Suppose that the output market is in perfect competition with the price of $10 per unit and input market is a monopsony with the following information assuming that labor is the only input. Wage (W)
L MP W MRP TP TR
1 20 20 200 20 200
2 18 40 180 38 380
3 16 60 160 54 540
4 14 80 140 68 680
5 12 100 120 80 800
6 10 120 100 90 900
7 8 140 80 98 980
8 6 160 60 104 1040
9 4 180 40 108 1080
10 2 200 20 110 1100
1. Find TLC, MFC and Profits (with calculation)
In: Economics
Alpha Tunis LLC, a newly publicly listed company in San Diego, is currently valued at $100. Over the next two six-month periods, analysts forecast it will go up by 10% or down by 10%. The current risk free rate is 8% per year. Given that the current strike price is $100, based on the Binomial Option Pricing model,
(i) Estimate the value of one-year European call option. Clearly show the binomial trees as part of your calculations.
(ii) Estimate the value of one-year European put option. Clearly show the binomial trees as part of your calculations.
(iii) Demonstrate if the Put-Call parity hypothesis holds. Clearly show your workings.
Please use 4 decimal places in your workings.
In: Finance
LaBBC Company has provided the following information from their records:
Purchases Sales
Units Unit Cost Units Selling Price/Unit
Mar 1 Beginning inventory 100 $50
3 Purchase 60 $60
4 Sales 70 $100
10 Purchase 200 $70
16 Sales 80 $110
19 Sales 80 $110
25 Sales 50 $110
30 Purchase 40 $75
Using the inventory and sales data above, to complete the below inventory schedule under average cost method and prepare the journal entries to record the sales on March 4. All sales are made on credit.
| Inventory Schedule - Average Cost | |||||||||
| PURCHASES | COST OF GOODS SOLD | BALANCE | |||||||
| Date | Units | Cost | Total | Units | Cost | Total | Units | Cost | Total |
In: Accounting
ABC Company has provided the following information from their records:
Purchases Sales
Units Unit Cost Units Selling Price/Unit
Mar 1 Beginning inventory 100 $50
3 Purchase 60 $60
4 Sales 70 $100
10 Purchase 200 $70
16 Sales 80 $110
19 Sales 80 $110
25 Sales 50 $110
30 Purchase 40 $75
Using the inventory and sales data above, to complete the below inventory schedule under FIFO method and prepare the journal entries to record the sales on March 4. All sales are made on credit.
| Inventory Schedule - FIFO | |||||||||
| PURCHASES | COST OF GOODS SOLD | BALANCE | |||||||
| Date | Units | Cost | Total | Units | Cost | Total | Units | Cost | Total |
In: Accounting
An investor bought the share of ABC Corp for $100. One year from now, ABC pays a dividend of $5 per share and the share price rises to $125. On the basis of this information, the dividend yield, capital gain, and total expected return for holding ABC stock for one year amounts to:
| a. |
5%, 20%, and 25% |
|
| b. |
5%, 25% and 30% |
|
| c. |
4%, 20% and 30% |
|
| d. |
20%, 4%, 30% |
In: Finance
1. A government bond issued in Germany has a coupon rate of 8 percent, a face value of 100 euros, and matures in seven years. The bond pays annual interest payments. Calculate the price of the bond (in euros) if the yield to maturity is 4.2 percent.
2. A five-year treasury bond with a coupon rate of 8 percent has a face value of $1,000. If it pays interest semiannually, then it pays interest ($ coupon payments)
In: Finance
Avondale Aeronautics has perpetual preferred stock outstanding with a par value of $100. The stock pays a quarterly dividend of $2.00 and its current price is $120.
What is its nominal annual rate of return? Do not round
intermediate calculations. Round your answer to two decimal
places.
%
What is its effective annual rate of return? Do not round
intermediate calculations. Round your answer to two decimal
places.
%
In: Finance
You expect the following set of possible outcomes for a stock:
| Outcome | Probability | Ending Stock Price | Holding Period Return (Percent) | Risk-free rate (Percent) |
| Good | 35% | $120 | 44.5 | 4 |
| Neutral | 30% | $100 | 14 | 2 |
| Bad | 35% | $70 | -16.5 | .5 |
What is the standard deviation of the risk-free rate? Please enter your answer in percent rounded to the nearest basis point.
In: Finance
You manage a cable company that offers 2 channels - NBC and Fox. You face 2 types of customers (type A and type B) and there are 100 customers of each type. Their respective values for each channel are: Type A Type B NBC $10 $15 Fox $3 $7 If you bundle the two channels together, what price should you charge for the bundle? (Write answer without the dollar sign.)
In: Economics
The market for hotels in Sacramento is described by the following equations: Qd=80−P and Qs=2P−100
(a) What is the equilibrium price and quantity?
(b) Suppose the city places a $2 tax on hotel rooms. How much do consumers now pay? How much do producers receive? How much tax revenue is raised by the tax?
(c) Based on your answer to part (b) is supply or demand more elastic?
In: Economics