32. Assume there is a fixed exchange rate between the Euro and U.S. dollar. The expected return and standard deviation of return on the U.S. stock market are 16% and 13%, respectively. The expected return and standard deviation on the DAX stock market are 11% and 18%, respectively. The covariance of returns between the U.S. and German stock market is 1.5%.
If you invested 50% of your money in the German (DAX) stock market and 50% in the U.S. stock market, the expected return on your portfolio would be
Multiple Choice
12.5%.
12.0%.
13.0%.
13.5%.31.
XYZ's stock price and dividend history are as follows:
| Year | Beginning-of-Year Price | Dividend Paid at Year-End | |||||||||
| 2017 | $ | 165 | $ | 4 | |||||||
| 2018 | 195 | 4 | |||||||||
| 2019 | 145 | 4 | |||||||||
| 2020 | 165 | 4 | |||||||||
31. An investor buys three shares of XYZ at the beginning of 2017, buys another two shares at the beginning of 2018, sells one share at the beginning of 2019, and sells all four remaining shares at the beginning of 2020.
a. What are the arithmetic and geometric average time-weighted rates of return for the investor? (Round your year-by-year rates of return and final answer to 2 decimal places. Do not round other calculations.)
b. What is the dollar-weighted rate of return? (Hint: Carefully prepare a chart of cash flows for the four dates corresponding to the turns of the year for January 1, 2017, to January 1, 2020. If your calculator cannot calculate IRR, you will have to use trial and error or a spreadsheet program.) (Round your answers to 4 decimal places. Negative amount should be indicated by a minus sign.)
In: Finance
Wool Ltd acquired all the assets and liabilities of Rod Ltd on 1 July 2014. At this date, the assets and liabilities of Rod Ltd consisted of the following:
|
Carrying Amount |
Fair Value |
|
|
Assets |
||
|
Cash |
300,000 |
300,000 |
|
Accounts receivable |
200,000 |
200,000 |
|
Land |
300,000 |
450,000 |
|
Vehicle |
150,000 |
200,000 |
|
Accumulated depreciation -Vehicle |
(50,000) |
|
|
Liabilities |
||
|
Accounts payable |
250,000 |
250,000 |
|
Loans |
200,000 |
200,000 |
|
Equity |
||
|
Share Capital – 100 000 shares |
400,000 |
|
|
Reserves |
50,000 |
In exchange for these assets and liabilities, Wool Ltd agreed to
1- Issue 3 Wool Ltd shares for every Rod Ltd Share – Wool Ltd shares were considered to have a fair value of $4 per share; costs of issue were $600
2- Transfer a piece of Land to the former shareholders of Rod Ltd – the Land was carried in the records of Wool Ltd at $300,000 but was considered to have a fair value of $600,000.
3- Pay $5 per share in cash to each of the former shareholders of Rod Ltd.
Wool Ltd incurred $3000 in costs associated with the acquisition of these net assets.
Required:
________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
In: Accounting
You are well aware of the risks that you face when you buy shares in a company that has shares with different voting rights. Assume that you have no choice but to buy non-voting shares in a company that has both voting and non-voting shares. Which of the following would you view as least dangerous to you (from a corporate governance standpoint)?
In: Finance
If you were a CEO, how would you recession-proof your company?
In: Economics
|
In a pre-2009 business combination, Acme Company acquired all of Brem Company’s assets and liabilities for cash. After the combination Acme formally dissolved Brem. At the acquisition date, the following book and fair values were available for the Brem Company accounts: |
| Book Values | Fair Values | |||||
| Current assets | $ | 74,500 | $ | 74,500 | ||
| Equipment | 135,500 | 205,500 | ||||
| Trademark | 0 | 397,000 | ||||
| Liabilities | (65,000 | ) | (65,000 | ) | ||
| Common stock | (100,000 | ) | ||||
| Retained earnings | (45,000 | ) | ||||
Note: Parentheses indicate a credit balance.
| In addition, Acme paid an investment bank $32,700 cash for assistance in arranging the combination. |
| a. |
Using the legacy purchase method for pre-2009 business combinations, prepare Acme’s entry to record its acquisition of Brem in its accounting records assuming the following cash amounts were paid to the former owners of Brem: (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your intermediate calculations to two decimal places.) |
| 1. $695,300 |
| 2. $497,800 |
| b. |
How would these journal entries change if the acquisition occurred post-2009 and therefore Acme applied the acquisition method? (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) |
| 1. $695,300 |
| 2. $497,800 |
In: Accounting
A friend of the CEO of the cable car company of Small Ski Resort asks him why he does not use this opportunity to fire everyone who does not fulfill the requirements of the new situation. Instead of paying for a training program he could just hire new staff. What would the CEO say? What are the advantages for the cable car company of Small Ski Resort to implement a training program instead of hiring new staff?
In: Economics
Expectations play a huge role in our careers as well as the people around us. Having an MBA will grant you access to positions that you might not have been able to obtain before. Write on Paragraph about what your expectation is for your career once you obtain an MBA and another about how co-workers have played a role in your success.
In: Operations Management
Problem 2-13
Loss Carryback and Carryforward
The Bookbinder Company has made $300,000 before taxes during each of the last 15 years, and it expects to make $300,000 a year before taxes in the future. However, in 2016 the firm incurred a loss of $725,000. The firm will claim a tax credit at the time it files its 2016 income tax return, and it will receive a check from the U.S. Treasury. Show how it calculates this credit, and then indicate the firm's tax liability for each of the next 5 years. Assume a 35% tax rate on all income to ease the calculations. Enter your answers as positive values. If an amount is zero, enter "0".
| Prior Years | 2014 | 2015 |
| Profit earned | $ | $ |
| Carry-back credit | ||
| Adjusted profit | $ | $ |
| Tax previously paid (35%) | ||
| Tax refund: Taxes previously paid | $ | $ |
Total check from U.S. Treasury $
Firm's tax liability
2017: $
2018: $
2019: $
2020: $
2021: $
In: Finance
Loss Carryback and Carryforward
The Bookbinder Company has made $250,000 before taxes during each of the last 15 years, and it expects to make $250,000 a year before taxes in the future. However, in 2016 the firm incurred a loss of $550,000. The firm will claim a tax credit at the time it files its 2016 income tax return, and it will receive a check from the U.S. Treasury. Show how it calculates this credit, and then indicate the firm's tax liability for each of the next 5 years. Assume a 40% tax rate on all income to ease the calculations. Enter your answers as positive values. If an amount is zero, enter "0".
| Prior Years | 2014 | 2015 |
| Profit earned | $ | $ |
| Carry-back credit | $ | $ |
| Adjusted profit | $ | $ |
| Tax previously paid (40%) | $ | $ |
| Tax refund: Taxes previously paid | $ | $ |
Total check from U.S. Treasury $
Firm's tax liability
2017: $
2018: $
2019: $
2020: $
2021: $
In: Accounting
Predict the effect of a bottleneck or founder effect on allelic diversity.
In: Biology