Answer:
The price of the stock is expected to be $188.16 in 1 year.
Explanation:
This can be determined as follows:
Current price of the stock = Expected next dividend / Expected return = $24.87 / 15.2% = $163.62
Expected stock price in 1 year = Current price of the stock * (100% + Expected return)^Number of year = $163.62 * (100% + 15.2%)^1 = $188.16
Therefore, the price of the stock is expected to be $188.16 in 1 year.
Answer:
Risk and Return
1. Joe is an average investor. His financial advisor gave him options of investing in stock A, with a σ of 12%, and stock B, with a σ of 9%. Both stocks have the same expected return of 16%. Joe can pick only one stock and decides to invest in stock B.
Good Financial Decision?
Yes
No
2. Marcie works for an educational technology firm that recently launched its employee stock option plan (ESOP). Marcie allocated all her investments in the ESOP.
Good Financial Decision?
Yes
No
3. rin wants to invest in a hedge fund that has had a very strong performance track record. The hedge fund has given its investors a return of over 60% for the past five years. Although Erin is tempted to put her money in the fund, she decides to conduct due diligence on the hedge fund’s assets, because she is aware that past performance is no guarantee of future results.
Good Financial Decision?
Yes
No
Explanation:
1. Joe's decision to invest in stock B is a good financial decision. Since both investments have the same returns, the decision on which investment to take shifts to the standard deviation of the returns, which specifies the variability of the returns. Invariably, the investment with less standard deviation should win the vote. Therefore, Joe's decision is a good financial decision because investment in B has a standard deviation of 9% unlike A's 12%.
2. Putting all eggs in one market as Marcie had done by allocating all her investments in the ESOP is not a good financial decision, theoretically. It is always best to spread the risks, though higher-yielding investments (returns) bear higher risks.
3. The decision of Erin to conduct due diligence on the hedge fund's assets, despite its past performance is a good financial decision. Due diligence reveals some behind-the-scene information that are instrumental in making sound business decisions. Who are the present managers of the fund? What systems are in place in the entity to guarantee similar future performance, all things being equal? What market's sentiments and information are available for consideration? These questions, and many others can be answered through a due diligence. Surely, "past performance is no guarantee of future results."
Answer:
LARSON, NORRIS, SPENCER AND HARRISON
PREDISTRIBUTION PLAN FOR LIQUIDATING PARTNERSHIP
ASSET
Cash $28,250
liquidating expense <u> (8,000) </u> 20,250
Account receivable 44,000
inventory 39,000
land and building 23,000
Equipment 104,000
Total Asset 230,250
Liabilities <u> (47,000)</u>
Net asset 183,250
Asset to be distributed as follows:
Larson(15,000 - 1600) 13,400
Norris(60,000 -2400) 57,600
Spencer(75,000 - 1600) 73,400
Harrison(41,250-2400) 38,850 <u> ( 183,250)</u>
<u> 0 </u>
Loss
share of liquidation expenses
Larson = 20%*8000 = 1600
Norris = 30%*8000 = 2400
Spencer = 20%*8000= 1600
Harrison = 30%*8000 = 2400
Explanation:
The three legal forms of business ownership are partnership, sole proprietorship, and corporation. The correct option among all the options that are given in the question is the fourth option or the last option or option "d". I hope that this is the answer that has actually come to your desired help.
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