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3 years ago

Independent risks can be diversified by holding a large number of uncorrelated assets with independent risks.

1 answer:

8 0

The statement "Independent risks can be diversified by holding a large number of uncorrelated assets with independent risks." is true.

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Consider the following scenario to answer the following questions: Kukla makes tables, with an opportunity cost of 3 rugs per ev

mote1985 [20]

Answer:

Explanation:

In this question, we are told to state what the reaction of Koka and Zola will be;

Kukla and Zola both like the proposal. As according to the given opportunity cost for Kukla (3 rugs per every 4 tables) she can get 1.5 rugs for 2 tables .But with the offer made now she can get 2 rugs for giving 2 tables.

Given the opportunity cost for Zola ( 2 tables per every 3 rugs ) she must give 3 rugs for getting 2 tables. But with the offer made she can now get 2 tables for giving away only 2 rugs .

So both Kukla and Zola are happy with the offer.

3 0

3 years ago

Read 2 more answers

2.Think of two investment opportunities and compare them to each other. Give a brief outline of what they are, how they work, an

Eddi Din [679]

So lets say we have two investment opportunities. A new convenient store in your neighborhood or a new shopping center more than 5 miles away from where you live... What would you invest in well lets look at the pros and cons of each investment. So even though the new convenient store is right around the corner from you and prices are low the new shopping center has better products, warranty and higher prices unlike the convenient store closer to you. So we have an investment budget of $1000 dollars and want to spend it wisely we need to access what has a better chance of being successful with what you put into it. So the convenient store will reach less people has a bargain price but also doesn't have security cameras. Even though the shopping center has great employees, top-of-the-line products, high security, and a great establishment but also has flaws. What are you gonna invest in, will you take risks? My personal opinion is that I would invest in the shopping center because more people would be attracted to it because of the quality of service and products. So it would have a better probability in success and good use of my money.

4 0

3 years ago

Company FIN3610-FTRA has a six-year project that requires an initial investment of $30,000. Every year, the project will pay fix

lara31 [8.8K]

Answer:

909.09

Explanation:

Breakeven quantity are the number of units produced and sold at which net income is zero

Breakeven quantity = fixed cost / price – variable cost per unit

$20,000 / 58 - 36 = 909.09

4 0

2 years ago

4. Each year, Holly's Best Salad Dressing, Inc. (HBSD) purchases 50,000 gallons of extra virgin olive oil. Ordering costs are $1

Norma-Jean [14]

Answer:

HBSD should take the discount because it will

lead to as savings of $1,120.00

Explanation:

step 1

Determine the the inventory cost of EOQ

EOQ =√ (2× Co× D)/Ch

= √(2× 100× 50,000)/ 80% × $0.50

= 5,000 units

Inventory cost = Purchase cost + Ordering cost + carrying cost

Purchase cost = 50,000 × $0.50 = 25,000.00

Ordering cost = (50,000/5000)× 100 = 1,000

carrying cost = (5000/2) × $0.50 × 80% = 1,000

Total cost 27,000.

Step 2

Determine the inventory cost for order of 10,000 gallons

Order of 10,000 gallons

Purchase cost = $(0.50-0.03) × 50,000 = 23,500.

Ordering cost = (50,000/10,000) × 100 = 500

Carrying cost = (10000/2) × $(0.50-0.03)× 80% =1880

Total cost 25,880.

Step 3

Compare the cost under the two options

HBSD should take the discount because it will

lead to as savings of $1,120.00 i.e (927,000 - 25,880.)

6 0

3 years ago

g Suppose that if GSI drops the price on the Glucoscan 3000 immediately, it can increase sales over the next year by 30% to 130,

Amanda [17]

Complete Question:

Glucose Scan Incorporated (GSI) currently sells its latest glucose monitor, the Glucoscan 3000, to diabetic patients for $129. GSI is considering lowering the sale price to $99 per unit. The cost of goods sold for each Glucoscan unit is $50, and GSI expects to sell 100,000 units over the next year. The marginal corporate tax rate is 40%. Suppose that if GSI drops the price on the Glucoscan 3000 to $99 immediately, it can increase sales over the next year by 30% to 130,000 units.

Also suppose that for each Glucoscan monitor sold, GSI expects additional sales of $100 per year on glucose testing strips and these strips have a gross profit margin of 75%. These strip sales occur on all monitor sales regardless of the price of the monitor. Including the increase in the sale of testing strips, the incremental impact of this price drop on the firms EBIT is closest to:

Answer:

$720,000

Explanation:

Incremental Earnings Before Interest and Tax Analysis

Details Current price Reduced price

Units Sold 100,000 130,000

Unit sales price 129 99

Sales Revenue $12,900,000 $12,870,000

Cost of Goods sold at $50 5,000,000 $6,500,000

Gross Profit $7,900,000 $6,370,000

G. Profit on Strips sold at $75 $7,500,000 $9,750,000

Total Gross Profit for the year $15,400,000 $16,120,000

The Net benefit of this price change is increase of Earnings before interest and tax by $720,000.

3 0

2 years ago