Answer:
A. 4.3
B. 2.4
Explanation:
(a) Calculation to determine ratio of fixed assets to long-term liabilities
Using this formula
Ratio of fixed assets to long-term liabilities =Fixed assets (net)/Long-term liabilities
Let plug in the formula
Ratio of fixed assets to long-term liabilities= $860,000 /$200,000
Ratio of fixed assets to long-term liabilities=4.3
Therefore Ratio of fixed assets to long-term liabilities is 4.3
(b) Calculation to determine ratio of liabilities to stockholders' equity
Using this formula
Ratio of liabilities to stockholders' equity=Liabilities/Total stockholders’ equity
Let plug in the formula
Ratio of liabilities to stockholders' equity=$600,000 /$250,000
Ratio of liabilities to stockholders' equity=2.4
Therefore ratio of liabilities to stockholders' equity is 2.4
Answer:
When expected return is lowered to 8% share price is $53
Explanation:
The price of a stock =Do*(1+g)/r-g
Do is the dividend received last year of $1.00
g is the growth rate of dividend which is 6% per year
r is the required rate of return which is 8%
The price of Bosstown Inc's stock=$1.00*(1+0.06)/(0.08-0.06)
=$53
The price at 11.6% rate of return is also computed thus:
price=$1.00*(1+0.06)/(0.116-0.06)
=$18.93
Hence by reducing expected return from 11.6% to 8% , the share price increased from $18.93 to $53,hence the higher the expected return , the lower the share price
Answer:
Current Price of bond= Number of Bonds *price quoted...........Equation 1
Number of Bonds = Total Nominal value/100........Equation 2
So this means that the formula for the computation of market value of all bonds held is same to the computation of total Market value of shares held.
Market Value of bonds held= Total Nominal value/100 * price quoted...EQ3
Putting values in the equation 3
Market Value of bonds held= $8500/100*$89 per bond= $7565
Equation 3 was derived to enable you understand why we divide Total nominal value with 100 (par value). We do this to compute "Number of bonds held."
Answer:
Covered Interest Arbitrage
Explanation:
The Covered Interest Arbitrage is a term that refers to arbitrage trading approach in which a stockholder take the chance to gain advantage from the disparity in interest rate between two nations.
The trading strategy helps in its verifiability, quantifiability, consistency, and objectivity
It is designed to profit the investor from the differences in interest rates between two countries, when buying and selling foreign currencies.
When a market is small or there's a high level of competition, there's a possibility that the earnings on covered interest rate arbitrage won't yield much.
<span>This is an example of a Trade Sales Promotion situation. Many companies do this type of thing with techniques such as discounts, coupons, contests and commissions as part of the deals. Also used in these promotions are trade allowances, displays, push money and training programs.</span>
