In a perfectly competitive market, firms face no barriers to entry or exit.

Given $100,000 to invest, construct a value-weighted portfolio of the four stocks listed below.

Reika [66]

Answer:

Weight of Golden Seas in the portfolio = 1.40%

Weight of Jacobs and Jacobs in the portfolio = 2.42%

Weight of MAG in the portfolio = 88.94%

Weight of PDJB in the portfolio = 7.24%

Explanation:

This can be done as follows:

Step 1: Calculation of value of each stock

Value of stock can be calculated using the following formula:

Value of a stock = Price per share * Number of shares outstanding................ (1)

Using equation (1), we have:

Value of Golden Seas = $14 * 1.43 millions = $20.02 millions

Values of Jacobs and Jacobs = $24 * 1.44 millions = $34.56 millions

Value of MAG = $43 * 29.52 millions = $1,269.36 millions

Values of PDJB = $9 * 11.48 millions = $103.32 millions

Step 2: Calculation of value of the portfolio

This can be obtained by adding the values of all the stocks in step 1 as follows:

Value of the portfolio = Value of Golden Seas + Values of Jacobs and Jacobs + Value of MAG + Values of PDJB = $20.02 millions + $34.56 millions + $1,269.36 millions + $103.32 millions = $1,427.26 millions

Step 3: Calculation of weight of each stock in the portfolio

The weight of each stock in the portfolio is obtained as the values of each stock divided by the value of the portfolio. This can be calculated as follows:

Weight of Golden Seas in the portfolio = $20.02 millions / $1,427.26 millions = 0.0140, or 1.40%

Weight of Jacobs and Jacobs in the portfolio = $34.56 millions / $1,427.26 millions = 0.0242, or 2.42%

Weight of MAG in the portfolio = $1,269.36 millions / $1,427.26 millions = 0.8894, or 88.94%

Weight of PDJB in the portfolio = $103.32 millions / $1,427.26 millions = 0.0724, or 7.24%

8 0

3 years ago

Farmer Corp. owned 20,000 shares of Eaton Corp. purchased in 2009 for $300,000. On December 15, 2012, Farmer declared a property

Evgen [1.6K]

Answer:

Debited to Retained Earnings of $500,000.

Explanation:

At the time of declaration of the dividend, the journal entry is recorded which is shown below:

Retained earning A/c Dr $500,000

To Dividend payable A/c $500,000

(Being cash dividend declared)

On the declaration date, the dividend amount is recorded. So while recording we debited the retained earning account and credited the dividend payable account

All other information which is given is not relevant. Hence, ignored it

3 0

3 years ago

One of the most explosive areas of growth in recent years has been cellular phone networks

Firlakuza [10]

That is a true sentence.

4 0

3 years ago

Read 2 more answers

Firm X is being acquired by Firm Y for $35,000 worth of Firm Y stock. The incremental value of the acquisition is $2,500. Firm X

UkoKoshka [18]

Answer:

$34,789

Explanation:

Worth of stocks = $35,000

Incremental value of the acquisition = $2,500

Stock outstanding of Firm X = 2,000

Price per share of Firm X = $16

Stock outstanding of Firm Y = 1,200

Price per share of Firm Y = $40

Now,

Number of shares issued = 35,000 ÷ 40

or

= 875 shares

Value after merger = (Value of Stock x + Value of Stock Y + Synergy)

= (1200 × 40) + (2000 × 16) + 2500

or

= $82,500

Number of Stock Outstanding after merger = ( 1,200 + 875 )

= 2,075

Thus,

Value per share after merger = $82500 ÷ 2,075

= 39.759

Therefore,

Actual cost of acquisition

= Value per share after merger × Number of shares issued

= 875 × $39.759

= $34,789

5 0

3 years ago

A student has inherited $50,000. If it is placed in asavings account that earns 3% interest, how much isin the account in 30 yea

taurus [48]

Answer:

$121,363

Explanation:

The amount in 30 years is known as the Future Value (FV) . We arrive at this figure by compounding the Present Value using the interest earned on the savings as follows :

PV = $50,000

P/yr = 1

N = 30

PMT = $ 0

i = 3 %

FV = ?

Using a Financial calculator to enter the amounts as shown above, the FV can be determined as $121,363

8 0

3 years ago