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2 years ago

Discuss the benefits, and limitation of Budgeting.

1 answer:

7 0

Budgeting allows management to decentralize responsibility while yet maintaining control over the company. It quickly uncovers organizational flaws, inefficiencies, and deviations that may be addressed in order to reach a desired goal.

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grigory [225]

One popular system for defining effective goals uses the acronym SMART, which stands for: SPECIFIC, MEASURABLE, ATTAINABLE, REALISTIC AND TIMELY.
SMART is an acronym that define the characteristic of a goal that is considered an excellent one. A goal that one wants to achieve must have some features which make it possible for one to achieve the goal. The goal must be specific, that is, one must be able to define specifically what one want to achieve. The goal must be measurable, that is, you must be able to measure the progress you have made so far. The goal must be attainable, it must be realistic, something that is possible for you to achieve. The must goal must also have a life span, that is, the period during which the goal must be achieved.

4 0

3 years ago

Read 2 more answers

The common stock of ABC, Inc., has a beta of 1.13 and a standard deviation of 21.4 percent. The market rate of return is 12.7 pe

harina [27]

Answer:

The appropriate answer is "13.82%".

Explanation:

Given:

Risk free rate,

$R_f=4.10$

Beta of stock,

$\beta=1.13$

Market rate,

= $12.7$

Now,

The market risk premium will be:

⇒ $R_p$ = $Market \ rate-Risk \ free \ rate$

= $12.7-4.1$

= $8.60$ (%)

hence,

The cost of equity will be:

⇒ $r=R_f+\beta\times R_p$

$=4.10+1.13\times 8.60$

$=4.10+ 9.718$

$=13.82$ (%)

7 0

3 years ago

Generally, firms entering foreign markets begin with:

kirill115 [55]

Answer:

a. less risky strategies first.

Explanation:

When find enter into foreign markets their knowledge and experience in the market space is limited. They will most likely implement less risky strategies of doing business bearlier on.

As they get to understand the market dynamics of the foreign country they are more confident in doing more risky transactions.

For example they can start with local production and exporting to the foreign country first. Then later open up operations in the foreign country.

7 0

3 years ago

Read 2 more answers

Banks channel money from savers to borrowers to _____.

BigorU [14]

Bank channel money from savers to borrowers to INVESTORS.

Savers are individuals who put their money in the bank to earn interests.

Borrowers are individuals who borrow money from the bank and pay fees and interests with either house or vehicle set up as collateral.

Investors are individuals who purchase government securities and corporate bonds sold by the bank.

8 0

3 years ago

Read 2 more answers

UPS, a delivery services company, has a beta of , and Wal-Mart has a beta of The risk-free rate of interest is and the mark

serg [7]

The question is incomplete as it does not contain values. The following is the complete question.

UPS, a delivery services company, has a beta of 1.2, and Wal-mart has a beta of 0.8. The risk-free rate of interest is 4% and the market risk premium is 7%. What is the expected return a portfolio with 40% of its money in UPS and the balance in Wal-Mart?

Answer:

The expected return of the portfolio is Portfolio r = 0.1072 or 10.72%

Explanation:

The expected return of a portfolio is the weighted average of the individual stocks' expected returns that form up the portfolio.

The formula for portfolio's expected return is as follows,

Portfolio r = wA * rA + wB * rB + ... + wN * rN

Where,

w is the weight of each stock in the portfolio
r is the expected return of each stock

To calculate the expected return of the portfolio, we will first calculate the expected return of UPS and Wal Mart using the CAPM equation.

The formula for expected return under CAPM is,

r = rRF + Beta * rpM

Where,

rRF is the risk free rate
rpM is the risk premium of market

r UPS = 0.04 + 1.2 * 0.07

r UPS = 0.124 or 12.4%

r Wal Mart = 0.04 + 0.8 * 0.07

r Wal Mart = 0.096 or 9.6%

Portfolio r = 0.4 * 0.124 + 0.6 * 0.096

Portfolio r = 0.1072 or 10.72%

5 0

3 years ago