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2 years ago

The effect of the declaration of a cash dividend on a company's financial statements is to:_______

1 answer:

5 0

The effect of the declaration of a cash dividend on a company's financial statements is to decrease both stockholders' equity and total assets.

<h3>What are cash dividends?</h3>

Dividends are cash payments made to the stockholders of a public company. Stockholders are individuals who purchase shares in a public company.

Dividends are paid with cash, thus, the assets of a company would decline. Since assets is positively related to stockholders equity, stock holder's equity would also decline.

To learn more about dividends, please check: brainly.com/question/13672624

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The (annual) expected return and standard deviation of returns for 2 assets are as follows: Asset A Asset B E[r] 10% 20% SD[r] 3

polet [3.4K]

Answer:

Part A

(i) Weight(A) = 0.80 , Weight(B) = 0.20

ER(portfolio) = { ER(A) * Weight(A) } + { ER(B) * Weight(B) }

= { 10 * 0.80 } + { 20 * 0.20 }

= 12%

SD(portfolio) = { SD(A)^2 * W(A)^2 + SD(B)^2 * W(B)^2 + 2*SD(A) * SD(B) * W(A) * W(B) * CORR }^1/2

= { 900*0.64 + 2500*0.04 + 2*30*50*0.8*0.2*0.15}^1/2

= {748}^1/2

= 27.35%

(ii) Weight(A) = 0.50 , Weight(B) = 0.50

ER(portfolio) = { ER(A) * Weight(A) } + { ER(B) * Weight(B) }

= { 10 * 0.50 } + { 20 * 0.50 }

= 15%

SD(portfolio) = { SD(A)^2 * W(A)^2 + SD(B)^2 * W(B)^2 + 2*SD(A) * SD(B) * W(A) * W(B) * CORR }^1/2

= { 900*0.25 + 2500*0.25 + 2*30*50*0.5*0.5*0.15}^1/2

= {917.5}^1/2

= 30.29 %

(iii) Weight(A) = 0.20 , Weight(B) = 0.80

ER(portfolio) = { ER(A) * Weight(A) } + { ER(B) * Weight(B) }

= { 10 * 0.20 } + { 20 * 0.80 }

= 18 %

SD(portfolio) = { SD(A)^2 * W(A)^2 + SD(B)^2 * W(B)^2 + 2*SD(A) * SD(B) * W(A) * W(B) * CORR }^1/2

= { 900*0.04 + 2500*0.64 + 2*30*50*0.2*0.8*0.15}^1/2

= {1708}^1/2

= 41.33 %

Part B

Let Weight(A) be x, and Weight(B) be (1-x)

Solving the ER(portfolio) Equation :

ER(portfolio) = { ER(A) * Weight(A) } + { ER(B) * Weight(B) }

25 = {10 * x } + {20 * (1 - x) }

25 = 10x + 20 - 20x

25 - 20 = -10x

x = - 0.5

Weight (A) = - 0.5 {its Negative which means Short Selling of Stock A}

Weight (B) = 1 - (-0.5) = 1.5

<u><em>Cross-Proof</em></u>

ER (portfolio) = { ER(A) * Weight(A) } + { ER(B) * Weight(B) }

= { 10 * -0.5 } + { 20 * 1.5 }

= { - 5 } + { 30 }

= 25% . Therefore, our Weights are Correct

Calculation of SD (portfolio)

SD(portfolio) = { SD(A)^2 * W(A)^2 + SD(B)^2 * W(B)^2 + 2*SD(A) * SD(B) * W(A) * W(B) * CORR }^1/2

= { 900*0.25 + 2500*2.25 + 2*30*50*-0.5*1.5*0.15}^1/2

= { 225 + 5625 - 337.5 }^1/2

= {5512.5}1/2

= 74.2 %

3 0

3 years ago

Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant ra

melomori [17]

Answer:

0.6

Explanation:

Variable Expense Ratio is calculated by taking Variable Expense and dividing it by Sales. This ratio indicates how much of the variable expense is incurred by company for each $1 Sales.

So, variable expense ratio is .6 or 60% (33,000 / 55,000).

Such questions also require the calculation of Contribution Margin Ratio which is calculated by taking Contribution Margin and Dividing it by Sales. This ratio tells us how much the company generates after covering variables expenses when the sales are $1.

So, Contribution Margin Ratio is .4 or 40% (22,000 / 55,000).

6 0

4 years ago

Teri, Doug, and Brian are partners with capital balances of $20,000, $30,000, and $50,000, respectively. They share income and l

mixer [17]

Answer:

$20,000

Explanation:

For computing the Doug withdrawal amount, first, we have to compute the net income or net loss which is shown below:

Net income/loss = Revenue - expense

= $350,000 - $380,000

= -$30,000

Now Doug share in net loss = Net loss × (his share ÷ total share)

= - $30,000 × (2 ÷ 6)

= - $10,000

We knew that the Doug capital is $30,000 and his share in loss is $10,000

So, its withdrawal amount = $30,000 - $10,000 = $20,000

7 0

4 years ago

Remember, a bond’s coupon rate partially determines the interest-based return that a bond (might/will)...........pay, and a bond

prohojiy [21]

Answer:

<u>will</u>, <u>would like </u>

Explanation:

Bond refers to debt instruments whereby corporates raise long term finance agreeing to pay in return, the holders of such securities (bond holders), timely coupon payments and principal repayment at the end of the term.

The fixed rate of interest bondholders receive is referred to as the coupon rate. The rate of interest received by holders of similar bonds in the market refers to an investors expected rate of return also denoted as YTM i.e yield to maturity.

Yield to maturity refers to the rate of return other investors are earning on similarly priced bonds in the market. Higher the yield to maturity, lower will be the present value of bond.

When coupon rate of payment is higher than YTM, such bonds are priced at a premium.

3 0

4 years ago

Metropolitan Power and Light is a monopoly in the electrical generation and distribution industry. Since it does not face any co

____ [38]

Answer: x-inefficiency.

Explanation: Since it does not face any competition in its industry, the actions of Metropolitan Power and Light are an example of x-inefficiency which is a situation in which monopolies find themselves wherein they do not have to act efficiently since they are protected from competitive pressures. X-inefficiency is also applied to analyzing the average costs in imperfectly competitive markets whose average costs are higher than they would be if the market was more efficient.

7 0

3 years ago