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IrinaK [193]
3 years ago
6

Clever tests to discriminate between alternative explanations. LaPorta, Lakonishok, Shleifer, and Vishny ("Good News for Value S

tocks," Journal of Finance, June 1997) study the returns on stocks on the few days surrounding their quarterly earnings announcements (relative to various expected return benchmarks). They find that on average, high-B/M stocks earn 0.9% around an earnings announcement. In contrast, low-B/M stocks earn an average of -0.1% around an earnings announcement. The difference is statistically significant.
Discuss whether the return pattern found by LaPorta et al. (1997) around earnings announcements is more consistent with the irrational expectations (behavioral) view, or the risk factor (efficient markets) view of the book-to-market effect, and explain your logic.
Business
1 answer:
yulyashka [42]3 years ago
8 0

Answer:

The answer to the above question is:

"The return patterns around earnings announcement is an example of behaviorial pattern exhibiting as more investors flock to buy the stock which has shown better earnings thus driving up the price. In an efficient market, this information would already be built into the price and thus there would not be any appreciable change in price post earning announcement".

Explanation:

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On November 1, 2016, Cullumber Company places a new asset into service. The cost of the asset is $78500 with an estimated 10-yea
MrRissso [65]

Answer:

$7,000

Explanation:

Depreciation: The depreciation is an expense that shows a reduction in the value of the fixed assets due to tear and wear, obsolesce, usage, time period, etc. It is shown on the debit side of the income statement. It is a non-cash item that does not affect the cash balance.  

The computation of the depreciation expense for 2017 is shown below:

= (Original cost - residual value) ÷ (useful life)

= ($78,500 - $8,500) ÷ (10 years)

= ($70,000) ÷ (10 years)  

= $7,000

In this method, the depreciation is same for all the remaining useful life

3 0
3 years ago
identify three of the many shared ethical standards among businesses that are incorporated in codes of ethics​
erma4kov [3.2K]
Social responsibility, fair pricing and truth in advertising.
4 0
3 years ago
The Porch Cushion Company manufactures foam cushions. The number of cushions to be produced in the upcoming three months follows
yKpoI14uk [10]

Answer: 25,200 pounds

Explanation:

Your question is incomplete as it lacked the first part. I attached a completion that I found.

The company has a policy that the ending inventory of foam each month must be equal to 30% of the following month's expected production needs.

This means that in August, the Opening inventory will be 30% of what was is needed in August and the Closing Inventory will be 30% of what is needed in September.

Remember that each cushion requires 2 pounds of foam as stuffing.

Pounds required in August

= 12,000 cushions * 2

= 24,000 pounds

Opening Stock

= 30% * (12,000 * 2)

= 7,200 pounds

Closing stock

= 30% * ( 14,000 * 2)

= 8,400 pounds.

Foam needed to be purchased in August = Pounds required tonbe produced + Closing Stock - Opening Stock

= 24,000 + 8,400 - 7,200

= 25,200

25,200 pounds of foam are what The Porch Cushion Company needs to purchase in August.

7 0
3 years ago
A corporation makes an investment of $20,000 that will provide the following cash flows after the corresponding amounts of time:
s344n2d4d5 [400]

A) The company should not invest in the provided project due to the negative NPV of the project.

B) The NPV of the project comes out to be (286).

<h3>What is NPV?</h3>

NPV is an abbreviated form of Net present value and computed by deducting the cash outflows from cash inflows at the present value.

Given values:

Cash flow of year 1: $10,000

Cash flow of year 2: $10,000

Cash flow of year 3: $2,000

Cash outflow (cost of investment) =$20,000

Step-1 Computation of PV of cash inflows of every year:

PV of year 1 = Cash inflow of year 1 / (1+ interest rate)^ 1

                    = $10,000 / (1+0.07) ^ 1

                    = $10,000 X 0.934579

                    = $9,346

PV of year 2 = Cash inflow of year 1 / (1+ interest rate)^ 2

                    = $10,000 / (1+0.07) ^ 2

                    = $10,000 X 0.873438

                    = $8,735

PV of year 3= Cash inflow of year 1 / (1+ interest rate)^ 3

                   = $2,000 / (1+0.07) ^ 2

                    = $2,000 X 0.816297

                    =$1,633

Step-2 Computation of total amount of PV of cash inflows:

\rm\ PV \rm\ of \rm\ cash \rm\ inflows = \rm\ PV \rm\  of \rm\  year \rm\  1 + \rm\  PV \rm\ of \rm\ year \rm\ 2 + \rm\ PV \rm\ of \rm\ year \rm\ 3\\\rm\ PV \rm\ of \rm\ cash \rm\ inflows =\$9,346 + \$8,735 + \$1,633\\\rm\ PV \rm\ of \rm\ cash \rm\ inflows =\$19,714

Step-3 Computation of NPV:

\rm\ NPV=\rm\ PV \rm\ of \rm\ cash \rm\ inflows- \rm\ Cost \rm\ of \rm\ investment\\\rm\ NPV=\$19,714-\$20,000\\\rm\ NPV=\$ (286)

Therefore, the NPV comes out to be a negative amount of 286, and hence, the company should not accept the project.

Learn more about the net present value in the related link:

brainly.com/question/14015430

#SPJ1

5 0
2 years ago
The job of increasing public awareness of a company's products, brands, or activities and by fostering desirable company images,
Zina [86]

It is the task of <u>"Public Relations".</u>


Public relations(PR) is the way associations, organizations and people speak with general society and media. A Public relations authority speaks with the intended interest group straightforwardly or by implication through media with an expect to make and keep up a positive picture and make a solid association with the gathering of people. Examples incorporate official statements, pamphlets, open appearances, and so on and also utilization of the internet.

8 0
3 years ago
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