All categories

2 years ago

In the semi-strong-form of market efficiency, fundamental analysis most likely requires the analyst to:

1 answer:

4 0

The fundamental analysis will most likely requires the analyst to extrapolate historical data to estimate future values and make investment decisions in the semi-strong-form of market efficiency.

<h3>What is the market efficiency?</h3>

This refers to how the current prices reflect the present, available, relevant information about the actual value of the underlying assets.

Hence, in the semi-strong-form of market efficiency the fundamental analysis will most likely requires the analyst to extrapolate historical data to estimate future values and make investment decisions.

You might be interested in

Rodriguez Company pays $310,000 for real estate plus $16,430 in closing costs. The real estate consists of land appraised at $21

Sergeeva-Olga [200]

Answer:

Required 1.

Land = $163,215

Land improvements = $65,286

Buildings = $97,929

Required 2.

Land $163,215 (debit)

Land improvements $65,286 (credit)

Buildings $97,929 (credit)

Cash $310,000 (credit)

Explanation:

Allocation of the purchase cost must be made on the bases appraisal value.

Total Appraisal Value = $215,000 + $86,000 + $129,000

= $430,000

Land = $215,000 / $430,000 × $326,430

= $163,215

Land improvements = $86,000 / $430,000 × $326,430

= $65,286

Buildings = $129,000 / $430,000 × $326,430

= $97,929

6 0

3 years ago

Tasty Subs acquired a delivery truck on October 1, 2021, for $22,500. The company estimates a residual value of $2,700 and a six

mixer [17]

Answer: Depreciation expense for 2021 = $825

Depreciation expense for 2022 =$3, 300

Explanation:

Using Straight line depreciation

We have that our Annual depreciation= Purchase price - salvage value / useful life.

$22,500 - $2,700 / 6

=19,800/6

$3, 300

Depreciation expense for 2021 ( from October to December )

$3,300 x 3/ 12= $9,900/12

=$825

Depreciation expense for 2022 ( From January to December)

Annual Depreciation = $3,300

6 0

3 years ago

Macrosoft Company reports net income of $61,000. The accounting records reveal depreciation expense of $76,000 as well as increa

melamori03 [73]

Answer:

Cashflow from Operating Activities $

Net income 61,000

Add: items not involving movement of cash

Depreciation <u>76,000</u>

137,000

Changes in working capital:

Increase in prepaid rent (56,000)

Increase in accounts payable <u>11,000</u>

92,000

Less: Tax <u> 16,000</u>

Cashflow from operating activities <u> 76,000</u>

Explanation:

Cashflow from operaing activities using the indirect method equals net income plus depreciation minus increase in prepaid rent plus increase in accounts payable minus tax.

4 0

4 years ago

On January 1, 2019, Castle Services issued $ 174 comma 000 of sixminus year, 12 % bonds when the market interest rate was 11

Marysya12 [62]

Answer: Debit: Interest expense $9900

Debit: Premium on bonds payable $540

Credit: Cash $10440

Explanation:

First and foremost, the cash payment will be calculated as:

= $174,000 × 12% × 6/12

= $174,000 × 0.12 × 0.5

= $10440

Interest expenses will be calculated as:

= $180000 × 11% × 6/12

= $180000 × 0.11 × 0.5

= $9900

Therefore, the journal entry to record the first interest payment would be:

Debit: Interest expense $9900

Debit: Premium on bonds payable $540

Credit: Cash $10440

8 0

3 years ago

A firm is considering a simple investment project. If it goes forward, then the firm must pay $900 now, but it receives a paymen

kiruha [24]

Answer:

a) scenario A NPV positive 28.68, scenario B NPV Negative 16.16, scenario C NPV positive 664.92, scenario D NPV positive 889.72 (b) The scenario with the highest positive NPV is the most profitable (c) The scenario B with the interest rate of 17% has Negative NPV of 16.16 produces less investment (d) The scenario C with the highest interest rate of 20% has the positive NPV of 664.92 he scenario D with the highest interest rate of 20% has the highest positive NPV of 889.72, produces more investment

Explanation:

Calculation of Discount Factor

Effective rate for scenario C and D

Using the formula (1 + m/1 + i)∧n - 1 Where i = rate of inflation, m = cost of capital, n = numbers of years

For C since interest rate = 20% = 20÷100 = 0.2, since rate of inflation = 2% = 2÷100 = 0.02

(1 + 0.2/1 + 0.02)∧n - 1

= 1.2 /1.02 -1

=1.1764 -1

=0.1764 ×100 = 17.64%

Discount Factor for C using the formula ( 1 + r)∧-n -1/ r since n = 3 ,r = 0.1764

= ( 1 + 0.2)∧-3 - 1/ 0.1764

= (1.2)∧-3 -1/0.1764

=0.5787 -1

= 0.4213÷ 0.1764

= 2.3883

For D Effective rate

( 1 + 0.2)∧n - 1/(1 + 0.05)

= 1.2/1.05 -1

=1.1428 -1

= 0.1428 × 100 = 14.28%

DF for D

= (1 + 0.2)∧-3 -1 / 0.1428

=0.5787 -1 = 0.4213

=0.4213÷0.1428

=2.9503

DF for year 1 and 2 for C and D

Using the formula ( 1 + r) ∧-n

( 1 + 0.2)∧-1 = ( 1.2)∧-1 = 0.83

(1 + 0.2)∧-2 = (1.2)∧-2 = 0.694

DF for scenario A For year 1 -3 using ( 1+ r)∧-n

= ( 1 + 0.14)∧-1 = (1.14)∧-1 = 0.8772

= (1+0.14)∧-2 = (1.14)∧-2 = 0.7695

=(1+0.14)∧-3 = (1.14)∧-3 = 0.6750

DF for scenario B using the same formula

=( 1 + 0.17)∧-1 =(1.17)∧-1 = 0.8547

=(1+0.17)∧-2 = (1.17)∧-2 = 0.7305

=(1 + 0.17)∧-3 = (1.17)∧-3 = 0.6244

Scenario A

Year. C.F. DF PV

$ $

0. 900 1 (900)

1 400 0.8772 350.88

2 400 0.7695 307.8

3 400 0.6750 270

-----------

NPV positive 28.68

-------------

Workings = C F × DF = PV

Scenario B

Year. CF DF PV

$ $

0 900 1 (900)

1. 400 0.8547 341.88

2 400 0.7305 292.2

3. 400 0.6244 249.76

-------------

NPV Negative 16.16

------------------

Scenario C

Year CF DF PV

$ $

0 900 1 (900)

1 400 0.83 332

2 400 0.694 277.6

1-3 400 2.3883. 955.32

----- ---------

NPV positive 664.92

----------------

Scenario D

Year CF DF PV

$ $

0 900 1 (900)

1 400 0.83 332

2. 400 0.694 277.6

1-3 400 2.9503 1,180.12

---------------

NPV positive 889.72

-----------------

6 0

3 years ago