determined by comparing the current GDP to the GDP made in the reference year

So it would be measured the particular collection of the goods & services that should be compared with that of the reference year

hence, first option is correct

On June 30, Lord Baltimore, Inc. paid Denver Insurance Company $40,000 for one year’s worth of insurance. What is the adjusting entry that should be recorded by Denver Insurance Company on December 31, after 6 of 12 months of insurance had expired? Group of answer choices

Answers

Answer:

Dr Unearned revenue, $20,000

Cr Revenue, $20,000

Explanation:

Based On the information given if on June 30, the company paid Denver Insurance Company the amount of $40,000 for one year’s worth of insurance. Which means that adjusting entry that should be recorded by Denver Insurance Company on December 31 will be

Dr Unearned revenue, $20,000

Cr Revenue, $20,000

($40,000*6/12)

starbucks repurchased over 1.4 billion of its common stock in 2015. did this repurchase increase or decrease roe

Answers

Starbucks reports net income for 2015 of $2,558.4 million. Its stockholders' equity is $5,716 million and $6,262 million for 2014 and 2015, respectively. a. Compute its return on equity for 2015. Round answer to one decimal place (ex: 0.2345 = 23.5%) Answer % b. Starbucks repurchased over $1.4 billion of its common stock in 2015. How did this repurchase affect Starbucks' ROE? ROE usually decreases since the repurchase of shares reduces the denominator (avg. stockholders' equity). ROE usually increases since the repurchase of shares reduces the denominator (avg. stockholders' equity). ROE usually increases since the repurchase of shares increases the denominator (avg. stockholders' equity). ROE usually decreases since the repurchase of shares increases the denominator (avg. stockholders' equity). c. Why do you think a company like Starbucks repurchases its own stock? Companies repurchase their own stock if they feel it overvalued by the market. Companies repurchase their own stock if they feel it undervalued by the market.
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