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1 year ago

As leverage increases, the separation between the re increases for different rates of return to assets?

1 answer:

Crank1 year ago

5 0

As leverage increases, the separation between the re increases for different rates of return to assets is a false statement.

<h3>What is leverage?</h3>

Financial leverage, often known as leverage, is the process of making an investment by using debt or borrowed cash to increase profits, buy more assets, or raise money for the business. By borrowing money or capital from lenders and making a commitment to repay the obligation together with the extra interest, people or companies incur debt. Thus, using leverage can also refer to trading stocks. When a corporation or someone is described as highly leveraged, it signifies that their debt burden exceeds their equity. Knowing this enables investors to choose wisely before making an investment in any real estate, business, or corporation.

Thus, the given statement is a false statement.

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You might be interested in

If 7000 dollars is invested in a bank account at an interest rate of 7 per cent per year, Find the amount in the bank after 14 y

Harlamova29_29 [7]

Answer:

1. Interest compounded annually = $18,049.74

2. Interest compounded quarterly = $18,493.77

3. Interest compounded Monthly = $18,598.16

4. Interest compounded continuously = $18,651.19

Explanation:

First let me state the formula for compound interest:

The future value of a certain amount which is compounded is the total amount (Principal + interest) on the amount of money, after compound interests have been applied, and this is shown below:

FV = PV $(1+\frac{r}{n} )^{n*t}$

where:

FV = Future value

PV = Present value = $7,000

r = interest rate in decimal = 0.07

n = number of compounding periods per year

t = compounding period in years = 14

For interests compounded continuously, the Future value is given as:

FV = PV × $e^{r*t}$

where

$e$ is a mathematical constant which is = 2.7183

Now to calculate each on the compounding periods one after the other:

1. Interest compounded annually:

here n (number of compounding periods annually) = 1

Therefore,

FV = 7,000 × $(1+\frac{0.07}{1})^{14}$

FV = 7,000 × $1.07^{14}$ = $18,049.74

2. Interest compounded quarterly:

here, n = 3 ( there are 4 quarters in a year)

FV = 7,000 × $(1+\frac{0.07}{4} )^{4*14}$

FV = 7,000 × $1.0175^{56}$ = $18,493.77

3. Interest compounded Monthly:

here n = 12 ( 12 months in a year)

FV = 7,000 × $(1+\frac{0.07}{12} )^{12*14}$

FV = 7,000 × $1.005833^{168}$ = $18,598.16

4. Interests compounded continuously:

FV = PV × $e^{0.07 * 14}$

FV = 7,000 × 2.66446 = $18,651.19

3 0

3 years ago

Suppose in the spot market 1 U.S. dollar equals 1.3750 Canadian dollars. 6-month Canadian securities have an annualized return o

myrzilka [38]

Answer:

$1 = 1.372 CD

Explanation:

Spot rate, 1$ = 1.3750 Canadian dollars

Canadian securities annualized return = 6%

U.S. securities annualized return = 6.5%

Term = 6 month ≅(180 days)

Forward exchange rate in 180 days, 1$ = Spot rate * (1+US rate*6/12) / (1+CD rate*6/12)

= 1.3750 CD * (1 + 6%*6/12) / (1 + 6.5%*6/12)

= 1.3750 CD * (1 + 0.03) / (1 + 0.0325)

= 1.3750 CD * 1.03/1.0325

= 1.371670702179177 CD

= 1.372 CD

So, the the U.S. dollar-Canadian dollar exchange rate in the 180-day forward market is $1 = 1.372 CD

4 0

3 years ago

Suppose Maestro'sMaestro's had cost of goods sold during the year of $ 230 comma 000$230,000. Beginning merchandise inventory wa

sveticcg [70]

Answer:

The answer is: Maestro's inventory turnover was 5.75 times

Explanation:

In order to find the inventory turnover we use the following formulas:

Inventory turnover = COGS / Average inventory
Average inventory = (beginning inventory + ending inventory) / 2

First we find the average inventory:

Average inventory = ($35,000 + $45,000) / 2 = $40,000

Now we can calculate the inventory turnover:

Inventory turnover = $230,000 / $40,000 = 5.75 times

6 0

3 years ago

Paying an amount on account reduces:_______

hichkok12 [17]

Option (d) the amount owed on a liability is correct.

Paying an amount on account reduces the amount owed on a liability.

<h3>What is liability?</h3>

A liability is an obligation that a person or business has, typically financial in nature. Over time, liabilities are resolved by the transmission of economic advantages like cash, products, or services.
There are various ways to define a liability's duration. The average duration (or mean term) of the liability is what is typically meant by the term "duration of liability" in actuarial valuation. In other terms, it refers to the typical rate of a liability's repayment.
Liabilities can be used by businesses to increase liquidity if they are having cash flow issues. Most small and medium-sized enterprises lack the financial resources necessary to grow.

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3 0

2 years ago

There are 100 dog kennels in Atlanta. An economist studying the pricing behavior of dog kennels tells you that she is limiting h

Ratling [72]

Answer:

D short run.

Explanation:

Based on the information provided within the question it can be said that the time period this economist referred to as the short run. This refers to a time period in which the quantity of an input in the research is always the same while the others can change. Which in this situation the fixed variable would be the amount of dog kennels in Atlanta which would allow the researcher to correctly study the pricing behavior of the dog kennels.

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7 0

3 years ago