Answer:
B. The hedge is asymmetric.
Explanation:
Hedging refers to a technique or a mechanism whereby firms and individuals aim for risk reduction, arising out of uncertain and volatile business situations, which may result into a heavy loss.
For example, an exporter entering into a forward contract to eliminate or reduce the risk of arising out of a future situation wherein, future receipts denominated in a foreign currency, receivable at a future date, may be less than same receipts receivable at current spot exchange rate as on today.
Currency hedge ratio depicts the proportion of total exposure which is covered by hedge w.r.t the total exposure itself.
Asymmetrical hedge refers to covering an exposure by an opposite position wherein the chances of earning profits are higher than the losses current position can lead to. Such an hedge would be similar to covering a call option with a put option. Asymmetrical refers to being of dissimilar or non equal size. Here, it refers to the dissimilarity between prospective profits and losses.
Under a perfect hedge, the loss position in a scenario is completely covered i.e 100% by a prospective gain in other situation, with there being negative correlation between the two scenarios such as if scenario 1 yields a profit, scenario 2 would yield a loss and vice versa.
Answer:
The correct word for the blank space is: transactional leader.
Explanation:
Transactional leadership is the type of managerial leadership in which the leader motivates the performance of the subordinates through a system of rewards and punishments. It means the leader rewards those employees who perform their duties efficiently and punishes those who do not meet the expectations, provoking in such a way that the employees work the best way possible.
Therefore, <em>if Clarissa provides her subordinates rewards if they do their jobs well, she is likely to be a transactional leader.</em>
Answer:
1. C. $33.76 per share
2. B- The constant growth model can be used if a stock's expected constant growth rateis less than its required return
3. 8.25% ; $35.62 ; 5.5%
Explanation:
1. Using the Constant Growth Model to calculate the intrinsic value would be best given the above values.
The formula is;
Value = Next Dividend / (Required Return - Growth rate)
Value = (2.64 * ( 1 + 5.5%)) / ( 13.75% - 5.5%)
Value = 2.7852/8.25%
Value = $33.76
2. Going by the formula, if the expected growth rate is more than the required return, the intrinsic value would be a negative number and a stock's price cannot go below 0. The growth rate has to be less than the required return for this to work.
3. At Equilibrium, the stock dividend is growing as it should.
Dividend Yield should therefore be;
= Next Dividend / Stock Value * 100
= (2.7852 / 33.76) * 100
= 8.25%
Stock Price should grow at the growth rate so;
= 33.76 * ( 1 + 0.055)
= $35.62
Gains yield refers to what rate the stock will change in value. Growth rate is 5.5% so that will be the answer.
Answer: b. When population exceeds real GDP growth
Explanation:
Gross domestic growth(GDP) is the monetary value of all finished goods and services done within in a country over a period of time. When the population of a country exceeds what it produces there would be record in decline in productivity of the country. This is a serious problem as it could lead to other factors as scarcity(having high demand and low supply), it could lead to poverty as there won't be much jobs as production is not commensurate with population.
