Consider a four-year project with the following information: initial fixed asset investment = $600,000; straight-line depreciation to zero over the four-year life; zero salvage value; price = $35; variable costs = $28; fixed costs = $240,000; quantity sold = 90,000 units; tax rate = 25 percent. How sensitive is OCF to changes in quantity sold? (Do not round intermediate calculations and round your answer to 2 decimal places)
change in OCF/change in Q = ?
In: Finance
Question) According to the semi-strong form of the efficient markets hypothesis, ____.
Multiple Choice Answers) Please answer and explain!
a) stock prices do not rapidly adjust to new information.
b) corporate insiders should have no better investment performance than other investors even if allowed to trade freely.
c) future changes in stock prices cannot be predicted from any information that is publicly available.
d) arbitrage between futures and cash markets should not produce extraordinary profits.
In: Finance
Which of the following is/are correct regarding interest rates? Pick all the correct ones.
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Borrowers’ preference for long duration and lenders’ preference for short duration causes the term premium to be positive. |
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Bonds with greater default risk typically trade at lower yield-to-maturities. |
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An inverted yield curve serves as a negative indicator for the future state of the economy. |
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Zero-coupon bonds are less sensitive to interest rate changes compared to coupon bonds with the same time to maturity. |
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The yield curve is usually flat. |
In: Finance
A young executive deposits $100 at the end of each month for 5 years into an account that earns 6% compounded monthly. How much is in the account after the 5 years? (Round your answer to the nearest cent).
$
The executive then changes the deposits in order to have a total of $400,000 after 25 total years. What should be the revised monthly payment in order to meet the $400,000 goal? (Round your answer to the nearest cent).
$
How much interest is earned during the 25 years?
$
In: Finance
Nancy purchased $80,000 worth of common stock by borrowing $32,000 from her broker. She paid the rest to satisfy the initial margin requirement. The initial stock price is $160 per share. The maintenance margin requirement is 45%. The broker charges 8% on the margin loan. If the stock price changes from $160 to $120 one year later, will Nancy receive a margin call at this price?
| A. |
Yes, Nancy will receive a margin call at this price. |
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| B. |
No, Nancy will not receive a margin call at this price. |
In: Finance
One morning the Open Market Account Manager at the New York Federal Reserve Bank observes that the equilibrium (market) federal funds rate is 3.25%. Suppose the target federal funds rate is 2.5%. What does this indicate about total reserves in the banking system? What would the Account Manager decide to do (open market purchase or open market sale)? Draw a reserves market diagram to explain your answer. Label the diagram(s) neatly and show all the changes clearly.
In: Economics
The marginal propensity to consume is:
| A. |
expected to be between zero and one. |
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| B. |
normally assumed to increase as taxes increase. |
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| C. |
the amount by which consumption changes when wealth increases by one dollar. |
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| D. |
equal to disposable income divided by consumption. |
If the consumption function is given by C = 150 + 0.85( Y – T) and T increases by 1 unit, then national saving
| A. |
increases by 0.15 units. |
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| B. |
increases by 0.85 units. |
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| C. |
decreases by 0.85 units. |
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| D. |
decreases by 0.15 units. |
In: Economics
Lightbolt Inc. makes bolts and sells in a perfectly competitive market. The manager of the firm reads business publications regularly to keep up with market changes. Recently, two events came to her attention: (a) the overall market supply of bolts will decrease by 4% due to exit by competitors, (b) the overall market demand for bolts will increase by 4% due to a manufacturing boom. How will this affect the firm’s production and profit? Show graphically (assuming P = MC = ATC when manager was informed of the events).
In: Economics
Which of the following statements are correct (Select all that apply):
Select one or more:
A. An income statement reports on financing activities.
B. A balance sheet reports on investing and financing activities.
C. The statement of cash flows reports on cash flows from operating, investing, and financing activities over a period of time.
D. A balance sheet reports on a company's assets and liabilities over a period of time.
E. The statement of equity reports on changes in the accounts that make up equity
In: Accounting
Which of the following statements are correct (Select all that apply): Select one or more: A. A balance sheet reports on investing and financing activities. B. An income statement reports on financing activities. C. The statement of equity reports on changes in the accounts that make up equity. D. The statement of cash flows reports on cash flows from operating, investing, and financing activities over a period of time. E. A balance sheet reports on a company's assets and liabilities over a period of time.
In: Advanced Math