Answer:
Encouraging saving by allowing workers to set aside a portion of their earnings in tax-free retirement
Imposing restrictions on foreign ownership of domestic capital
Explanation:
Answer and Explanation:
The amount and the journal entry is shown below:
a. Amortization Expense - Patents $35,000 ($315,000 ÷ 9 years)
To Patents $35,000
(Being amortization expense is recorded)
b Amortization Expense - Patent $2,600 ($46,800 ÷ 18 years)
To Patents $2,600
(Being amortization expense is recorded)
c Amortization Expense - Franchises $18,000 ($72,000 ÷ 4)
To Franchises $18,000
(Being amortization expense is recorded)
Answer:
Consider the following explanation.
Explanation:
The six different strategies (spreads or combinations) the investor can follow:
1)short Butterfly spread: it’s a spread with selling one call option with the lowest strike price(XL),purchasing two call options with the medium strike price(XM) and selling one call option with the highest strike price (XH) , XL<XM<XH. The strike price (XM) is generally chosen such that its equal to the stock price and options are of same maturity. The strategy shall generate the net income from the selling of calls when the stock price deviated from the strike price XM due to the high volatility. A high jump either way guarantees a net income.
2) The Straddle combination with long one put and long 1 call with the same strike price X and maturity. Its payoff depends on the deviation of the strike price if the big jump either way is expected then either the put or the call expires in the money so that the moneyness(payoffs) covers all the premiums paid for the call and put and there are profits. The high jump either way guarantees a big payoff from either the put or the call.
3)In the Strangle combination there is one long call with strike price (Xc) and one long put with strike price Xp,this combination is cheaper to generate due to purchase of OTM(out of the money) options. If the big jump either way is expected then either the put or the call expires in the money so that the moneyness (payoffs) covers all the premiums paid for the call and put and there are profits. The high jump either way guarantees a big payoff from either the put or the call. It’s easier to cover all the lesser premiums paid for the call and put and generate profits with a big move.
4) The Strip combination consists of 1 call+2 put with same exercise price and maturity. If the big jump either way is expected then either the two put or the call expires in the money so that the moneyness covers all the premiums paid for the call and put and there are profits. The payoff generated by the 2 puts is much more when the stock moves downwards as compared to when the stock moves upwards. Investor is sure of the uncertain directional big jump but thinks that the probability of downward move is greater than the upward move.
5) The Strap combination consists of 2 calls+1 put with same exercise price and maturity. If the big jump either way is expected then either the 1 put or the 2 calls expires in the money so that the moneyness covers all the premiums paid for the call and put and there are profits. The payoff generated by the 2 calls is much more when the stock moves upwards as compared to when the stock moves downwards. Investor is sure of the uncertain directional big jump but thinks that the probability of upward move is greater than the downward move.
6) Short Calendar spread: short shorter term call and at the same time short longer term call therefore the income is generated by the big move from the premiums of the calls and differences in the maturity.
Answer:
Current dividend paid = 8% x $100 = $8
Current yield = <u>Current dividend paid</u>
Current market price
Current yield = <u>$8</u>
$74
Current yield = 0.1081 = 10.81%
Explanation:
Current yield is the ratio of current dividend paid to current market price. The current dividend paid is $8 and the current market price is $74. The division of current dividend by current market price gives current yield.
Answer:
Present Value= $9,003,586.40
Explanation:
Giving the following information:
You have just won the lottery and will receive $1,000,000 in one year. You will receive payments for 35 years and the payments will increase by 3.4 percent per year. The appropriate discount rate is 7.4 percent.
I will assume that 1 million is the first payment of 35.
First, we will calculate the final value. To do this, we need to sum the growing rate to the interest rate.
FV= {A*[(1+i)^n-1]}/i
A= annual deposit= 1,000,000
i= 0.074 + 0.034= 0.108
n=35
FV= {1,000,000*[(1.108^35)-1]}/0.108= $326,067,227.1
Now, we can calculate the present value:
PV= FV/ (1+i)^n
PV= 326,067,227.1/ 1.108^35= $9,003,586.40
