Debt usage will affect financial risk.
Financial risk is the type of risk where losses can be incurred by investing in a business or an investment. Parties taking the financial risk can face loss of capital.
Financial risk is the management of the debts and completion of financial obligations. These types of risks can occur in various ways such as business instability, interest rates, currencies, financial market, or movements.
There are various types of financial risks such as operational risk, market risk, investment risk, liquidity risk, or credit risk. Financial risk could occur in any form such as delay in delivery of the goods or increasing amount of debt on the business.
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what is financialization? what are its five facets? what are the processes and effects of these facets? explain.
Financialization is the process by which the financial sector—including financial markets, financial institutions, and financial elites—gains more sway over economic decisions and consequences. At both the macro and micro levels, financialization changes how economic systems operate.
The five main facets of finance are corporate finance, investments, financial institutions, international finance and fintech.
Finance refers to the management, creation, and analysis of money and investments. It entails the use of credit and debt, securities, and investment to fund current projects with the proceeds of future income flows. Finance is inextricably linked to the time value of money, interest rates, and other related topics because of this temporal aspect.
Finance, in essence, refers to money management and the process of acquiring required funds. Finance also includes the management, creation, and analysis of money, banking, credit, investments, assets, and liabilities that comprise financial systems. Financial services are used by both consumers and businesses to acquire financial goods and achieve financial objectives. The financial services industry is a major economic driver.
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When making keep or replace decisions, management should consider the: (check all that apply. ).
The trade-in allowance on the outdated equipment should be taken into account by management when deciding whether to keep or replace it.
What is trade-in allowance ?When you trade in your old vehicle, the dealer will deduct an allowance from the price of your new vehicle. This is comparable to a credit from the sale of your old car that can be applied to the cost of your new car.
The selling of automobiles is one of the most typical instances of a trade-in allowance being used. Car lots may promote a certain minimum trade-in allowance to anyone who buys a new car or truck as part of their sales strategy.
Discounts and allowances are the terms for incentives used to encourage sales and payments, respectively. Companies in the retail and wholesale sectors most frequently use discounts.
Trade-in allowances are financial rewards used in a wide range of industries. In essence, it refers to the amount by which a seller lowers the price of new property in exchange for acquiring property already owned by the buyer.
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pril 12, hong company agrees to accept a 60-day, 6%, $8,400 note from indigo company to extend the due date on an overdue account. what is the journal entry that indigo company would make, when it records payment of the note on the maturity date?
The journal entry that indigo company would make, when it records payment of the note on the maturity date is 8400
What is journal entry?An entry in your journal serves as a record of a transaction in your company's books. Every transaction in double-entry bookkeeping requires at least two journal entries.
Dr. Payable Notes 8400
140 Dr. Interest expense
Money Cr 8540
Explanation:
Based on the information given if On April 12, the Hong Company agrees to accept a 60-day which include the amount of $8400 note from Indigo Company which means that in order to extend the due date on an overdue account the journal entry that Indigo Company would make, when it records payment of the note on the maturity date is :
Dr. Payable Notes 8400
Dr Interest expense 140
(8400/60 days) =140
Cr Cash 8540
(8400+140) = 8540
The journal entry that indigo company would make, when it records payment of the note on the maturity date is 8400
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true or false: on a scatter diagram, the estimated line of cost behavior is the best variable fit, so it is easy to determine.
The estimated line of cost behavior is the best variable fit on a scatter diagram, making it simple to detect that it is wrong.
Describe the scattergraph approach.Only the highest and lowest levels of activity are taken into account by the scattergraph method. Once more, the objective is to create an estimate of fixed and variable expenses in the form of the equation Y = f + vX.Variable cost: -Changes in total in direct proportion to a change in activity level (or cost driver); -Variable cost per unit stays the same as activity changes. Costs with Step Variation. -Costs that rise almost continuously, but in discrete steps rather than all at once.The estimated line of cost behavior is the best variable fit on a scatter diagram, making it simple to detect that it is wrong.To learn more about Scattergraph method refer to:
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to be effective, a leader must understand the aspects of the organization such as values, attitudes, and personalities. multiple choice cognitive behavioral informal formal
To be effective, a leader must understand the informal aspects of the organization such as values, attitudes, and personalities.
What is informal organization?The social network that underpins everyday interactions between individuals is known as the informal organization. Work gets done and relationships are formed among persons who have a common organizational affiliation or cluster of affiliations through an amalgam of norms, personal connections, and professional connections. It is made up of a dynamic collection of interpersonal connections, social networks, groups of people who share interests, and emotional drives. Both the informal organization and its members' intricate social dynamics change over time.The nature of the informal organization becomes more distinct when its key characteristics are juxtaposed with those of the formal organization.Key characteristics of the informal organization:
evolving constantlygrassrootsdynamic and responsiveexcellent at motivationrequires insider knowledge to be seentreats people as individualsflat and fluidcohered by trust and reciprocitydifficult to pin downcollective decision-makingessential for situations that change quickly or are not yet fully understoodTo be an effective leader, you must understand your own motivations, strengths, and weaknesses. Effective leaders related with their team by facilitating open communication, encouraging employee growth and development, and giving and receiving feedback.The informal aspects are the focus of the interdisciplinary, which is dedicated to better understanding and managing people at work.To learn more about informal organization, refer to
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during 2007-2009 the us economy has slipped into a recession fueled mainly by the burst of the bubble in the housing market and the crisis in wall street. in response, the federal reserve has been working on an expansionary monetary policy. what is the way in which the fed has conducted this policy?
The federal funds rate was initially reduced by the Fed via "conventional" policy operations, from 5.25 percent in September 2007 to a range of 0-0.25 percent in December 2008, with the majority of the drop taking place in January to March 2008 and in September to December 2008.
The significant decline during those times was due to the economic outlook being significantly downgraded and the increasing downside risks to output and inflation (including the risk of deflation).
By December 2008, the federal funds rate had reached its effective lower bound, and the FOMC had started using its policy statement to give the federal funds rate forward guidance.
The phrase mentioned maintaining the rate at very low levels "for some time" and then "for an extended period" (Board of Governors 2008). (Board of Governors 2009a).
By lowering the term structure of interest rates, raising inflation expectations (or lowering the likelihood of deflation), and lowering real interest rates, this guideline was meant to stimulate the economy's monetary system.
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non-value-added activities in a process design can be eliminated by:
Non-value-added activities in a process design can be eliminated by using value stream mapping.
In chemical engineering, process design is the selection and ordering of units for the desired physical and/or chemical transformation of a material.
Process design is at the heart of chemical engineering and can be considered the pinnacle of the field, bringing together all the components of the field. Process design is at the heart of operations management (OM). It is the process of creating and improving systems that convert the input to output. Process design involves understanding how work is done in an organization, and then designing and implementing ways to improve it.Learn more about process design here: https://brainly.com/question/16952977
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What do local and state governments do to attract local businesses and stimulate the local economy?.
Local and state governments have a direct impact on the local economy by encouraging business registration and job creation, encouraging sustainable growth by providing work opportunities to private businesses like construction contractors and IT workers, and providing modern internet access.
The federal government provide grants, contracts, and small business loans to aid small businesses to get initiated. Grants are financial aid that doesn't need to be paid back, while loans need repayment with interest.
Several federal agencies aid small businesses. Entrepreneurs might constantly question where they can try or the application guidelines. Federal contracting is a rigorous process that requires large-scale planning and preparation.
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9) A person who is not a manager but is still able to get a group focused and organized is
using
a. Tactical management
b. Strategic management
c. Formal influence
d. Informal influence
An informal influence refers to a person who is not a manager but has the ability to keep the group focused and organized. Option d is correct.
What is informal influence?It corresponds to an individual who is not directly responsible for managing a team, as a common collaborator, but who has influence as such, helping to guide the group and achieve goals.
Therefore, a worker who is an informal influence on his team usually has some developed managerial skills, such as communication, cooperation and empathy.
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A perfectly competitive industry is in a state of long-run equilibrium. Which of the following must be true?
a. P = MR = MC > ATC.
b. P = MR = MC = AVC.
c. P = MR = MC = ATC.
d. P > MR = MC = AVC.
The correct response is option b. P=MR=MC=ATC at long-run equilibrium
An economy is in economic equilibrium when the demand for a basket of commodities and the supply of those commodities are equally stable. External factors like an increase in government spending, income tax, price level, and consumption pattern will have an impact on the value of economic forces in equilibrium.
A commodity's aggregate demand and supply are equal in economic equilibrium. Firms in perfectly competitive industries make a normal profit, and each firm aims to make the most money possible by producing as much output as possible at a level where the marginal cost (MC) equals the marginal revenue (MR).
In the long run, firms in a perfectly competitive industry strive to be allocatively efficient, which means that they produce goods in a way that meets the preferences of customers at a price (P) that is equal to the marginal cost (MC). Additionally, businesses strive for productive efficiency when marginal cost (MC) and average total cost (ATC) are equal.
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when a country allows trade and becomes an importer of a good,
when a country allows trade and becomes an importer of a good, domestic producers gain, and domestic consumers lose. When a country allows trade and becomes an importer of a good, the gains of the winners exceed the losses of the losers.
Dynamic gains from trade are related to the economy's growth. The nation's specialization in the manufacturing of the best-suited goods leads to a high volume of high-quality output that fosters growth. Thus, opening up the home market to global trade will hasten economic expansion.
When a state permits trade, consumer surplus falls and domestic prices rise to parity with global prices. Additionally, when goods are exported to a foreign country, producer surplus rises because the exporter can experience an increase in their company's profit margin.
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in this section, you will implement the stochastic gradient descent algorithm for a regression task. 'house price dataset.csv' is the data file that will be provided to you for the gradient descent algorithm implementation. the first line contains the attribute names. all the other lines are different example instances to be used for the algorithm. each column holds values of the attributes, whereas the last column holds the output value for that instance that your model should predict.
A popular and frequently employed technique, stochastic gradient descent is the cornerstone of neural networks and other machine learning methods. I've done my best to describe it in this essay in both detail and layman's terms. Before continuing with this tutorial, I strongly advise running a linear regression.
What is Stochastic gradient:
Gradient simply refers to a surface's slope or tilt. In order to get to the lowest point on the surface, one must literally descend a slope.
I demonstrate the gradient descent approach using a linear regression problem. As we recall from this essay, the goal of regression is to reduce the sum of squared residuals. When the slope equals 0, we know that a function has reached its minimal value. This method allowed us to learn the weight vector and solve the linear regression problem. The gradient descent method can be used to solve the same issue.
For each iteration of Stochastic Gradient Descent, a small number of samples are chosen at random rather than the entire data set. The number of samples from a dataset that are utilized to calculate the gradient for each iteration is referred to as the "batch" in the Gradient Descent algorithm.
The optimization procedure stochastic gradient descent is frequently used in machine learning applications to identify the model parameters that best match the expected and actual outputs. It is a crude but effective method. The machine learning industry frequently uses stochastic gradient descent.
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Adjusting prices in real time to fit individual customer situations, locations, and buying behaviors is known as ________ pricing.
Adjusting prices in the real time to fit an individual customer situations, locations, and buying behaviors is known as dynamic pricing.
Dynamic pricing, often referred to as surge pricing, demand pricing, or time-based pricing, is a pricing strategy in which businesses set variable prices for goods or services in accordance with the current market demands. Businesses can change their rates based on algorithms that take supply and demand, rival pricing, and other factors from the outside market into account. Dynamic pricing is a common practice in several industries, including hospitality, tourism, entertainment, retail, electricity, and public transit. Each industry employs a somewhat different strategy to dynamic pricing depending on its own needs and product demand. Dynamic pricing has become the standard ever since the start of humanity. Experienced shopkeepers, who would argue over the price of each and every item in the store, were primarily in charge of managing this process.
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Which method of calculating inventory cost allows a business to store
inventory without indicating which batch it belongs to?
A. weighted average method
B. last in, first out (LIFO)
C. first in, first out (FIFO)
D. weighted average sales price method
first in, first out (FIFO) method of calculating inventory cost allows a business to store inventory. Inventory refers to all of the items, goods, commerce, and materials held by a company for the purpose of reselling in the market for a profit.
For instance, if a newspaper seller uses a vehicle to deliver newspapers to consumers, only the newspaper is considered inventory. The automobile will be considered an asset FIFO. The inventory is classified as an asset on the university's balance sheet. The inventory can be any physical property, merchandise, or other sales items that are retained for the future resale.
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Section 402A covers:
a. manufacturers.
b. retailers.
c. those who sell products out of their home.
d. all of the above
which costing method assigns only manufacturing costs to products? multiple choice question. traditional absorption costing both traditional absorption and activity-based costing activity-based costing neither traditional absorption nor activity-based costing
C) Only manufacturing costs are assigned to products using the activity-based costing method.
Activity-based costing: what is it?ABC is a method of costing that allocates overhead and indirect costs to connected goods and services. By recognizing the connection between costs, overhead activities, and manufactured goods, this accounting method of costing assigns indirect costs to products less arbitrarily than traditional costing techniques.
However, some indirect expenses, like management and office staff salaries, are challenging to relate to a specific product. The manufacturing sector uses activity-based costing (ABC) most frequently because it improves the accuracy of cost data, yielding costs that are almost exact and better classifying the costs a company incurs during production.
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which of the following characteristics are required for a business expense to be deductible? (check all that apply.)
Ordinary, Necessary, and Directly related to the business activity are required for a business expense to be deductible.
The deductible is the sum that must first be paid out of pocket by the policyholder before the insurance company will cover any costs. The term "deductible" can be used to refer to any one of a number of clause types that insurance companies use to set the minimum amount that must be paid under a policy.
A business is a enterprising organization or entity that engages in commercial activity. They may be industrial, commercial, or other types. Businesses that are for profit operate with the intention of making a profit, while those that are nonprofit focus on charitable purposes. The sole proprietorship, partnership, corporation, and S corporation are the four business structures that are used the most.
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the schedule below reports the beginning balances and activity during the year in a town's supplies fund. the government accounts for supplies on a purchases basis. fund balance (unreserved 1/1) $400 fund balance (reserved for encumbrance 1/1) $240 fund balance (reserved for inventory 1/1) $170 total fund balance, january 1 $810 appropriations $3,400 actual revenues $3,200 supplies ordered $3,160 supplies received $3,360 supplies paid-for $2,800 supplies used $3,280 reserve for encumbrance is : $120 $45 $40 $60
Fund Balance is the total accumulation of working surpluses and deficits considering the fact that the opening of a neighborhood government's existence. The Fund Balance Formula: Fund Balance = Assets – Liabilities.
Why is fund stability important?It is integral that governments maintain ample degrees of fund balance to mitigate cutting-edge and future dangers (e.g., revenue shortfalls and unanticipated expenditures) and to make certain secure tax rates. In most cases, discussions of fund stability will excellent center of attention on a government's widespread fund.
Is fund balance an asset or liability?Fund balance (Equity) is in reality the distinction between assets and liabilities. In general, it is the stability remaining after the assets have been used to satisfy the fantastic liabilities.
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https://brainly.com/question/14297626#SPJ4the critical factors necessary for successful leadership abroad have come to be known as the .
The critical factors necessary for successful leadership abroad have come to be known as the Global mindset.
Successful leadership is an important feature of an individual which gives them the power to influence popular ideologies and policies. It is very important for the political leaders to be successful leaders too in the international political and economic system so that they can induce fruitful policies and memorandums with other countries to bring more prosperity to their own nation. Global mindset refers to the popular influential qualities that tend to direct multicultural groups, organizations and the foreign diaspora. It gives an additional competitive edge to organizations trying to spread their roles in foreign world due to their accuracy and well-designed strategies.
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Refer to the complete question below:
The critical factors necessary for successful leadership abroad have come to be known as the ________.
global mindset
cultural quotient
global logistics
cultural diversity
blue water tours has paid annual dividends of $2.10, $2.12, $2.15, $2.15, and $2.22 over the past 5 years, respectively. what is the arithmetic average growth rate for these dividends? 1.08 percent 1.57 percent 1.70 percent 1.73 percent 1.41 percent
blue water tours has paid annual dividends of $2.10, $2.12, $2.15, $2.15, and $2.22 over the past 5 years, respectively. 1.41 percent is the arithmetic average growth rate for these dividends.
Arithmetic Average : The quantity obtained by adding up two or more numbers or variables and dividing by the total number of numbers or variables is known as the arithmetic mean, also known as the average or average value. Statistics place a lot of emphasis on the arithmetic mean.
Calculating the arithmetic mean is one approach. Add up all the values, then divide the total by the total number of values. For instance, add the numbers together if there is a group of "n" numbers, for instance: a + b + c + d and so on. The sum is then divided by "n." The total number of values in a given set divided by the sum of all the values is how an average is calculated. The arithmetic mean is another name for it.
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Which of the following is not only ethical, but can be used to help your audience confirm your information or explore it in more detail? OA) Extracting assumptions from data O B) Respecting intellectual property rights O c) Citing sources OD) Skewing data O E) Respecting the privacy of research participants
The correct option is (C) Citing Sources following is not only ethical but can be used to help your audience confirm your information or explore it in more detail.
commercial enterprise records are information that holds meaning, price, or significance in your enterprise. it would include any reviews, spreadsheets, metrics, regulatory reporting, net pages, files, dashboards, etc that match the definition of having that means, price, or importance to your commercial enterprise.
In business corporations, facts systems play a very broad role in all elements of commercial enterprise that arise in agencies along with sales and advertising and marketing structures that feature to boom income, see possibilities and marketplace segments which might be focused via income and boom consumer pleasure with products and services. records allow keeping off the duplication of studies. facts stimulate the concept technique of the users, specifically the scholars.
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a 38-year-old investor places $25,000 into a single premium deferred variable annuity. twenty years later, with the account valued at $72,000, the investor withdraws $25,000. if the investor is in the 25% marginal income tax bracket, the total tax liability is a) $6,250. b) $8,750 c) $17,500. d) $0.00
The total tax liability is $6,250
What is the total amount of tax due?The total amount withdrawn is taxable because the account is a qualifying annuity. Additionally, the investor must pay an additional 10% tax because she is under the age of 59.5.
Your gross tax obligation is the sum of your taxable income less any tax deductions. Your gross tax liability less any valid tax credits equals your total income tax obligation.
Tax liability is the sum of money you owe to the government in the form of taxes. It represents the entire amount of tax you owe the government.
The effective total tax is calculated as follows: 25% + 10% = 35%
Total tax du= 25% x $50,000, or
=0.25 x $25,000, for a total of $6,250.
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how long will it take an investment to double in value if the interest rate is 10% compounded continuously? (round your answer to two decimal places.) yr (b) what is the equivalent annual interest rate? (round your answer to two decimal places.)
The time period of the investment to double the value will be 6.93 years and equivalent annual interest rate will be 10.52%.
Compound Interest is the type of interest at which any individual lends money to the borrower in which the amount after one year becomes principle for the second year. Since, the interest is compounded continuously, the formula for amount is given as
[tex]A = Pe^rt[/tex]
where A is the amount, P is principle, r is rate of interest and t is time. Now, the amount gets double the principle that is A = 2P and r = 0.1
[tex]2P = Pe^{0.1t}[/tex]
[tex]2 = e^{0.1t}[/tex]
Taking log on both sides
ln(2) = 0.1t
t = ln(2)/0.1
t = 6.93 year that is time is 6.93 years.
Now, the formula for equivalent annual interest rate is given as
[tex]2 = (1 + I)^t[/tex]
where I is interest rate and t is time = 6.93.
[tex]2 = (1 + I)^{6.93}[/tex]
[tex]2^{0.1443} = 1 + I[/tex]
1 + I = 1.1052
I = 1.1052 - 1
I = 0.1052
I = 10.52% that is Interest rate is 10.52%
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jolanta has been working on implementing new policies on the plant floor designed to improve safety. now that the new policies have been implemented, what is jolanta's last step. according to the rational decision-making process?
Jolanta's last step according to the rational decision-making process would be to review her decision and its consequences.
Determining a decision, collecting data related to it, and measuring the potential solutions are all steps in the decision-making process. This strategy raises the chance of selecting the solution that will satisfy you the most. Consider the outcomes of your choice and assess whether or not they have met the need you specified in Phase 1 in the last step.
You, as the maker of the decision, should always go through the procedure and steps again to reach a different option in case the current choice does not satisfy the indicated need. For instance, you could want to collect data that is more detailed and accurate or significantly different or consider more options.
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__________ theory assumes that people are motivated to work toward a goal when they want to achieve the outcome and also think they have the ability and means to achieve it.
Edwin Locke proposed the goal-setting theory of motivation in the 1960s. According to this hypothesis, task performance and goal setting are fundamentally related.
What is the motivational goal-setting theory?Edwin Locke developed the goal-setting theory of motivation in the 1960s. This hypothesis proposes a basic relationship between task performance and goal planning. It claims that task performance may be increased and improved with the help of clear, challenging objectives and helpful feedback.In the 1960s, Edwin Locke advanced the goal-setting theory of motivation. This theory holds that there are basic connections between task performance and goal planning. It asserts that people perform activities more effectively when given clear, challenging objectives and helpful feedback.In the 1960s, Edwin Locke advanced the goal-setting theory of motivation. This theory holds that there are basic connections between task performance and goal planning.
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on september 16, 2011, the new york times reported that the american public's approval rating of congress had sunk to an all-time low of 12%. if this were regarded as true for the population, and a poll two weeks later of 500 individuals found a proportion of 14%, we can find the value of the z test statistic using the formula: . what is the simplified numerator? please type the correct answer in the following input field, and then select the submit answer button or press the enter key when finished.
To estimate the percentage of people who at that time approve of Congress to within 3% at 95% confidence, 451 people must be surveyed.
According to the problem:
The sample size is 451, with n.
Margin of error is E=0.03
Sample Proportion P=0.12
The confidence level from the question is 95%, hence the level of significance is,
[tex]\alpha=(100-95)\%[/tex]
[tex]\alpha=5\%[/tex]
[tex]\alpha=0.05[/tex]
The critical value of, according to the normal distribution table,
[tex]\alpha/2[/tex] is,
[tex]\frac{Z\alpha}{2} =1.96[/tex]
The sample size is also mathematically denoted by the following:
[tex]n=\frac{Z_\alpha/2}{E} \times\hat{p}(1-\hat{p})[/tex]
[tex]n=(\frac{1.96}{0.03}) ^2\times0.12(1-0.12)[/tex]
[tex]n=451[/tex]
In order to determine the percentage of people who approve of Congress at that time to within 3% at 95% confidence, 451 people must be surveyed.
Any properly distributed data with any potential value for its parameters the mean and the standard deviation are represented by a normal distribution, which is a type of general distribution. The standard normal distribution, on the other hand, is a special example where the mean equals zero and the standard deviation is the unit. Because of this, we are able to use the terms normal distribution and standard normal distribution.
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bryan's company wanted to gain a greater market share on its bicycle products so it built in greater functionality to the bikes and created an after-service customer call center. which aspect of value creation is bryan's company concerned with?
The aspect of value creation that Bryan's company is concerned with is value.
Value creation is a process where efforts and resources are transformed to create something valuable that can satisfy the need of others. Adding some value by using technology and innovation in order to enhance the quality of consumers. In the contemporary world, the main focus of any company is to provide value to the customers, society, and stakeholders through their products and services which could also value to the firm in terms of revenue and loyal customers. This also comprises short and long term value creation based on company's goals and objectives.
By building greater functionality to the bikes with the gaining in market share on bicycles, the company focuses on value.
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demand is said to be inelastic when group of answer choices a reduction in price results in an increase in total revenue. a reduction in price results in a decrease in total revenue. an increase in price results in a reduction in total revenue. the elasticity coefficient exceeds one.
Demand is referred to as being inelastic when a price decrease results in a decrease in overall revenue.
Inelastic demand is when a customer's desire for a product does not change as much as a product's price changes. When prices increase by 20% and demand decreases by just 1%, the demand is said to be inelastic. Common household products and services are a common source of this issue.
Producers have the option of charging high prices for goods with inelastic demand or low prices for those with elastic demand. As a result, management must be aware of demand elasticity in order to optimize profit.
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which of the following is a reason cash flows may differ from accounting income? depreciation is a tax-deductible expense but is not a cash outlay. the total number of units sold will be different for accounting income and cash flows.
The depreciation is a tax-deductible expense but is not a cash outlay. the total number of units sold will be different for accounting income and cash flows.
A tax-deductible expense is an expense that can be legally deducted from the gross profit. This reduces your gross profit and therefore the amount of tax you need to pay. In general, the expenses necessary to run a business are very likely to be tax deductible.
All deductions are expenses, but not all expenses are considered deductions. We'll get to the point in a moment. However, deductions occur when expenses are deducted from a business owner's or individual's taxable income. This reduces the amount of tax you have to pay in a given period.
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What is the eventual effect on real gdp if the government, instead of changing its spending, increases transfers by $80,000? assume the mpc has not changed.
Before taking inflation into account, nominal GDP takes the raw data in current dollars. By modifying the data and setting the currency's value, real GDP removes any distortion caused by inflation or deflation.
How can I determine actual GDP?Usually, the GDP deflator is multiplied by nominal GDP to calculate real GDP (R). For instance, if a nation's economic prices have increased by 1% since the base year, the deflationary number is 1.01. Real GDP is calculated as nominal GDP multiplied by 1.01, which equals $990,099 in this case.
Given that,
(a). Increase in government spending of $80,000
Marginal propensity to consume (MPC) = 0.75
Real GDP= [tex]\frac{1}{1- MPC}[/tex] x Government Purchases
= [tex]\frac{1}{1 - 0.75}[/tex] X 80,000
= 4 X 80,000
= $320,000
A $320,000 rise in Real GDP results as a result.
(b). In the event that transfers rise by $80,000
MPC = 0.75 (MPC doesn't change)
Real GDP= [tex]\frac{MPC}{1- MPC}[/tex] x Government Transfers
= [tex]\frac{0.75}{1-0.75}[/tex] X 80,000
= 3 X 80,000
= $240,000
The total change in real GDP is therefore $240,000. As a result, real GDP grows by $240,000.
(c). The figures above make it quite evident that an increase in government transfers or taxes, as opposed to an increase in government spending, will ultimately have a smaller impact on real GDP.
$240,000 is the change in real GDP caused by an increase in government transfers.$320,000 is the change in real GDP caused by an increase in government purchases.Learn more about Real GDP: https://brainly.com/question/15682765
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The correct question is:
What is the eventual effect on real GDP if the government increases its purchases of goods and services by $80,000? Assume the marginal propensity to consume (MPC) is 0.75. $ What is the eventual effect on real GDP if the government, instead of changing its spending, increases transfers by $80,000? Assume the MPC has not changed. $ An increase in government transfers or taxes, as opposed to an increase in government purchases of goods and services, will result in an identical eventual effect on real GDP. a smaller eventual effect on real GDP. a larger eventual effect on real GDP. no change to real GDP.