Roy is a sole trader if he is not setting up a company instead starts a business.
<h3>What is a Business?</h3>
A business is the process of selling goods or services and earning revenue and profits through it, the business generates revenue which is deducted by the expenses incurred by the business. The business ensures the strategy to have a balance between these expenses and revenue so that there is some residue profit.
The sole trader is the business where the owner of the business is highly involved in day to day running of the business taking all the strategic decisions and responsible for all the debts of the business.
On the other hand a limited liability company is a business in which the owner of the company can be involved in day to day running of the operations but is not liable personally for the debts.
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Answer:
A. We should expect higher interest rates and lower stock prices.
Explanation:
Producer price index refers to the price that producers recieve for their products. When there is an increase in PPI it means producers are receiving more revenue.
Increased revenue will result in more money in circulation. To regulate the excess money the monetary authorities will increase interest rate to reduce borrowing and by extension money in the economy.
Because there is now a need to get more funds by the companies, they will lower share prices to make them attractive to prospective investors.
Answer: $2.33
Explanation:
The unit contribution margin that is required to attain the profit target will be calculated thus:
= (Fixed cost + Desired profit) / Estimated units
= ($225,000 + $125,000) / 150,000
= $350,000 / 150,000
= $2.33
Therefore, the unit contribution margin is $2.33
Answer:
The WACC before bond issuance is 3.9% and the WACC after bond issuance is 3.71%
Explanation:
In order to calculate the WACC before bond issuance
, we would have to calculate first the cost of equity using capital asset pricing model
.
So Using CAPM we have Rf + Beta x Market risk premium
=
0.5% + 0.85 * 4%
= 3.9%
. cost of equity
Therefore WACC before bond issuance = (Cost of equity x weight of equity + cost of debt (1-tax) x weight of debt)
= 3.9%
. WACC before bond issuance will be equal to cost of equity in this case as there is no debt issue.
In order to calculate the WACC after bond issuance we make the following calculation:
WACC after bond issuance = (Cost of equity x weight of equity + cost of debt (1-tax) x weight of debt)
= (3.9% x 0.9) + (2% x 0.1)
= 3.51% + 0.2%
= 3.71%
Answer:
The colleague has committed a violation because your customer's order could move the price of ABC stock
Explanation:
Front running is also called tailgating. It is a prohibited practice where a trader enters into a position security based on non-public information about a large trade that will influence the price of the security.
The trade is initiated to take advantage of the new price that the large trade will cause. The position is entered before the large trade occurs.
In this scenario your neighbour heard you telling your client to but 100,000 share of ABC. Because the transaction will influence the market he also tells his client to buy 10,000.
This is tailgating and it is a violation.
