The May 17, 2015, price quotation for a Boring call option with a strike price of $50 due to expire in November is $20.80, while the stock price of Boring is $69.80. The premium on one Boring November 50 call contract is _________.

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Answer 1

premium for one Boring November 50 call contract is $2,080.

To determine the premium on one Boring November 50 call contract, we need to understand what a call option is and how it works.
A call option is a financial contract that gives the buyer the right, but not the obligation, to buy a certain stock at a predetermined price (known as the strike price) within a certain time frame (known as the expiration date). The buyer pays a price for this contract, known as the premium.
In this scenario, the call option in question is a Boring November 50 call option, which means that the buyer has the right to buy Boring stock at a strike price of $50 per share, and the option will expire in November.
The May 17, 2015, price quotation for this call option is $20.80, which means that the buyer would need to pay $20.80 per share to purchase the option. However, one call option contract typically represents 100 shares of the underlying stock, so the premium for one Boring November 50 call contract would be $20.80 multiplied by 100, which equals $2,080.
It's worth noting that the premium for a call option is affected by several factors, including the stock price, the strike price, the time remaining until expiration, and the volatility of the stock. In this case, the stock price of Boring is $69.80, which is higher than the strike price of $50. This means that the call option has intrinsic value, since the buyer could immediately exercise the option and buy Boring stock at a discount. This intrinsic value contributes to the overall premium for the option.

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Related Questions

The practice of hiring workers in other countries instead of domestic workers either to save money or to increase efficiency is known as what

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The practice of hiring workers in other countries instead of domestic workers either to save money or to increase efficiency is known as offshore outsourcing, offshoring, or outsourcing.

Offshore outsourcing involves contracting with an external organization or a third-party service provider to perform business processes or services that are typically done in-house or domestically. This can include functions such as customer service, information technology (IT) services, manufacturing, and other business operations.

Offshore outsourcing can offer several benefits to companies, such as cost savings, access to a wider pool of skilled workers, and increased flexibility. However, it can also have drawbacks such as the potential for communication and cultural barriers, intellectual property concerns, and negative impacts on domestic employment.

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Central to the notion of sustainable development is the idea that __________ should not suffer so that the present generation can see economic development.

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Central to the notion of sustainable development is the idea that "future generations" should not suffer so that the present generation can see economic development.

Sustainable development is about balancing the needs of the present generation with the needs of future generations.

It is about finding ways to meet the economic, social, and environmental needs of the present generation without compromising the ability of future generations to meet their own needs. In other words, sustainable development is about meeting the needs of the present generation without jeopardizing the needs of future generations.Sustainable development is becoming increasingly important as the world faces a range of environmental and social challenges. These challenges include climate change, loss of biodiversity, deforestation, air and water pollution, and poverty. By adopting sustainable development practices, we can address these challenges and ensure that economic growth and development are sustainable over the long term.Overall, the central idea of sustainable development is that we must take a long-term view of economic development, and ensure that we are not compromising the well-being of future generations. This requires a commitment to sustainable practices that promote economic growth, social well-being, and environmental sustainability. By doing so, we can ensure a better future for ourselves and for generations to come.

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Which type of note requires the borrower to pay interest and principal to the lender over the note's life to maturity with no balloon payment at maturity

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The type of note that requires the borrower to pay interest and principal to the lender over the note's life to maturity with no balloon payment at maturity is called an amortizing note.

With an amortizing note, the borrower makes regular payments that gradually reduce the principal balance until the note is fully paid off at maturity.  In this type of loan, the borrower makes regular payments, which cover both principal and interest, until the entire loan is paid off at maturity.This is different from a balloon note, which requires the borrower to make smaller payments over the life of the loan, but then a large "balloon payment" at the end to fully pay off the remaining balance.

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True or false: Contributions of property to a partnership generally result in the same type of deferral available to a sole shareholder's contribution of property to a corporation. True false question. True False

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False.  Contributions of property to a partnership generally result in the same type of deferral available to a sole shareholder's contribution of property to a corporation.

Contributions of property to a partnership and to a corporation are treated differently for tax purposes. When a shareholder contributes property to a corporation, the corporation is deemed to purchase the property at its fair market value, which may result in a taxable gain to the shareholder. In contrast, when a partner contributes property to a partnership, there is generally no immediate tax effect, but the partner's basis in the partnership is adjusted to reflect the fair market value of the property contributed.

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(Round up to the Glven the following information, the standard deviation is $ largest whole number) Outcome Probability of the Outcome $500 . 3 $1,000 . 6 $1,300 . 1

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Rounding up to the nearest whole number, the standard deviation is $291. The standard deviation, we need to first calculate the expected value of the distribution

To calculate the standard deviation, we need to first calculate the expected value of the distribution:

Expected Value = (Probability of Outcome 1 x Outcome 1) + (Probability of Outcome 2 x Outcome 2) + (Probability of Outcome 3 x Outcome 3)

Expected Value = (0.3 x 500) + (0.6 x 1000) + (0.1 x 1300) = 820

Next, we calculate the variance using the formula:

Variance = (Probability of Outcome 1 x [tex](Outcome 1 - Expected Value)^2)[/tex] + (Probability of Outcome 2 x[tex](Outcome 2 - Expected Value)^2)[/tex] + (Probability of Outcome 3 x [tex](Outcome 3 - Expected Value)^2)[/tex]

Variance = (0.3 x [tex](500 - 820)^2)[/tex] + (0.6 x[tex](1000 - 820)^2[/tex]) + (0.1 x [tex](1300 - 820)^2[/tex]) = 84,200

Finally, we calculate the standard deviation by taking the square root of the variance:

Standard Deviation = √84,200 = 290.15

Rounding up to the nearest whole number, the standard deviation is $291.

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XYZ Corp is doing a study of consumers' use of soap across the US. The questiuonnaire for the sttudy will include questions about soap brands, types of soaps used, freqnency of soap use, lifestyle items and dempgraphics. Such a study is best characterized as

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The study described is an example of market research, specifically consumer research. Market research is a process of gathering information about a target market or audience, in this case, consumers of soap across the US.

The goal of market research is to understand consumer behavior, preferences, and opinions to inform business decisions such as product development, marketing, and advertising strategies. In this particular study, the questionnaire will collect information about soap brands, types of soaps used, frequency of soap use, lifestyle items, and demographics to gain insights into consumer behavior related to soap usage. Therefore, the study can be best characterized as a consumer research study, which is a type of market research.

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In order to satisfy the writing requirement of the statute of frauds, both parties must sign the writing. True False

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The statement "In order to satisfy the writing requirement of the statute of frauds, both parties must sign the writing" is true.

Why is this the case?

The statute of frauds is a law that requires certain types of contracts to be in writing in order to be enforceable. These contracts include agreements for the sale of goods over a certain value, contracts for the sale of real estate, and agreements that cannot be performed within one year.

The writing must contain the essential terms of the agreement and must be signed by the party against whom enforcement is sought. In some cases, the writing may also need to be signed by both parties.

However, there are exceptions to this general rule, such as when one party has already partially performed their obligations under the contract.

Hence, the answer is true.

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The equilibrium quantity of labor decreases and the equilibrium wage increases when: Group of answer choices

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The equilibrium quantity of labor decreases and the equilibrium wage increases when "there is a decrease in the supply of labor or an increase in the demand for labor."

In other words, when there are fewer workers available to work, or when employers demand more workers for a given wage, the equilibrium price of labor (wage) will increase, and the equilibrium quantity of labor (the number of workers employed) will decrease.

This phenomenon can occur for several reasons. For instance, a decrease in the supply of labor may be caused by a decrease in the population or a decrease in the number of people entering the workforce due to education or retirement. On the other hand, an increase in demand for labor may be caused by economic growth, expansion of business activities, or technological advancements that require more workers with specialized skills.The increase in wages and decrease in labor quantity may lead to a rise in production costs, which can result in higher prices for consumers. Additionally, this may encourage employers to substitute labor with capital, such as automation or machinery, to reduce production costs. Ultimately, the equilibrium price and quantity of labor are determined by the interaction of labor supply and demand in the market.

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The sale-to-cash conversion period is calculated by dividing average revenues by net sales per day. Group of answer choices True False

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Answer:

False

The sale-to-cash conversion period is a financial ratio that measures the number of days it takes for a company to convert its sales into cash. It is calculated by dividing the average accounts receivable by the net sales per day. The formula for the sale-to-cash conversion period is:

Sale-to-cash conversion period = (Average accounts receivable / Net sales) x Number of days

So, the statement in the question is incorrect. The sale-to-cash conversion period is calculated by dividing the average accounts receivable by net sales per day, not average revenues.

Price-comparison searches and location-based promotions are Blank______. Multiple choice question. important smartphone apps for mobile marketing

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Price-comparison searches and location-based promotions are important smartphone apps for mobile marketing.

Price-comparison searches allow consumers to quickly and easily compare prices for a particular product across multiple retailers. This app is useful for both consumers and retailers. Consumers can save money by finding the best deals, while retailers can use this information to adjust their pricing strategies and remain competitive. Location-based promotions use GPS technology to send targeted promotions to consumers based on their location. For example, a coffee shop may send a coupon for a free drink to a customer who is walking by their store. This app is useful for retailers because it allows them to reach customers who are in close proximity to their store and incentivize them to visit. Overall, these apps are important for mobile marketing because they allow retailers to target their promotions more effectively and provide consumers with the information they need to make informed purchasing decisions. As more consumers rely on their smartphones for shopping and other daily activities, these apps will become increasingly important for retailers looking to connect with their customers.

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What is the best resource for general stories, information, and advice about contemporary business issues

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The best resource for accessing general stories, information, and advice about contemporary business issues will depend on the specific needs and interests of the individual.

There are a variety of resources available for accessing information, news, and advice about contemporary business issues. One of the best resources is business publications, which are dedicated to covering the latest news and trends in the business world. These publications often provide in-depth analysis, expert opinions, and real-world examples of successful business strategies.

Some popular examples of business publications include The Wall Street Journal, Forbes, Business Insider, Bloomberg Businessweek, and Harvard Business Review. These publications cover a wide range of topics, including finance, marketing, management, entrepreneurship, and technology.

In addition to business publications, there are also a variety of online resources available. Websites such as LinkedIn, Medium, and Quora can provide access to a wealth of information and insights from industry professionals and experts.

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An employee can receive health insurance from a former employer after changing jobs. The enactment of which legislation makes this possible

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The legislation that makes it possible for an employee to receive health insurance from a former employer after changing jobs is called the Consolidated Omnibus Budget Reconciliation Act (COBRA).

The legislation that makes it possible for an employee to receive health insurance from a former employer after changing jobs is called the Consolidated Omnibus Budget Reconciliation Act (COBRA). COBRA is a federal law that was enacted in 1986 and applies to companies with 20 or more employees. It allows employees to continue their group health insurance coverage for a limited period, typically up to 18 months, after leaving their job. Under COBRA, employees who were covered by their employer's group health insurance plan can choose to continue their coverage, but they will be responsible for paying the entire premium themselves. The premium can be up to 102% of the cost of the plan, including both the employer and employee contribution. COBRA provides a safety net for employees who are between jobs or have recently lost their jobs and need to maintain their health insurance coverage. It helps to ensure that individuals and families have access to necessary healthcare services during times of transition.

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calculate the price of a zero-coupon bond that matures in 20 years if the market interest rate is 3.8 percent. assume semiannual compounding and $1,000 par value. (do not round intermediate calculations. round your final answer to 2 decimal places.)

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The price of the zero-coupon bond that matures in 20 years with a market interest rate of 3.8 percent, assuming semiannual compounding and $1,000 par value, is $452.84.

It is given that a zero-coupon bond matures in 20 years with a market interest rate of 3.8 percent. Assume semiannual compounding and $1,000 par value. The price of the bond is:

1: Convert the annual interest rate to a semiannual rate by dividing by 2.

Semiannual interest rate = 3.8% / 2 = 1.9%

2: Convert the percentage to a decimal by dividing by 100.

Decimal interest rate = 1.9% / 100 = 0.019

3: Calculate the number of compounding periods by multiplying the years to maturity by the compounding frequency (semiannual = 2 periods per year).

Number of periods = 20 years * 2 = 40 periods

4: Calculate the bond price using the formula:

Bond price = Par value / (1 + Interest rate)^Number of periods

5: Plug in the values and compute the bond price.

Bond price = $1,000 / (1 + 0.019)^40

Bond price = $1,000 / (1.019)^40

Bond price = $1,000 / 2.2081221814

Bond price = $452.84

So, the price of the zero-coupon bond is $452.84.

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In recent times, the top ______ percent of households by income made over $320,000. In recent times, the top ______ percent of households by income made over $320,000. 5 10 30 50

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In recent times, the top 5 percent of households by income made over $320,000.

This means that the top 5 percent of households had an income greater than $320,000.

This figure is often used as a threshold for high-income households and is used as a reference point for understanding income inequality.

The remaining 95 percent of households would have incomes below this level. It's important to note that this figure can vary based on factors such as geographic location, industry, and individual circumstances.

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In late 2008, the U.S. government extended unemployment insurance benefits for seven additional weeks, in recognition of the growing unemployment problem. This extension is an example of

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The extension of unemployment insurance benefits by the U.S. government in late 2008 is an example of fiscal policy.

Fiscal policy is the use of government spending and taxation to influence the economy. In this case, the government increased spending by extending unemployment insurance benefits, which helps to support those who are unemployed and stimulate economic activity. By providing additional funds to those who are out of work, they are able to continue spending on goods and services, which helps to support businesses and jobs.

The decision to extend unemployment insurance benefits is an example of an expansionary fiscal policy, which is designed to stimulate economic growth during a downturn. This is in contrast to contractionary fiscal policy, which is designed to slow down an overheating economy by decreasing government spending and increasing taxes.

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In late 2008, the U.S. government extended unemployment insurance benefits for seven additional weeks, in recognition of the growing unemployment problem. This extension is an example of _____

If there were 75,000 pounds of raw materials on hand on April 1st, 150,000 pounds are desired for inventory at April 30th, and 500,000 pounds are required for April production, how many pounds of raw materials should be purchased in April

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575,000 pounds of raw materials should be purchased in April. This is because 500,000 pounds are required for production and an additional 150,000 pounds are desired for inventory, totaling 650,000 pounds needed. Subtracting the 75,000 pounds on hand at the beginning of April, the result is 575,000 pounds to be purchased.

To determine the amount of raw materials to be purchased in April, we need to consider the desired inventory level as well as the production requirements. The desired inventory level of 150,000 pounds is in addition to the 500,000 pounds needed for production, resulting in a total of 650,000 pounds needed for the month. Subtracting the 75,000 pounds on hand at the beginning of April gives us the amount of raw materials that need to be purchased, which is 575,000 pounds.

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Beverly should use _____ advertising for her client who has requested a medium that is less wasteful than other media and produces the highest percentage of responses.

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Beverly should use direct response advertising for her client who has requested a medium that is less wasteful than other media and produces the highest percentage of responses.

Direct response advertising allows the advertiser to directly target potential customers and encourages them to respond to the advertisement immediately, rather than waiting for them to take action later. This can lead to higher response rates and more efficient use of advertising resources, making it a good option for clients who are looking for a medium that is less wasteful and more effective.

Beverly should consider using targeted advertising, which focuses on reaching a specific audience based on demographics, interests, or behaviors. This type of advertising can be more efficient and effective since it's directed toward people who are more likely to be interested in the product or service being offered.

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A principle of the human relations approach is that Multiple Choice scientific methods should be applied to analyze work. social needs matter more than economic needs. management should cooperate with workers to ensure that jobs match plans. wasteful movements can be identified and removed to increase productivity.

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A principle of the human relations approach is that social needs matter more than economic needs.  So, the correct answer is "social needs matter more than economic needs. "

This approach emphasizes the importance of understanding and addressing employees' social needs in the workplace, as it recognizes that employee satisfaction and motivation are crucial for organizational success.

By prioritizing social needs, management can create a positive work environment, which in turn leads to higher levels of productivity and commitment from employees. It recognizes that workers are not simply cogs in a machine, but individuals with emotional and social needs that impact their work performance.

Therefore, the human relations approach suggests that management should work closely with workers to identify and address their social and emotional needs. This can lead to higher levels of job satisfaction, increased productivity, and better organizational outcomes.

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When the total amount spent on a commodity remains unchanged as price is raised or lowered, demand is said to be Group of answer choices a. Of absolute elasticity. b. Of unitary elasticity. c. Income inelastic. d. Price inelastic. e. Price elastic.

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When the total amount spent on a commodity remains unchanged as price is raised or lowered, demand is said to be of "unitary elasticity".

Unitary elasticity of demand occurs when the percentage change in quantity demanded is equal to the percentage change in price. In other words, if the price of a good increases by 10%, the quantity demanded will decrease by 10%, resulting in no change in total expenditure on the good. Similarly, if the price of a good decreases by 10%, the quantity demanded will increase by 10%, again resulting in no change in total expenditure on the good.

In contrast, demand is said to be "price inelastic" when the percentage change in quantity demanded is less than the percentage change in price, meaning that changes in price have a relatively small impact on the quantity demanded.

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An investor purchases 100 shares of Shilaf Baby Products, Inc. (SBPI) at $60 per share. SBPI pays quarterly dividends of $.55. One year after the purchase, SBPI is at $66 per share, and after the second year, its market price is $63 per share. If the investor were to close out the position at this time, the total return would be

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the investor's total return on the investment would be 12.33% if they were to close out the position at the end of the second year.

To calculate the total return on the investment, we need to take into account both the capital appreciation of the stock and the dividend payments received.

First, let's calculate the total dividend payments received over the two-year period. Since SBPI pays quarterly dividends of $.55 per share, the annual dividend per share is $2.20. Therefore, the total dividends received over the two-year period would be:

$2.20 per share per year x 100 shares x 2 years = $440

Next, let's calculate the capital appreciation of the stock. After the first year, the stock price increased from $60 to $66 per share, which represents a gain of $6 per share. After the second year, the stock price decreased from $66 to $63 per share, which represents a loss of $3 per share. Therefore, the total capital appreciation would be:

($6 gain per share in year 1 - $3 loss per share in year 2) x 100 shares = $300

Finally, we can calculate the total return by adding the dividend payments and the capital appreciation and dividing by the initial investment:

Total return = (Dividend payments + Capital appreciation) / Initial investment

Total return = ($440 + $300) / ($60 per share x 100 shares)

Total return = $740 / $6,000

Total return = 0.1233 or 12.33%

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Tyson is a 25 percent partner in the KT Partnership. On January 1, KT makes a proportionate distribution of $16,000 cash and land with a $16,000 fair value (inside basis $8,000) to Tyson. KT has no liabilities at the date of the distribution. Tyson's basis in his KT Partnership interest is $20,000. What is Tyson's basis in the distributed land? Multiple Choice $0 $4,000 $8,000 $16,000

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Tyson's basis in the distributed land is $8,000.

This is because the inside basis of the land in the partnership was $8,000 and it was distributed proportionally to Tyson, who has a 25% interest in the partnership. Therefore, Tyson's share of the inside basis of the land is $2,000 ($8,000 x 0.25).

However, the fair value of the land is $16,000, so this amount is used to adjust Tyson's basis in the partnership interest. His basis is increased by the excess of the fair value over the inside basis, which is $8,000 ($16,000 - $8,000). Therefore, Tyson's basis in the distributed land is $8,000 ($2,000 + $8,000).

In summary, Tyson's basis in the distributed land is determined by first calculating his share of the inside basis of the land and then adjusting it by the excess of the fair value over the inside basis. This results in a basis of $8,000 for the distributed land.

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ue or False: If the Fed wants to keep the price level stable instead, it should increase the money supply by 5% next year.

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False, If the Federal Reserve (Fed) wants to keep the price level stable, increasing the money supply by 5% next year might not necessarily achieve that goal.

Increasing the money supply by 5% next year would lead to inflation and would not necessarily keep the price level stable. The explanation is that an increase in the money supply would lead to an increase in demand for goods and services, which would drive up prices. Therefore, to keep the price level stable, the Fed would need to carefully monitor and adjust the money supply as needed, rather than simply increasing it by a fixed percentage. A detail explanation would also involve consideration of other factors such as the state of the economy, interest rates, and inflation expectations.

If the Federal Reserve (Fed) wants to keep the price level stable, increasing the money supply by 5% next year might not necessarily achieve that goal.

The relationship between money supply and price levels is based on the Quantity Theory of Money, which states that when there is a change in the money supply, it directly impacts inflation and price levels. However, this relationship is not always linear, and various factors can influence the outcome. To maintain price level stability, the Fed must consider the economy's growth rate, inflation, and other economic indicators. Thus, a fixed increase of 5% in the money supply may not guarantee price level stability, as the required increase might be higher or lower depending on the specific economic conditions.

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International portfolio investments have boomed in recent years, as a result of Group of answer choices a depreciating U.S. dollar. increased gasoline and other commodity prices. the general relaxation of capital controls and regulation in many countries. an appreciating U.S. dollar.

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The general relaxation of capital controls and regulation in many countries has led to the recent boom in international portfolio investments.

With the relaxation of capital controls, it has become easier for investors to move capital in and out of countries, allowing them to diversify their portfolios and seek higher returns. The reduction in regulation has also made it easier for investors to access foreign markets and invest in a wider range of assets. As a result, the volume of international portfolio investments has increased significantly in recent years, as investors seek to take advantage of these new opportunities. This trend is likely to continue as globalization continues to facilitate the flow of capital across borders.

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What is one of the disadvantages higher-level executives face when overseeing an ethical climate of the organization

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One of the disadvantages higher-level executives face when overseeing an ethical climate of the organization is that they may become disconnected from the day-to-day operations and employee interactions.

As executives move up the ladder, they may become more removed from the actual workings of the company and its employees.

This can lead to a lack of understanding of the ethical issues that arise on a daily basis and a failure to address them effectively.

Additionally, executives may become more focused on achieving financial goals rather than upholding ethical standards.

This can lead to a culture where unethical behavior is tolerated or even encouraged in order to achieve those goals.

It is important for executives to stay connected with their employees and remain vigilant in promoting a strong ethical climate within the organization.

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Points are also known as: Group of answer choices reduction in payment amount. loan discount fees. third party charges. reduction of mortgage yield.

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The "reduction of mortgage yield." Points refer to an upfront fee paid by the borrower to the lender in exchange for a lower interest rate on their mortgage.

This fee reduces the yield that the lender would otherwise earn on the loan, hence the term "reduction of mortgage yield." Other group of answer choices such as reduction in payment amount, loan discount fees, and third party charges are not directly related to points.

Points, in the context of mortgages, refer to loan discount fees that are paid upfront to reduce the interest rate on a mortgage loan. Typically, one point is equal to 1% of the loan amount. By paying points, borrowers can secure a lower interest rate, which in turn reduces the total cost of the mortgage over its term.

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Keynesian economists believe that __________________. Group of answer choices A. the velocity of money is stable B. changes in the money supply do not affect output C. the velocity of money is affected by changes in expectations

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Keynesian economists believe that changes in the money supply can have a significant impact on output, employment, and inflation, and that the velocity of money is affected by changes in expectations. Therefore, the correct answer is B.

The name, theories, and concepts of Keynesian economics are derived from British economist John Maynard Keynes (1883-1946), often considered as the father of contemporary macroeconomics. The General Theory of Employment, Interest, and Money, his most renowned work, was released in 1936.

Keynesian economics is a macroeconomic theory that examines overall economic expenditure and its impact on production, employment, and inflation. It was established during the 1930s by British economist John Maynard Keynes in an attempt to comprehend the Great Depression.

Keynesian economics is based on the premise that government intervention can stabilize the economy. Keynes' theory was the first to distinguish between studying economic behavior and individual motivations and studying large aggregate variables and constructs.

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What effective annual rate of return (EAR) would Rayne need to earn if she deposits $1,000 per month into an account beginning one month from today in order to have a total of $1,000,000 in 30 years

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To calculate the effective annual rate of return (EAR) that Rayne would need to earn in order to have a total of $1,000,000 in 30 years by depositing $1,000 per month, we can use the following steps:

1. Determine the total amount of money that Rayne will deposit over 30 years. Since she is depositing $1,000 per month, she will deposit a total of:

  $1,000/month x 12 months/year x 30 years = $360,000

2. Determine the amount of interest that needs to be earned on the deposits to reach the goal of $1,000,000. This is simply:

  $1,000,000 - $360,000 = $640,000

3. Use a financial calculator or a spreadsheet to solve for the EAR needed to earn $640,000 in interest over 30 years on a deposit of $360,000. Assuming monthly compounding, the formula would be:

  $360,000 x [(1 + EAR/12)^(12 x 30)] = $1,000,000

  Solving for EAR gives an answer of approximately 7.25%.

Therefore, Rayne would need to earn an effective annual rate of return of approximately 7.25% on her monthly deposits in order to have a total of $1,000,000 in 30 years.

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In one year, spot rate can be 0.70$/C$, 0.78$/C$ and 0.85$/C$ with the probability of 0.3, 0.4, and 0.3, respectively. If you hedge your position with one futures contract, what will be the expected total profit of the hedge

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The expected total profit of the hedge would be 0.075 $ per Canadian dollar hedged.

To calculate the expected total profit of the hedge, we need to know the current futures price, the size of the futures contract, and the expiration date of the futures contract.

Assuming that the current futures price is equal to the current spot rate, and that the size of the futures contract is for 1 Canadian dollar, we can calculate the profit or loss on the futures contract for each of the three possible spot rates:

If the spot rate is 0.70 $/C$, the profit or loss on the futures contract will be:

(0.70 - 0.70) x 1 = 0 $

If the spot rate is 0.78 $/C$, the profit or loss on the futures contract will be:

(0.78 - 0.70) x 1 = 0.08 $

If the spot rate is 0.85 $/C$, the profit or loss on the futures contract will be:

(0.85 - 0.70) x 1 = 0.15 $

Now we can calculate the expected profit or loss on the futures contract by weighting each profit or loss by its corresponding probability:

Expected profit or loss on futures contract = (0.3 x 0 $) + (0.4 x 0.08 $) + (0.3 x 0.15 $) = 0.054 $

Therefore, the expected total profit of the hedge would be equal to the spot rate at the end of the year minus the current spot rate, minus the expected profit or loss on the futures contract:

Expected total profit of the hedge = spot rate at the end of the year - current spot rate - expected profit or loss on futures contract

Assuming that the current spot rate is 0.70 $/C$, and that the spot rate at the end of the year will be randomly determined based on the probabilities given, we can calculate the expected total profit of the hedge as follows:

Expected total profit of the hedge = (0.3 x (0.70 $/C$)) + (0.4 x (0.78 $/C$)) + (0.3 x (0.85 $/C$)) - 0.70 $/C$ - 0.054 $

Expected total profit of the hedge = 0.075 $

Therefore, the expected total profit of the hedge would be 0.075 $ per Canadian dollar hedged.

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The budget line is a (an): a. convex curve. b. vertical line. c. concave curve. d. downward-sloping straight line. e. upward-sloping straight line.

Answers

The answer is, budget line is a (an): d. downward-sloping straight line.

What is it?

The budget line represents the different combinations of two goods that a consumer can purchase with a given income and the prevailing market prices of the goods.

The line shows the maximum amount of one good that can be purchased for every unit of the other good that is forgone. The budget line is a downward-sloping straight line, which means that as the quantity of one good increases, the quantity of the other good that can be purchased decreases.

The slope of the line represents the relative prices of the two goods, and the intercepts represent the maximum amount of each good that can be purchased if the entire income is spent on that good.

The shape of the budget line does not change unless there is a change in income or prices of the goods.

Hence, option d. is correct.

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If U.S. prices increase relative to the rest of the world, we would expect imports to _______ and exports to _______.

Answers

We would expect imports to decrease and exports to increase if U.S. In comparison to the rest of the globe, prices rise.

When U.S. prices increase, it becomes more expensive for foreign countries to import goods from the U.S. As a result, there may be less demand for U.S. goods, which in turn reduces imports. On the other hand, when U.S. prices increase, U.S. goods become relatively cheaper for foreign buyers. This can increase demand for U.S items, increasing exports as a result.

When U.S. prices increase compared to the rest of the world, this means that goods produced in the U.S. become more expensive for foreign buyers. As a result, they will likely reduce their demand for U.S. goods, leading to a decrease in exports. On the other hand, U.S. consumers will find foreign goods more attractive due to their relatively lower prices, which will lead to an increase in imports.

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