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Leto [7]
3 years ago
9

The capital allocation process involves the transfer of capital among different entities that include individuals, small busines

ses, banks, financial intermediaries, companies, mutual funds, and other market participants. In a developed market economy, capital flows freely between entities that want to supply capital to those who want it. This flow of capital can be classified in three ways. In the table below, identify the nature of capital transfer given in the scenario with its appropriate classification:(a) Elliot invests $25,000 by purchasing 1,000 shares of an emerging markets mutual fund. This mutual fund invests in companies in Brazil, India, and China. He bought the mutual fund from the mutual fund company.(b) Based in Grass Valley, California, L & M Seeds Co. is a small company that manufactures organic seeds. To raise capital, the company sells stocks directly to savers in Grass Valley without involving any bank or financial intermediary.(c) xEdu.com is an early-stage start-up company that plans to issue its first public common stock—called an initial public offering (IPO)—in six months. It hires an investment bank to underwrite the issue.(d) Erin borrows money from her uncle to buy a new laptop.
Business
1 answer:
Zolol [24]3 years ago
8 0

Answer:

We have to classify the transfers as Direct Transfer, Indirect Transfer Through Investment Banks, and Indirect Transfer Through Financial Intermediaries.

(a) - Indirect Transfer Through Financial Intermediaries.

A market mutual fund is a financial intermediary, and it is the option that Elliot has chosen to transfer capital.

(b) - Direct Transfer

As the statement explains, the company has not gone through any financial intermediation to raise capital. It has directly done so.

(c) - Indirect Transfer Through Investment Banks

xEdu.com hired an an investment banking to issue its initial public offering

(d) - Direct Transfer

Erin borrowed the money from his uncle without any financial intermediation.

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Investment interest expense includes:
Oksana_A [137]

Answer:

A)) interest expense from loans to purchase corporate bonds and interest expense from loans to purchase stocks.

Explanation:

An investment interest expense can be regarded as any amount of interest which is been paid on proceeds of loan that is been used in purchasing investments or securities. investment interest expense can be regarded as been deductible under some particular circumstances.

It should be noted that investment interest expense include;

✓interest expense from loans to purchase corporate bonds

✓ interest expense from loans to purchase stocks.

8 0
3 years ago
Susan drops by Dean's garage sale and buys a painting for $10 that both she and Dean think is a copy of a piece by Matisse, a we
zloy xaker [14]

Answer:

Dean probably will be able to get the painting back.

A mutual mistake was made since both parties involved, Dean and Susan, made an important factual error. They both were convinced that the painting was an ordinary copy and that it was worth very little money.

5 0
3 years ago
Which of the following statements is FALSE?
Illusion [34]

Answer:C. Smaller stock have lower volatility than larger stock.

Explanation:

Volatility refers to the prones of a stock price to changes in market conditions. The higher the impact of changes in market conditions on a stock the higher the volatility level and the lower the impact of changes in market conditions on a stock price the lower the volatility. However the size of a stock does not necessarily determine the level of his volatility, a

stock may be small but still have a large volatility level and stock may be large and have low volatility level.

6 0
3 years ago
The two most likely benefits realized from utilizing enterprise systems are improvements in ________. availability of informatio
Mazyrski [523]

Answer: availability of information and increased interaction throughout the organization

Explanation: An enterprise systems is described as an integrated suite of business applications for virtually every  department, process, and industry, that allows companies and organizations to integrate information across  operations on a company-wide basis by the use of one large database and as a result, there is an upward increase in the availability of information which leads to increased interaction across departments, processes, and industries throughout the organization.

6 0
3 years ago
Sandhill Company had bonds outstanding with a maturity value of $313,000. On April 30, 2017, when these bonds had an unamortized
siniylev [52]

Answer:

bonds payable     313,000 debit

loss at redemption 21,520 debit

           discount on bonds payable   9,000 credit

           cash                                     325,520 credit

Explanation:

face value of the bons     313,000

discount                        <u>       (9,000)  </u>

book value of the bonds 304,000

They are called at 104/100 of the face value of $313,000

that is: 325,520 dollars

we have paid 325,520 dollars for bonds worth 304,000 dollar in our accounting thus, we have a loss for 21,520 dollars

7 0
3 years ago
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