Here's the full question;
You are very bullish (optimistic) on stock EFG, much more so than the rest of the market. In each question, choose the portfolio strategy that will give you the biggest dollar profit if your bullish forecast turns out to be correct. Explain your answer.
a. Choice A: $10,000 invested in calls with X = 50.Choice B: $10,000 invested in EFG stock.
b. Choice A: 10 call option contracts (for 100 shares each), with X = 50.
Choice B: 1,000 shares of EFG stock.
Answer:
Choice A
Explanation:
Remember, a bullish investor is one that is very optimistic as to the returns on investment despite the risk of such investments, and he goes for the biggest dollar profit investment option.
Thus, we note that among the listed investment options, the call options investment has the greatest profit potential this will be the first catch for a bullish investor.
Luke is considering the various options available to him to promote an energy drink, Turbozade, that has decreasing sales volumes after having peaked some time back. Which of the following marketing communications tools should Luke focus marketing efforts on to keep the sales volume up?
A) advertising
B) direct marketing
C) events and experiences
D) sales promotions
E) publicity
Answer:
D) sales promotions.
Explanation:
Since Luke seeks options available to him to promote an energy drink, Turbozade, that has decreasing sales volumes after having peaked some time back. The marketing communications tool that Luke should focus marketing efforts on to keep the sales volume up is the use of sales promotions.
A sales promotion can be defined as a marketing strategy which is used by manufacturers to promote a product through the application of various short-term attractive incentives, in order to stimulate the demand and purchase of such products. Basically, it involves all short-term techniques and tactics developed by a manufacturer used to persuade customers into buying its products and consequently boosting the sales of such products.
Hence, Luke should initiate a sales promotions so as to keep the sales volume up.
Joetz Corporation has gathered the following data on a proposed investment project (Ignore income taxes.): Investment required in equipment $ 30,000 Annual cash inflows $ 6,000 Salvage value of equipment $ 0 Life of the investment 15 years Required rate of return 10% The company uses straight-line depreciation on all equipment. Assume cash flows occur uniformly throughout a year except for the initial investment. The payback period for the investment is:
Answer:
5 years
Explanation:
Payback calculates the amount of time it takes to recover the amount invested in a project from it cumulative cash flows
Payback period = Amount invested / cash flow
$30,000 / $6,000 = 5 years
Differentiate between cash-basis accounting and accrual-basis accounting. Why is accrual-basis accounting the preferred method for most businesses? The Internal Revenue Service requires all companies with sales over $5,000,000 to use the accrual-basis of accounting for income tax reporting purposes. Why
Answer:
Reason : To ensure constant flow of cash
Explanation:
Accrual Basis of accounting records transactions when they meet definition and recognition criteria of Assets, Liabilities,Equity, Expense and Incomes.
This is different from cash-basis accounting which records transactions at the receipt or payment of cash.
Because of timing difference, the cash transactions (cash basis) can happen a late than the day of recognition of the elements (accrual basis).
Hence Revenue services demand that income tax be calculated on accrual basis to ensure a constant flow of cash whenever an entity transact.
1. Del Gato Clinic's cash account shows a $13,510 debit balance and its bank statement shows $13,575 on deposit at the close of business on June 30.
Outstanding checks as of June 30 total $2,527.
The June 30 bank statement lists a $20 bank service charge.
Check No. 919, listed with the canceled checks, was correctly drawn for $289 in payment of a utility bill on June 15. Del Gato Clinic mistakenly recorded it with a debit to Utilities Expense and a credit to Cash in the amount of $298.
The June 30 cash receipts of $2,451 were placed in the bank’s night depository after banking hours and were not recorded on the June 30 bank statement.
2. Del Gato Clinic's cash account shows a $13,510 debit balance and its bank statement shows $13,575 on deposit at the close of business on June 30.
Outstanding checks as of June 30 total $2,527.
The June 30 bank statement lists a $20 bank service charge.
Check No. 919, listed with the canceled checks, was correctly drawn for $289 in payment of a utility bill on June 15. Del Gato Clinic mistakenly recorded it with a debit to Utilities Expense and a credit to Cash in the amount of $298.
The June 30 cash receipts of $2,451 were placed in the bank’s night depository after banking hours and were not recorded on the June 30 bank statement.
Required:
a. Record the adjusting entry related to outstanding checks, if necessary.
b. Record the adjusting entry related to bank service charges, if necessary.
c. Record the adjusting entry related to Check No. 919, if necessary.
d. Record the adjusting entry related to the June 30 deposit, if necessary.
Answer:
a. Record the adjusting entry related to outstanding checks, if necessary.
No adjusting entry is necessary for recording outstanding checks.
b. Record the adjusting entry related to bank service charges, if necessary.
June 30, 202x, bank fees expense
Dr Bank fees expense 20
Cr cash 20
c. Record the adjusting entry related to Check No. 919, if necessary.
June 30, 202x, adjusting entry for mistake on recording Check No. 919
Dr Cash 9
Cr utilities expense 9
d. Record the adjusting entry related to the June 30 deposit, if necessary.
No adjusting entry is necessary for recording deposits on transit.
Keene Co. has 2,000,000 shares of common stock outstanding on December 31, 2018. An additional 100,000 shares are issued on April 1, 2019, and 240,000 more on September 1. On September 1, 2019, Keene issued $3,000,000 of 9% convertible bonds. Each $1,000 bond is convertible into 60 shares of common stock. No bonds have been converted. Assume the bonds are dilutive. The number of shares to be used in computing basic earnings per share and diluted earnings per share on December 31, 2019 is
Answer:
The number of shares to be used in computing basic earnings per share and diluted earnings per share on December 31, 2019 is -
Basic Earnings Per Share = 2,155,000 shares AND
Diluted Earnings Per Share = 2,215,000 shares
Explanation:
Basic Earnings per Share = Earnings Attributable to holders of Common Stocks ÷ Weighted Average Number of Common Stocks Outstanding.
For Basic Earnings per Share calculations, Weighted Average Number of Common Stocks Outstanding will be,
Weighted Average Number of Common Stocks Outstanding :
Outstanding at beginning of the year 2,000,000
Issued April 1, 2019 : (100,000 × 9/12) 75,000
Issued September 1 : (240,000 × 4/12) 80,000
Weighted Average Number of Common Stocks Outstanding 2,155,000
For Diluted Earnings per Share calculations, entity takes into account potential voting right that arise from other financial instruments in issue as follows,
Weighted Average Number of Common Stocks Outstanding :
Outstanding at beginning of the year 2,000,000
Issued April 1, 2019 : (100,000 × 9/12) 75,000
Issued September 1 : (240,000 × 4/12) 80,000
Convertible Bonds : ($3,000,000/ $1,000 × 60) × 4/12 60,000
Weighted Average Number of Common Stocks Outstanding 2,215,000
Of the variables in the Black-Scholes OPM, the __________ is not directly observable. Group of answer choices variance of the underlying asset return risk-free rate of interest price of the underlying asset time to expiration
Answer:
variance of the underlying asset return
Explanation:
The Black-Scholes is the most widely used model to predict the value of call/put options. It is mostly used for European style options and only works for stocks that do not pay dividends. It is based on five variables that must be inputted in the formula:
underlying stock pricestrike pricetime until maturity risk-free interest rate volatility of the underlying stock
Managers are important members of the organization. Within an organization, there are managers at four levels: top, middle, first-line, and team leaders. This activity is important because each of these levels has different managerial challenges and decisions to make to achieve organizational effectiveness. The goal of this exercise is to challenge your knowledge of the four levels of management.
Answer:
1. Pat is Middle Level.
Pat is trying to implement the strategic goals of the company which are set by Top Management. That would make Pat a Middle level manager.
2. Rick is Top Level.
Rick is developing the policies for the entire company which would place Rick at Top Manager level.
3. Daisy is a First-line Manager
Daisy is responsible for the loading products such that it is done effectively. This is an operational duty which would place Daisy at First-line level.
4. Ruth is a First-Line Manager
Ruth directs art staff who are non-managers which would make Ruth a first-line manager
5. Gary is Top Level
By developing projections on long term growth, that means Gary contributes to strategic decisions thereby making Gary top level.
6. Greg is Middle Level
Greg is in charge of first line managers which places him directly on top of them which means he is a middle level manager.
7. Mike is a Team Leader
Mike is in charge of the team which is the textbook role of a team leader.
8. Nancy is a Team leader
The members of the team go to Nancy when they need to resolve conflict or when they want to coordinate their activities. As the team leader is in charge of team coordination, Nancy must therefore be a team leader.
Which of the following statements regarding a partner's basis adjustments is false?
A. A partner's basis may never be reduced below zero
B. Relief of partnership debt decreases a partner's tax basis
C. Partnership fines and penalties do not affect a partner's basis.
D. A partner must adjust his basis for ordinary income (loss) and for separately stated items
Answer: Partnership fines and penalties do not affect a partner's basis
Explanation:
Partnership is a formal arrangement that involves two or more individuals coming together in order to manage a business.
The option that Partnership fines and penalties do not affect a partner's basis is false. It should be noted that fines and penalties affect the basis of the partners.
What is the future value of 20 periodic payments of $5,460 each made at the beginning of each period and compounded at 8%
Answer:
$269,849.14
Explanation:
FV = $5,460 * Future value of an annuity due (8%, 20)
FV = $5,460 * 49.42292
FV = $269849.1432
FV = $269,849.14
The future value of 20 periodic payments of $5,460 each, made at the beginning of each period and compounded at 8%, is $269,849.15.
What is future value?The future value of periodic payments is the compounded value for a future period at an interest rate.
The formula for computing the future value of periodic payments is:
FV=PV(1+r)^{n}
Where:
FV = future value
PV = present value
r = annual interest rate
{n} = number of periods interest held
We can use compute the future value of periodic payments using an online finance calculator as follows:
Data and Calculations:N (# of periods) = 20 years
I/Y (Interest per year) = 8 years
PV (Present Value) = $0
PMT (Periodic Payment) = $5,460
Results:
Future Value = $269,849.15 ($109,200 + $160,649.15)
Sum of all periodic payments = $109,200 ($5,460 x 20)
Total Interest = $160,649.15
Thus, the future value of 20 periodic payments of $5,460 each, made at the beginning of each period and compounded at 8%, is $269,849.15.
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The assumption that the cash flows from an investment project are reinvested at the company's discount rate applies to:
Answer:
Only the net present value method
Explanation:
The net present value is the lies between the initial amount and the present value of cash inflows after considering the discount factor
If the initial investment is more than the present value of all year cash inflows so it comes in negative due to which the project is not accepted else the project should be accepted
Therefore in the given case, it only applied to the net present value method
"A corporation has issued $1,000 par, 8% convertible bonds, callable at par. The bonds are convertible into 20 shares of common stock. Currently, the bond is trading at 100 1/2 while the common stock is trading at $51. The corporation calls the bonds at par plus accrued interest of $10 per bond. A customer holds 100 bonds, purchased at par. The customer wishes to liquidate the position at the greatest profit. The BEST recommendation is to (ignoring commissions):"
Answer:
Convert the bonds into 20 common stocks.
Explanation:
the investor has 3 options:
sell the bond at $1,000 x 1.005 = $1,005sell the bond to the corporation at $1,000 + $10 = $1,010convert the bond into 20 common stocks = 20 x $51 = $1,020the option that yields the highest return is to convert the bonds into common stocks.
A city government adds street lights within its boundaries at a total cost of $300,000. The lights should burn for at least 10 years but can last significantly longer if maintained properly. The city sets up a system to monitor these lights with the goal that 97 percent will be working at any one time. During the year, the city spends $48,000 to clean and repair the lights so that they are working according to the specified conditions. However, it spends another $78,000 to construct lights for several new streets in the city.a. Prepare the entries assuming infrastructure assets are capitalized with depreciation recorded. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)Government-Wide Financial Statementsb. Prepare the entries assuming infrastructure assets capitalized with government using the modified approach. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Answer:
a.Dr Infrastructure Assets - Street Lights $300,000
Cr Cash $300,000
Dr Depreciation Expense $30,000
Cr Accumulated Depreciation - Infrastructure Assets $30,000
Dr Maintenance Expense - Infrastructure Assets $48,000
Cr Cash $48,000
Dr Infrastructure Assets - Street Lights $78,000
Cr Cash$78,000
b.
Dr Infrastructure Assets - Street Lights $300,000
Cr Cash $300,000
Dr Maintenance Expense - Infrastructure Assets $48,000
Cash $48,000
Dr Infrastructure Assets - Street Lights $78,000
Cr Cash $78,000
Explanation:
1.Preparation of the Journal entries assuming infrastructure assets are capitalized with depreciation recorded.
Based on the information given we were told that the city government adds street lights total cost of the amount of $300,000 which means that the transaction will be recorded as:
Dr Infrastructure Assets - Street Lights $300,000
Cr Cash $300,000
(To record the original cost of the asset)
Based on the information given we were told that the city government adds street lights total cost of the amount of $300,000 in which the lights should burn for at least 10 years
which means that the transaction will be recorded as:
Dr Depreciation Expense $30,000
($300,000/10)
Cr Accumulated Depreciation - Infrastructure Assets $30,000
(To record the amount of depreciation expense)
Based on the information given we were told that city spends the amount of $48,000 in order to clean and repair the lights, this means that the Journal entry will be:
Maintenance Expense - Infrastructure Assets $48,000
Cr Cash $48,000
(To record maintenance expenses)
Based on the information given we were told that they spends another amount of $78,000 to construct lights for new streets in the city which means that the Journal entry will be :
Dr Infrastructure Assets - Street Lights $78,000
Cr Cash $78,000
(To record the additional cost of assets)
b.Preparation of t the Journal entries assuming infrastructure assets capitalized with government using the modified approach.
Based on the information given we were told that the city government adds street lights total cost of the amount of $300,000 which means that the transaction will be recorded as:
Dr Infrastructure Assets - Street Lights $300,000
Cr Cash $300,000
(To record the original cost of the assets)
Based on the information given we were told that city spends the amount of $48,000 in order to clean and repair the lights, this means that the Journal entry will be:
Dr Maintenance Expense - Infrastructure Assets $48,000
Cash $48,000
(To record t maintenance expense)
Based on the information given we were told that they spends another amount of $78,000 to construct lights for new streets in the city which means that the Journal entry will be :
Dr Infrastructure Assets - Street Lights $78,000
Cr Cash $78,000
(To record the additional cost of assets)
The FOMC no longer sets targets for M1 and M2 to meet its goals of price stability and high employment.TrueFalse
Answer: True
Explanation:
The Federal Open Market Committee is a part of the Federal Reserve who's job it is to effect the Fed's monetary policy by using Open Market operations which include the buying and selling of securities.
In the past, they used to effect monetary policy by also setting targets for M1 and M2 to meet its goals of price stability and high employment. This practice ended in 2002 with the expiration of the Humphrey-Hawkins legislation which had required the Fed to use the said set targets.
Determining whether to raise or lower the Federal Funds Rate is a responsibility of __________.
A. the central bank
B. the credit unions
C. the government
D. the commercial banks
Answer:
Option A
A. the central bank
Explanation:
The Federal Funds Rate refers to the maximum interest rate at which commercial banks can borrow money, and lend their surplus to other commercial banks. These interest charges are usually done on an overnight basis.
The central bank of a nation is responsible for the raising or lowering of the Federal Funds rate. The Central bank can lower the Federal Funds Rate to ensure that low-interest rates are given to businesses to enable them to expand and enrich the economy of the nation.
In a lawsuit by Ex-Employee against Ex-Employer for wrongful termination of an employment is most accurate:________.
a) The Ex-Employee bares the burden of persuasion, unless the ‘employment at will’ doctrine
b) The Ex-Employer bares the burden persuasion, if the ‘employment at will’ doctrine applied
c) The Ex-Employee will lose if the contract is for a fixed term has expired.
d) The Ex-Employer will lose if the contract is ‘for cause’ and the plaintiff has some evidence that the contract was in retaliation for the Ex-Employee discussing with other employees the collective bargaining unit.
Answer:
The Ex-Employee will lose if the contract is for a fixed term has expired.
Explanation:
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In a lawsuit by an Ex-Employee against an Ex-Employer for wrongful termination of an employee is most accurate the Ex-Employee will lose if the contract is for a fixed term has expired. Thus, option C is correct.
What is employment?
When a person accepts a job offer, they also commit to certain obligations and rewards. Salary, incentives, retirement, corporate rules, terminating, including non-compete clauses are a few examples of terms that may be included in an existing contract. Employment is a contract between two parties that governs the performance of compensated labor services.
If the contract was for a definite period and has already ended, it is most likely the ex-employee should lose their claim against it ex-employer for wrongful dismissal of an individual. It necessitates filing a lawsuit against the employee for carelessness and/or violation of the contract, and now in order to win, you must be able to prove negligence.
Therefore, option C is the correct option.
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Is the cost of an off-airport warehouse considered to be a unit-level, batch-level, product-level, or facility-level cost as it relates to:_______
a) The airport store
b) An individual bottle of water
Answer:
a. Facility Level
b. Facility Level
Explanation:
Facility level costs are costs incurred to maintain the company in its entirety. It is not directly ascribable to any specific products or product lines.
In the case of the Airport store, the off-airport warehouse will be used to store all their storable products so this relates to an activity that benefits the entire store.
For the individual bottle of water, this is also a facility level cost as the off-airport warehouse will be used to store a number of bottles and as such is for the benefit of the entire company producing the bottles.
Edwards Electronics recently reported $11,250 of sales, $5,500 of operating costs other than depreciation, and $1,250 of depreciation. The company had no amortization charges, it had $3,500 of bonds that carry a 6.25% interest rate, and its federal-plus-state income tax rate was 35%. How much was its net cash flow?
Answer:
Net cash flow is $4,032.81.
Explanation:
To determine the net cash flow, the income after tax will have to be computed first as follows:
Edwards Electronics
Income Statement
Particulars $
Sales 11,250
Operating costs (5,500)
Depreciation (1,250)
Interest on bond (218.75)
Income before taxes 4,281.25
Taxes (4,281.25 * 35%) (1,498.44)
Income after taxes 2,782.81
The net cash flow can now be determined by preparing the cash flow statement where depreciation which which is not a non-cash expenses is adjusted for as follows:
Edwards Electronics
Cash Flow Statement
Particulars $
Income after taxes 2,782.81
Adjustment for non-cash item:
Depreciation 1,250.00
Net cash flow 4,032.81
Credit collections are % two months following the sale, % in the month following the sale, and % in the month of sale. The remaining % is expected to be uncollectible. What is the total cash received in April from the April sales at Feeney Furniture?
Answer: $49,120
Explanation:
Given the collection strategy listed, the total cash received in April would be
= Cash sales for April + (30% * March credit sales) + ( 62% of April credit sales)
= 39,000 + ( 0.3 * 11,000 ) + ( 0.62 * 11,000)
= 39,000 + 3,300 + 6,820
= $49,120
Domestic strategy reflects the choices a firm's executives make with respect to sourcing and selling its
goods in foreign markets.
A. True
B. False
Answer:
True.
Explanation:
True. The given statement is true because the domestic strategy refers to the strategy of a company to expand its business and find the new market for their products. So, the new market can be found by internationalizing the goods by the firm. Moreover, early-stage firms focus on the domestic market but as their business grows or production increases then it starts selling its goods and services in foreign markets.
In the maturity stage, competitors compete on price and product features. They also attempt to differentiate their product to satisfy different segments of the market. An example of a product in the maturity stage is
Answer:
Probably the product that has been on its maturity state the longest is Coke. Coke has been on its maturity stage for almost a century now. the Coca Cola company is the king of marketing and even though they have made mistakes in the past, e.g. Coke II, you can find Coke everywhere in the world. Even the countries where it is not sold legally, e.g. Cuba and North Korea, you can still find it.
Occasionally different versions of Coke appear since the company must try to differentiate themselves and it is continuously competing against other beverages.
Which of the following are NOT required for use of the rental real estate safe harbor?
a. Maintaining separate books and records for each rental activity.
b. Performing at least 250 hours of "rental service" throughout the year,
c. Maintaining contemporaneous records including reports or similar documents.
d. Owning a minimum of 10 rental properties.
Answer:
d. Owning a minimum of 10 rental properties
Explanation:
The IRS has a safe habour rule for landlords for the purpose of pass-through deductions .
If the regulations are followed the IRS will view the rental activity is for business purpose only.
There are 3 requirements to use safe habor.
- separate records and books must be kept showing expenses and income of each rental enterprise owned.
- at least 250 hours of rental service in a year.
- records of real estate services that have been performed
Owning a minimum of 10 rental properties is not a requirement.
Planet Music buys all of its inventory on credit. During 2005, Planet Music's inventory account increased by $10,000. Which of the following statements must be true for Planet Music during 2005?
A. It made payments of less than $10,000 to suppliers.
B. It made cash payments of $10,000 to suppliers.
C. It made more cash payments to its suppliers than it recorded as cost of goods sold.
D. It paid less cash to suppliers than it recorded as cost of goods sold.
Answer: C. It made more cash payments to its suppliers than it recorded as cost of goods sold.
Explanation:
From the question, we are informed that Planet Music buys all of its inventory on credit and that during 2005, Planet Music's inventory account increased by $10,000.
The option that is true for Planet Music during 2005 is that Planet Music made more cash payments to its suppliers than it recorded as cost of goods sold.
Journalize the following transactions for Combs Company.
(a) Purchased 6,900 units of raw materials on account for $13,060. The standard cost was $13,800.
(b) Issued 6,780 units of raw materials for production.
The standard units were 6,890. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) No. Account Titles and Explanation Debit Credit (a) (b)
Answer:
No Account Titles and Explanation Debit Credit
A. Raw material inventory $13,800
Direct material price variance $740
($13,800 - $13,060)
Account payable $13,060
(To record purchase of materials)
B. Work in process inventory $13,780
6,890 * ($13,800/6,900)
Direct material quantity variance $220
($13,780 - $13,560)
Raw materials inventory $13,560
6,780 * ($13,800/6900)
(To record materials issued to production)
Deluxe suites hotels incluedes the following selected accounts in its genarel ledger at December 31.2016:
Notes Payable $200,000 Accounts Payable $33,000
Bonds Payable 450,000 Discounts on Bonds Payable 13,500
Interest Payable
(due next year) 1,000 Salaries Payable 2,600
Estimated Warranty
Payable 1,300 Sales Tax Payable 400
Required:
Prepare the liabilities section of Luxury Suites' balance sheet at December 31.2016.
Answer:
Liabilities section of Luxury Suites' balance sheet at December 31.2016.
Liabilities
Non - Current Liabilities
Notes Payable $200,000
Total Non-Current Liabilities $200,000
Current Liabilities
Accounts Payable $33,000
Discounts on Bonds Payable $13,500
Interest Payable (due next year) $1,000
Salaries Payable $2,600
Estimated Warranty Payable $1,300
Sales Tax Payable $400
Total Current Liabilities $51,800
Explanation:
Liabilities are presented in the financial statements as either Current liabilities (due within a period of 12 months and Non-Current Liabilities (that are not due within a period of 12 months) as shown above.
Karla Salons leased equipment from Smith Co. on July 1, 2021, in a finance lease. The present value of the lease payments discounted at 8% was $61,600. Ten annual lease payments of $8,500 are due each year beginning July 1, 2021. Smith Co. had constructed the equipment recently for $53,500, and its retail fair value was $61,600. The total decrease in earnings (pretaxed) in daltons december 31, 2021 income statement would be (ignore taxes):_____.
a. $3,296.
b. $6,376.
c. $4,928.
d. $5,204.
Answer:
d. $5,204
Explanation:
Interest expenses up to December 31, 2020 = (Total present value of lease payment - Lease payment on July 2021) * 8% * 6/12
= $61,600 - $8,500 * 8% * 6/12
= $53,100 * 8% * 6/12
= $2,124
Depreciation Expenses up to December 31, 2021
= Fair value of equipment / Useful life * 6/12
= ($61,600 / 10) *6/12
= $6,160 * 6/12
= $3,080
Therefore, the total decrease in earnings (Pretax) in Larlas December 31, 2021 Income statement would be
= Interest expenses + Depreciation Expenses
= $2,124 + $3,080
= $5,204
Too Young, Inc., has a bond outstanding with a coupon rate of 7 percent and semiannual payments. The bond currently sells for $1,898 and matures in 16 years. The par value is $2,000. What is the company's pretax cost of debt
Answer:
Explanation:
I would need the pic attachment for this question in-order to be able to attempt the question.
1. Health maintenance organizations, or HMOs, differ from the indemnity insurance system by: A. Reimbursing either the provider or member for the costs of care but taking no responsibility for providing care B. Not requiring providers to share financial risk C. Developing cost-based premiums for their beneficiaries D. Taking responsibility for both financing and delivering health care services to a defined group of beneficiaries
Answer:
Health Maintenance Organizations or HMOs
How different from the indemnity insurance system?
D. Taking responsibility for both financing and delivering health care services to a defined group of beneficiaries.
Explanation:
HMOs are healthcare maintenance organizations which coordinate the provision of health services and care to registered patients. They provide health insurance services to their patients for a monthly fee. They ensure cost-effectiveness in healthcare delivery through their coordination efforts.
On the other hand, indemnity insurance system involves some contractual agreements in which one party (the insurer or insurance company) guarantees compensation for actual or potential losses or damages sustained by another party (the insured).
Which of these statements about the production order quantity model is FALSE? The production order quantity model is appropriate when the assumptions of the basic EOQ model are met, except that receipt is noninstantaneous. Average inventory is more than one-half of the production order quantity. Because receipt is noninstantaneous, some units are used immediately and not stored in inventory. All else equal, the smaller the ratio of demand rate to production rate, the smaller is the production order quantity. None of these is false.
Answer:
Question is written again to add options:
A. The production order quantity model is appropriate when the assumptions of the basic EOQ model are met, except that receipt is noninstantaneous.
B. Average inventory is more than one-half of the production order quantity.
C. Because receipt is noninstantaneous, some units are used immediately and not stored in inventory.
D. All else equal, the smaller the ratio of demand rate to production rate, the smaller is the production order quantity.
E. None of these is false.
The correct answer is option B "Average inventory is more than one-half of the production order quantity."
Explanation:
With an inventory, it is possible to separate parts of the production process , to separate assets from goods are yet to be produced or are already produced that could serve as a source of income for a company.
An average inventory is less than one-half of the production order quantity.
The production order quantity model doesn't make it possible for the ordered quantity to be received at one time.
The production order quantity model helps a company on how to manage inventory holding costs and the average fixed ordering cost, thereby making it possible for a company to check and minimize its inventory cost and to have a guide on what quantity to produce at every point in time.
Suppose that each 0.1-percentage-point increase in the equilibrium interest rate induces a $3 billion decrease in real planned investment spending by businesses. In addition, the investment multiplier is equal to 5, and the money multiplier is equal to 3. Furthermore, every $10 billion decreases in the money supply bring about a 0.1-percentage-point increase in the equilibrium interest rate. Use this information to answer the following questions under the assumption that all other things are equal.
Calculate by how much the real planned investment must decrease if the Federal Reserve desires to bring about a $60 billion decrease in the money supply level.
Answer and Explanation:
(1) Decrease in investment = Decrease in money supply / Investment multiplier
= $60 billion / 5 = $12 billion
Real planned investment will decrease by $12 billion
The Federal Reserve decreased money supply by 60 billion and we wish to determine by how much this would affect real planned investment. We have therefore applied the investment multiplier to determine decrease in real planned investment. This is based on Keynes' theory of investment multiplier
The risk-free rate of return is 8%, the expected rate of return on the market portfolio is 15%, and the stock of Xyrong Corporation has a beta coefficient of 1.2. Xyrong pays out 40% of its earnings in dividends, and the latest earnings announced were $10 per share. Dividends were just paid and are expected to be paid annually. You expect that Xyrong will earn an ROE of 20% per year on all reinvested earnings forever. a. What is the intrinsic value of a share of Xyrong stock? (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. If the market price of a share is currently $100, and you expect the market price to be equal to the intrinsic value one year from now, what is your expected 1-year holding-period return on Xyrong stock? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Answer:
a. The intrinsic value of a share of Xyrong stock is $90.91.
b. Your expected 1-year holding-period return on Xyrong stock is 5.82%.
Explanation:
Given in the question are the following:
rf = risk-free rate of return = 8%, or 0.08
rm = expected rate of return on the market portfolio = 15%. or 0.15
b = beta = 1.2
dp = Dividend payout ratio = 40%, or 0.40
e = latest earnings = $10
ROE = Return on equity = 20%, or 0.20
We therefore proceed as follows:
a. What is the intrinsic value of a share of Xyrong stock ? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
This can be calculated using the formula for calculating the intrinsic value of a share as follows:
Intrinsic value = (e * dp) / [rf + b * (rm - rf) - ROE * (1 - dp)] .......... (1)
Substituting the values into equation (1), we have:
Intrinsic value = ($10 * 40%) / [8%+ 1.2 * (15% - 8%) - 20% * (1 - 40%)]
Intrinsic value = $4 / [8% + 1.2 * 7% - 20% * 60%
Intrinsic value = $4 / (8% + 0.084 - 12%)
Intrinsic value = $4 / 0.044
Intrinsic value = $90.91
Therefore, the intrinsic value of a share of Xyrong stock is $90.91.
b. If the market price of a share is currently $100, and you expect the market price to be equal to the intrinsic value one year from now, what is your expected 1-year holding-period return on Xyrong stock? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
To do this, we first calculate the price of the share after one year from now as follows:
p1 = Intrinsic value * (1 + ROE * (1 - dp)) ............................ (2)
Where p1 denotes the price of the share after one year from now.
Substituting the relevant values into equation (2), we have:
p1 = 90.91 * (1 + 20% * (1-40%))
p1 = 90.91 * (1 + 20% * 60%)
p1 = 90.91 * 1.12
p1 = 101.8192
We can now calculate the expected 1-year holding-period return on Xyrong stock as follows:
Expected 1-year holding-period return = (p1 + e * dp) / 100 - 1 ............ (3)
Substituting the relevant values into equation (3), we have:
Expected 1-year holding-period return = [(101.8192 + 10 * 40%) / 100] - 1
Expected 1-year holding-period return = [105.8192 / 100] - 1
Expected 1-year holding-period return = 1.058192 - 1
Expected 1-year holding-period return = 0.058192, or 5.82%
Therefore, your expected 1-year holding-period return on Xyrong stock is 5.82%.