Answer:
b. 48
Explanation:
The computation of the expected value of the future stock price is as follows;
= Respective future price × respective probabilities
= $40 × 0.5 + $50 × 0.3 + $65 × 0.2
= $20 + $15 + $13
= $48
hence, the expected value of the future stock price is $48
Therefore the correct option is b.
The same is relevant
Answer:
Reinvestment risk
Explanation:
The mortgage banker would be most concerned about reinvestment risk, among other risks. Reinvestment risk relates to the inability to earn an original interest rate on an investment from periodic cash flows from the investment, thus limiting the overall rate of return on the investment.
In the question, since market mortgage rate has declined to 7.5%, the mortgage bank would have to reinvest the amount repaid from the original borrower at the new market rate, which is 1% lower than the ruling rate when the original borrower took the loan.
The problem would be compounded if the cost of funding to the mortgage bank was, for instance 8%. If that was the case, on the original loan, the mortgage bank was earning a (8.5% less 8% cost of funding =) 0.5% on the loan. However, due to the decline in market rates, the mortgage bank would have a cost of 8% compare to a market rate of 7.5% it would earn, thus resulting in a negative return of 0.5%.
Answer:
The two ways that a corporation can be classified by ownership are: publicly held and privately held
Explanation:
Corporation is majorly defined by the ownership of the entity and this ownership can only be determined by the number of share being held by private groups and promoters or the general public.
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Answer:
The answer is $1,500
Explanation:
Accounting equation can be stated as follows:
Equity = Asset - Liability
Asset = Equity + Liability
Liability = Asset - Equity.
What a firm is obligated to pay its creditors is known as a liability and its value in the question is $8,900
The assets owned by the company totalled $10,400
Now to find market value of the shareholders' equity, we use:
Equity = Asset - Liability
$10,400 - $8,900
= $1,500
