Answer:
Motivation
Matching items to the component of the simple model of motivation that they best depict:
Item Component
1. Desire is created to get things like food or water. Unfulfilled need
2. You search for ways to get things like food or water. Motivation
3. You make a choice for how to get things like food or water. Behaviors
4. These can be either intrinsic or extrinsic. Rewards
5. Information tells you whether your choices worked or not. Feedback
Explanation:
Components of Motivation:
a. Rewards: can be intrinsic or extrinsic to the person receiving them.
b. Motivation: is a stimulating process.
c. Unfulfilled need: a desire or drive.
d. Behaviors: actions taken to satisfy a need.
e. Feedback: evaluative information after the event.
Problem 2-15 (Algorithmic) Life Insurance (LO 2.8) Sharon transfers to Russ a life insurance policy with a cash surrender value of $24,800 and a face value of $74,400 in exchange for real estate. Russ continues to pay the premiums on the policy until Sharon dies 7 years later. At that time, Russ has paid $11,160 in premiums, and he collects the $74,400 face value. How much of the proceeds, if any, is taxable to Russ
Answer:
$38,440
Explanation:
Calculation to determine How much of the proceeds, if any, is taxable to Russ
Face value of policy $74,400
Less: Cash Surrender value ($24,800)
Less: Premium paid ($11,160)
Taxable Proceeds $38,440
Therefore the taxable Proceeds are $38,440.
Which of the following is not characteristic of long-run equilibrium under monopolistic competition? Price equals minimum average total cost. marginal cost equals marginal revenue. Price is equal to average total cost. Price exceeds marginal cost.
Answer:
Price equals minimum average total cost.
Explanation:
A monopoly is a market structure which is typically characterized by a single-seller who sells a unique product in the market by dominance. This ultimately implies that, it is a market structure wherein the seller has no competitor because he is solely responsible for the sale of unique products without close substitutes.
Monopolistic competition can be defined as the market structure which comprises of elements of competitive markets (having many competitors) and monopoly.
Under monopolistic competition, organizations earn profits in the long-run equilibrium.
In long-run equilibrium under monopolistic competition, price does not equal minimum average total cost.
When a monopolistically competitive firm is in long-run equilibrium, marginal revenue is equal to marginal cost . This ultimately implies that in the long-run, firms engaging in monopolistic competitive market are often going to manufacture the quantity of goods where the marginal cost (MC) curve intersect with the marginal revenue (MR). Also, the price set would be greater than the minimum average total cost (ATC).
Susan is a plant manager in charge of a factory in a relatively poor country. Even though market wages are low, she decides to raise the wages of her workers. Her decision A. might increase profits if it means that the wage is high enough for her workers to eat a nutritious diet that makes them more productive. B. will help eliminate the excess supply of labor. C. may cause her workers to reduce the effort they expend at their jobs. D. All of the above are correct.
Answer:
A. might increase profits if it means that the wage is high enough for her workers to eat a nutritious diet that makes them more productive
Explanation:
Since in the given situation, it is mentioned that she wants to increase the wages of her workers even though market wages are less. This decision would be taken to rise the profits so that the labor have enough to eat a nutritious diet due to which they give more productivity this results in accomplish the company goals & objectives in an efficient way
hence, the option is a.
Dawson Toys, Ltd., produces a toy called the Maze. The company has recently created a standard cost system to help control costs and has established the following standards for the Maze toy:
Direct materials: 6 microns per toy at $1.50 per micron
Direct labor: 1.3 hours per toy at $21 per hour
During July, the company produced 3,000 Maze toys. The toy's production data for the month are as follows: Direct materials: 25,000 microns were purchased at a cost of $1.48 per micron. 5,000 of these microns were still in inventory at the end of the month. Direct labor: 4,000 direct labor-hours were worked at a cost of $88,000.
Required:
Compute the variances for July.
Answer and Explanation:
The computation of the variance is shown below;
a) Material price variance is
= (Standard price - actual price) × actual quantity
= ($1.5 - $1.48) × 25000
= $500 F
b. Material quantity variance is
= (Standard quantity - actual quantity) × Standard price
= (3000 × 6 - 20,000) × 1.5
= $3,000 U
c) Labor rate variance is
= (Standard rate - actual rate) × actual hours
= ($21 × 4000 - $88,000)
= $4,000 U
d. Labor efficiency variance is
= (Standard hour - actual hour) × Standard rate
= (3000 × 1.3 - 4000) × 21
= $2,100 U
Quantitative Problem: Barton Industries expects that its target capital structure for raising funds in the future for its capital budget will consist of 40% debt, 5% preferred stock, and 55% common equity. Note that the firm's marginal tax rate is 25%. Assume that the firm's cost of debt, rd, is 9.0%, the firm's cost of preferred stock, rp, is 8.2% and the firm's cost of equity is 11.6% for old equity, rs, and 11.9% for new equity, re. What is the firm's weighted average cost of capital (WACC1) if it uses retained earnings as its source of common equity
Answer: 9.49%
Explanation:
Formula for WACC:
WACC = (Cost of Equity * Weight of equity) + [(Cost of debt * weight of debt) * (1 - tax rate)] + (Cost of Preference share * weight of preference share).
As we are using retained earnings, this is not a new stock issue so the relevant cost of equity to use is the old one.
WACC = (11.6% * 55%) + [(9% * 40%) * (1 - 25%)] + (8.2% * 5%)
= 9.49%
A borrower has secured a 30-year, $150,000 loan at 7% with monthly payments. Fifteen years later, the borrower has the opportunity to refinance with a fifteen-year mortgage at 6%. However, the up-front fees, which will be paid in cash, are $2,500. What is the return on investment if the borrower expects to remain in the home for the next fifteen years
Answer:
Return on investment ≈ 29%
Explanation:
using excel function
Determine :
Rate = 7% / 12 = 0.0058
Nper value = 30 years * 12 = 360
PV = -$150,000
∴ PMT value = $997.95
next : calculate the outstanding balance 15 years later
= ( 997.95 / 0.00583 ) * ( 1 - ( 1 / ( 1 + 0.00583 )^15*12 ))
= 171174.96 * 0.6489
= $ 111,075.43
Considering the opportunity to refinance
Rate = 6% /12 = 0.005
Nper = 15 * 12 = 180
Pv = - $111,075.43
∴ PMT = 937.32
the monthly saved up payment = PMT 1 - PMT 2
= 997.95 - 937.32 = $60.63
Finally
Rate of return on investment
= 2500 = 60.63 * [tex]( \frac{1 - (\frac{1+r}{12})^{-15*12} }{r} )[/tex]
hence Rate of return ≈ 29 %
attached below is a screenshot of the excel function used for question 2 and it can be used for question 1 as well just change the values
All of the following are potential exchanges between the fan and the event EXCEPT
Ticket purchases
Purchase of ancillary products
Purchase of sponsor products
Referrals
Answer:
Purchase of sponsor products
Explanation:
ABC Corporation has total assets of 120 million, total liabilities of 80 million, Goodwill of 12 million, and 4 millions of shares outstanding. If you believe the reasonable price to tangible book value should be 1.6 for this company, what is the implied share price of ABC
Answer: $16
Explanation:
Implied share price = Book value per share * Price to tangible book value
Book value per share = (Assets - Liabilities) / Number of shares outstanding
= (120 - 80) / 4
= $10
Implied share price = 10 * 1.6
= $16
Company A owns a 40% equity method investment in Company B. Subsequently, Company A acquires a controlling interest in a Company B and now must prepare consolidated financial statements. If the date Company A obtains control occurs midyear, how are subsidiary revenues and expenses reported in consolidated income statement in the year of the business combination
Answer:
Pre acquisition subsidiary revenues and expenses are excluded from consolidated revenue and expenses. Post acquisition subsidiary revenues and expenses are included in consolidated revenues and expenses.
Explanation:
Company A has acquired control over company B. When accounting for the consolidated financial statement the pre acquisition revenues and expenses will not be included, only post acquisition revenues and expenses will be included in the consolidated statement and they will be accounted for according to controlling percentage.
Taylor has owned and occupied her personal residence (adjusted basis of $190,000) for four years. In April 2015, she sells the residence for $300,000 (selling expenses are $20,000). On the same day as the sale, Taylor purchases another house for $350,000. Because of noisy neighbors, she sells the new house after just 10 months. The selling price is $483,000 (selling expenses are $18,000).
What is Taylor’s recognized gain on the sale of the first residence?
What is Taylor’s basis for her second residence?
What is Taylor’s recognized gain on the sale of the second residence?
Assume instead that the sale of the second residence was due to Taylor’s job transfer to another state. What is her recognized gain on the sale of the second residence?
Answer:
a) $90,000
b) $260,000
c) $115000
Explanation:
a) First House
Cost price = $190,000 + selling expense = $20,000 = $210,000
Selling price = $300,000
Gain on selling of first house
$300,000 - $210,000 = $90,000
b) Cost price of second house = $350,000
Base price spent on second house = $350,000 - $90,000 = $260,000
c) Gain on sale of second house = $483,000 -($350,000 + $18,000) = $115000
Woody Lightyear is considering the purchase of a toy store from Andy Enterprises. Woody expects the store will generate net cash flows (cash inflows less cash outflows) of $60,000 per year for 20 years. At the end of the 20 years, he intends to sell the store for $600,000. To finance the purchase, Woody will borrow using a 20-year note that requires 9% interest.
Required:
What is the maximum amount Woody should offer Andy for the toy store?
Answer: $654,769
Explanation:
Woody should find the present value of the cash inflows and the amount he plans to sell the company for after 20 years.
As the cash inflows are constant, they are an annuity.
Present value of annuity = Annuity * Present value interest factor of an annuity, 9%, 20 years
= 60,000 * 9.1285
= $547,710
Add the present value of the selling price:
= 547,710 + 600,000 / (1 + 9%)²⁰
= $654,768.53
= $654,769
The maximum amount woody should offer is $654,769.
What is the present value annuity factor?The present value annuity factor is used to calculate today's value of future one-dollar cash flows.
P = PMT * [1 – [ (1 / 1+r)^n] / r]
Given:
Net cash flows=$60,000 for 20 years
Sale price after 20 years=$600,000
Interest Rate=9%
As the cash inflows are constant, their is annuity.
Present value of annuity = Annuity X Present value annuity factor(at the rate 9% for 20 years)
= 60,000 X 9.1285
= $547,710
the selling price should be added as it is the current /todays price
= 547,710 + 600,000 / (1 + 0.9)²⁰
= $654,768.53
= $654,769
Therefore, the above calculation aptly describes $654,769 is the maximum amount Woody should offer.
Learn more about the present value annuity factor here:
https://brainly.com/question/21801625
Viola has to relocate for her job. She finds a townhome with an option to rent or buy. The conditions of each are shown below. Rent: Move-in costs of $2,380 and.monthly payment of $845. Buy: Move-in costs of $5,260 and monthly payment of $785. Viola moves frequently due to her job, but she thinks that she will stay in the area for 4 years. Therefore, she decided to buy. Cho0se the best evaluation of Viola's deci a. Since the costs would be the same over the 4 year period, she will have made a good decision if the property value does not decrease. b. She made a fairly good decision. Buying the townhome will be cheaper over the 4 year period as long as she doesn't have major repairs to make. C. She made a poor decision if the property value does not increase. Renting the townhome would be cheaper over the 4 year period. d. There is not enough information given to determine which option is best.
Answer: C
Explanation: i took a test on k12 with the same answer
Answer:
A
Explanation:
Since the costs would be the same over the 4 year period, she will have made a good decision if the property value does not decrease.
Penny is paid a gross wage of $2,648.00 on a monthly basis. She is single and is entitled to 2 withholding allowances. How much income tax, social security, and Medicare will be withheld based on the combined wage bracket tables in Exhibits 9-3 and 9-4 from your text
Answer:
The combined wage bracket tables in Exhibits 9-3 and 9-4 is missing hence I will use 2014 tax year
answer :
a) Federal income tax withheld
= 75.6 + ( 1989.60 - 944 )*15% = $232.44
b) social security
6% * 1989.6 = $119.38
c) Medicare
1.45% * 1989.6 = $28.85
Explanation:
For a single individual
Two withholding allowance = $329.20 * 2 = $658.40
Gross Pay = $2648
withholding allowance = $658.40
Subject to withholding = $2648 - $658.40 = $1989.60
a) Federal income tax withheld
= 75.6 + ( 1989.60 - 944 )*15% = $232.44
b) social security
6% * 1989.6 = $119.38
c) Medicare
1.45% * 1989.6 = $28.85
A firm is considering moving from the United States to Mexico. The firm pays its U.S. workers $30.00 per hour. Currently, U.S. workers have a marginal product of 45 units, whereas Mexican workers have a marginal product of 9 units. In order for the firm to reduce its wage cost per unit of output by moving to Mexico, the wages in Mexico must be below_________per hour.
Answer: $6.00
Explanation:
From the question, we can see that the productivity in the United States is (45/9) = 5 times higher than that of Mexico.
Therefore, the wages in Mexico should be 5 times lower than the wages paid to the workers in the United States. This will be:
= $30.00 / 5
= $6.00
Therefore, in order for the firm to reduce its wage cost per unit of output by moving to Mexico, the wages in Mexico must be below $6.00 per hour.
Match the cost variance component to its definition.
a. Actual quantity
b. Standard quantity
c. Actual price
d. Standard price Standard price drop zone empty.
1. The amount paid to acquire input.
2. The input used to manufacture the quantity of output
3. The expected input for the quantity of output
4. The expected price
Answer:
1. C
2. A
3. B
4. D
Explanation:
Price can be defined as the amount of money that is required to be paid by a buyer (customer) to a seller (producer) in order to acquire goods and services.
In sales and marketing, pricing of products is considered to be an essential element of a business firm's marketing mix because place, promotion and product largely depends on it.
In Accounting, costing is the measurement of the cost of production of goods and services by assessing the fixed costs and variable costs associated with each step of production.
The various types of cost variance components and their definition includes the following;
1. Actual price: the amount paid to acquire input.
2. Actual quantity: the input used to manufacture the quantity of output.
3. Standard quantity: the expected input for the quantity of output.
4. Standard price: the expected price.
Answer: actual quantity= input used to manufacture the quantity of output
Standard= expected input for the quantity of output
Actual= the amount paid to acquire input
Standard= expected price
Explanation:
The following data relate to Ramesh Company’s defined benefit pension plan: ($ in millions) Plan assets at fair value, January 1 $ 780 Expected return on plan assets 78 Actual return on plan assets 62 Contributions to the pension fund (end of year) 136 Amortization of net loss 16 Pension benefits paid (end of year) 23 Pension expense 108 Required: Determine the amount of pension plan assets at fair value on December 31. (Enter your answers in millions. Amounts to be deducted should be indicated with a minus sign.
Answer:
$955 million
Explanation:
Calculation to Determine the amount of pension plan assets at fair value on December 31
(millions)
Plan Assets Beginning of the year $780
Actual return $62
Cash contributions $136
Less: Retiree benefits($23)
End of the year pension plan assets $955
Therefore the amount of pension plan assets at fair value on December 31 is $955 million
Forecasting is the heart of planning process. Explain
Answer:
Forecasting is a very important step in the planning process, so much that without forecasting, the planning process for a project of a firm as a whole would not be possible.
Explanation:
The reason is that by definition, planning corresponds to a process that will be realized at some point in the future, (whether in the long or short-term depends on the planning horizon), and for the most part, information about the future is uncertain, and hard to predict. For that reason, the planning process must use forecasting methods to determine important variables like future sales, future revenue, future costs, and so on.
There are many forecasting techniques. For the most part, these techniques are statistical in nature and based on past information that is supposed to replicate somehow in the future. However, sometimes, more qualitative or intuitive forecasting methods are used, when statistical information is hard to come by.
Copper and nickel electroless plating processes are under consideration for printed circuit boards. The copper process has fixed costs of $110,000 per year with a variable cost of $50 per batch. The nickel process has a fixed cost of $85,000 per year and a variable cost of $90 per batch. Determine the number of batches that must be produced each year in order for the processes to break even.
Answer:
see explanation
Explanation:
The question has missing sales price information, however explanations are provided below
Break even point is the level at which a company makes neither a profit nor a loss.
Break even point (units) = Fixed Costs ÷ Contribution per unit
Step 1 :
Find Contribution per unit of each process and add the unit contributions to find the total unit contribution
Contribution = Sales - Variable Costs
Step 2
Find the Total Fixed Costs for both the copper process and nickel process.
Step 3
Determine the sales mix for copper process and nickel process
Step 4
Calculate the Break even units for the 2 processes combined. After that multiply the respective mixes to the break even point
Sarah Sandoval is a coffee farmer trying to decide how many tons of coffee to produce. She can sell each ton of coffee for $2000. The cost of producing the first ton of coffee is $500, for the second ton, it's $1000. For each additional ton of coffee produced, the marginal cost increases by $500. How many tons of coffee should Sarah produce, and what is the total cost of her coffee production
Answer:
She will produce four tons at a total cost of $5,000
Explanation:
For each additional ton of coffee produced the marginal cost is increase by $500. This means that when Sarah reaches the fourth ton of coffee the cost of producing the ton of coffee would be $2,000.
At this point she is neither making any profit nor any loss. So, this would be her maximum limit of producing the ton of coffee.
The total cost of producing the four tons of coffee would be $5,000 ($500 for first + $1,000 for second + $1,500 for third + $2,000 for fourth).
The budgeted income statement presented below is for Burkett Corporation for the coming fiscal year. Compute the number of units that must be sold in order to achieve a target pretax income of $183,500. Sales (55,000 units) $ 990,000 Costs: Direct materials $ 202,000 Direct labor 240,500 Fixed factory overhead 102,500 Variable factory overhead 150,500 Fixed marketing costs 110,500 Variable marketing costs 50,500 856,500 Pretax income $ 133,500
Answer:
see explanation
Explanation:
Units to achieve target profit = Target Profit + Fixed Cost ÷ Contribution margin ratio.
where ,
Contribution margin ratio = Contribution ÷ Sales
Identify which of the following are primary activities and which are support activities in a value chain. Review Later A Inbound movement of materials Sales and promotion of products/services Management of cash inflows and outflows Movement of final products to customers Acquisition of materials from external source Quality assurance, control systems and work culture Maintenance of products Research and development Primary activities Support activities
Answer:
According to Michael Porter's value chain, Primary Activities are meant to create more value than they cost so that the company makes a profit while the support activities are meant to support the primary activities.
Primary Activities include:
Inbound movement of materials Sales and promotion of products/services Movement of final products to customers Maintenance of productsSupport Activities
Management of cash inflows and outflowsAcquisition of materials from external sourceQuality assurance, control systems and work culture Research and developmentTwo companies, A and B, both have $1 million in assets, earnings before interest and taxes (EBIT) of $160,000, and the same tax rate. Company A is all equity financed, and Company B is 50% debt financed and 50% equity financed. If Company B's pretax cost of debt is 8%, then Company A will have a ROA that is _____ and a ROE that is _____ than Company B's. a. Option D b. Option B c. Option A d. Option C
Question Completion with Options:
A) lower, higher
B) higher, higher
C) lower, lower
D) higher, lower
Answer:
Companies A and B
If Company B's pretax cost of debt is 8%, then Company A will have a ROA that is __higher___ and a ROE that is __lower___ than Company B's.
a. Option D
Explanation:
a) Data and Calculations:
Company A Company B
Assets $1,000,000 $1,000,000
EBIT 160,000 160,000
Tax rate = same
Equity 100% 50%
Debts 0% 50%
Equity $1,000,000 $500,000
Debts $0 $500,000
Pretax cost of debt 0% 8%
Interest expense $0 $40,000
Pretax income $160,000 $120,000
ROA (Return on assets) = Pretax income/Assets * 100
= 16% 12%
ROE (Return on equity) = Pretax income/Equity * 100
= 16% 24%
Assume that a speculator purchases a put option on British pounds (with a strike price of $1.50) for $0.05 per unit. A pound option represents 31,250 units. Assume that at the time of the purchase, the spot rate of the pound is $1.51 and continually rises to $1.62 by the expiration date. The highest net profit possible for the speculator based on the information above is: Group of answer choices $1,562.50 -$1,250.00 -$625.00 -$1,562.50
Answer:
-$1,562.50
Explanation:
Calculation to determine The highest net profit possible for the speculator based
Premium of the option = $.05 per unit * (31,250 units)
Premium of the option= -$1,562.50
Therefore Based on the information given and the above calculation The HIGHEST NET PROFIT that will be possible for the speculator will be -$1,562.50
Cullumber Company incurred the following costs while manufacturing its product.
Materials used in product $121,000 Advertising expense $46,000
Depreciation on plant 61,000 Property taxes on plant 15,000
Property taxes on store 7,600 Delivery expense 22,000
Labor costs of assembly-line workers 111,000 Sales commissions 36,000
Factory supplies used 24,000 Salaries paid to sales clerks 51,000
Work in process inventory was $13,000 at January 1 and $16,600 at December 31. Finished goods inventory was $61,000 at January 1 and $45,700 at December 31.
Required:
Compute cost of goods manufactured.
Answer:
$328,400
Explanation:
Cost of Goods Manufactured is calculated in Manufacturing Account as follows :
Cost of Goods Manufactured = Beginning Work In Process Inventory + Total Manufacturing Costs - Ending Work In Process Inventory
therefore,
Cost of Goods Manufactured = $13,000 + ($121,000 + $61,000 + $15,000 + $111,000 + $24,000) - $16,600
= $328,400
Clare, a florist, opened a new store and wanted to purchase a new refrigeration display cabinet for fresh-flower arrangements. She entered into a deal with Alpha Refrigeration Systems for two refrigeration units at $600 each. But, after delivering the units, the salesperson demanded another $100 as delivery charges, which was not mentioned in the deal. Identify the win-lose strategy used by the salesperson.
The question is incomplete:
Clare, a florist, opened a new store and wanted to purchase a new refrigeration display cabinet for fresh-flower arrangements. She entered into a deal with Alpha Refrigeration Systems for two refrigeration units at $600 each. But, after delivering the units, the salesperson demanded another $100 as delivery charges, which was not mentioned in the deal. Identify the win-lose strategy used by the salesperson.
-Good guy-bad guy routine
-Browbeating
-Red herring
-Trial balloon
-Lowballing
Answer:
-Red herring
Explanation:
-Goog buy-bad guy routine is a strategy in which one person appears to be on your side and when you get to an agreement, this person goes to the bad guy for approval who will renegotiate.
-Browbeating is a strategy in which the buyer tries to affect the saleperson atittude by saying unflattering things.
-Red herring is a strategy in which one of the parties tries to distract the other one from certain isues to get an advantage.
-Trial balloon is an strategy in which one of the parties says something to the other one to get information about its position in the negotiation.
-Lowballing is an strategy in which the buyer makes a really low offer to test the seller.
According to the definitions, the answer is that the win-lose strategy used by the salesperson is red herring because Clara didn't consider the information related to the delivery when purchasing the units as she was probably distracted by other aspects and didn't consider this.
sino po crush nyo char
Answer:
Your ugly
Explanation:
Which task do all finance careers have in common, and which task is designed mainly for insurance careers?
a) All finance careers review budgets, and insurance careers help customers complete transactions.
b) All finance careers calculate taxes owed, and insurance careers handle money and analyze credit reports.
c) All finance careers advise customers on finances, and insurance careers handle risk management.
d) All finance careers develop investment strategies, and insurance careers sell financial products.
Answer:
C.) All finance careers advise customers on finances, and insurance careers handle risk management.
Explanation:
they help with risk management and finances etc
Answer:
C
Explanation:
Transferred-in costs, FIFO method. Refer to the information in Exercise 17-31. Suppose that Trendy uses the FIFO method instead of the weighted-average method in all of its departments. The only changes to Exercise 17-31 under the FIFO method are that total transferred-in costs of beginning work in process on June 1 are $45,000 (instead of $60,000) and total transferred-in costs added during June are $114,000 (instead of $117,000).
Required:
Using the FIFO method. Note that you first need to calculate equivalent units of work done in the current period (for transferred-in costs, direct materials, and conversion costs) to complete beginning work in process, to start and complete new units, and to produce ending work in process.
Answer:
Beginning work in process $69,000
Transferred in cost $115,000
Direct material 0
Conversion cost $20,000
Ending work in process $272,000
Transferred in cost $159,000
Direct material $27,000
Conversion cost $86,000
Explanation:
FIFO method is the one in which the inventory bought first is used first. Weighted average inventory system determines an average rate for all the inventory purchased and that rate is used for the calculation. Both method are used widely but there will be difference in ending inventory in the two methods.
Which of the following statements is CORRECT?
a. A 10-year coupon bond would have more price risk than a 5-year coupon bond, but all 10-year coupon bonds have the same amount of price risk.
b. A zero coupon bond of any maturity will have more price risk than any coupon bond, even a perpetuity.
c. If their maturities and other characteristics were the same, a 5% coupon bond would have more price risk than a 10% coupon bond.
d. A 10-year coupon bond would have more reinvestment risk than a 5-year coupon bond, but all 10-year coupon bonds have the same amount of reinvestment risk.
e. If their maturities and other characteristics were the same, a 5% coupon bond would have less price risk than a 10% coupon bond.
Answer: c. If their maturities and other characteristics were the same, a 5% coupon bond would have more price risk than a 10% coupon bond.
Explanation:
Price risk of a bond is the risk that the bond changes price or rather the degree of price volatility. Bond prices change in reaction to market interest rates with higher rates meaning lower prices and lower rates meaning higher prices.
When the market interest rates rise above the Coupon on a bond, the bond price will fall below par and when the interest rates are below the coupon, the bond will be above par.
A 5% coupon bond will be more prone to changes in prices because market interest rates are generally low and fluctuate below 10% which means that they will affect the 5% bond more than the 10% because there are better chances of rates rising above or falling below 5% than there are of 10%.
International businesses with markets and production facilities in other countries, or that use materials from different countries need to understand the ways and rates at which currency is converted.
a. True
b. False
Answer: True
Explanation:
International businesses that has its markets and its production facilities in other countries, or a business that uses resources from other countries should understand the exchange rate system and how it works.
Different policies are pursued by the government and there's no universal exchange rate system, therefore it's vital for businesses to look at the foreign markets and their currency conversion.