Answer:
$1,356.44
Explanation:
Computation for the value of one futures contract on the index
Using this formula
Futures contract =(Stock index value/(1+Risk-free rate)-Anticipated dividend
Let plug in the formula
Futures contract=$1,500/(1+0.0575) - $62
Futures contract=$1,500/(1.0575) - $62
Futures contract=$1,418.44 - $62
Futures contract=$1,356.44.
Therefore the value of one futures contract on the index will be $1,356.44.
Answer:
The correct answer is that the price of the product will decrease in order to meet the equilibrium
Explanation:
Equilibrium point is the point where the quantity supplied is equal to the quantity demanded. And the equilibrium price as well as the quantity is evaluated through the intersection of the demand the supply.
When the quantity which is supplied is greater or more than the quantity demanded, it will create a situation of surplus. And if the product price is decreased or lowered down, then the quantity demanded of the product will increase or rise until it reached to equilibrium. In short, the surplus drives the price down.
Answer:
(A)
accumualted depreication equipment 41,000 debit
equipment 41,000 credit
(B)
accumualted depreication equipment 37,200 debit
loss at disposal 3,800 debit
equipment 41,000 credit
Explanation:
to retire the equipment itt will write-off their equipment account
if the accumulated depreication matches the book value then there will be no loss at disposal while if lower a loss will be recognized.
(a) 41,000 book value - 41,000 depreciation = 0 no loss
(b) 41,000 - 37,200 = 3,800 loss at disposal
Answer:
Date Account Title Debit Credit
June 30 Cash $150
Interest revenue $150
Explanation:
Interest earned is considered to be revenue so it will be credited to the interest revenue account.
Cash will be debited because the interest revenue increased it and assets are debited when they increase.
Answer:
The risk premium on the risky investment is 8%
Explanation:
The first portfolio pays 15% rate of return with probability 60% in a good
The second portfolio 5% return with probability 40% in a bad state
The risk port-folio expected return = 60% * 15% + 40% * 5%
Expected return = 0.6 * 15% + 0.4* 5%
Expected return = 0.09 + 0.02
Expected return = 0.11
Expected return = 11%
Risk premium on the risky investment = Expected return - Risk free rate
= 11% - 5%
= 8%
The risk premium on the risky investment is 8%
