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3 years ago

Which one of the following is a claimed disadvantage of privatisation?

Business

1 answer:

Serga [27]3 years ago

8 0

Answer:

3. There will be less competition than when the industry was nationalized monopoly

Explanation:

Privatization transfers ownership of state-owned corporations or properties from the government to the private sector. The transfer is through the sale of government-held shares to another company or the general public.

Since state-owned enterprises are large corporations, privatization creates the possibility of forming private monopolies. The private monopolies are likely to dominate the market and stifle out the competition. They are also likely to increase prices as private business is profit-motivated, which is detrimental to consumers.

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A company currently pays a dividend of $3.4 per share (D0 = $3.4). It is estimated that the company's dividend will grow at a ra

ArbitrLikvidat [17]

Answer:

Current price of stock =$128.06

Explanation:

The Dividend Valuation Model is a technique used to value the worth of an asset. According to this model, the worth of an asset is the sum of the present values of its future cash flows discounted at the required rate of return.

The model is given as

P = D× g/(r-g)

P- price, D- dividend payable in year 1, r -cost of equity, g - growth rate in dividend

Cost of equity

The cost of equity can be calculated using the Capital Asset Model (CAPM).

Ke= Rf +β(Rm-Rf)

Ke =? , Rf- 6.5%, (Rm-Rf)- 1.5, β- 1.3

Ke=6.5% + 1.3× (1.5)= 8.45%

Stock price

PV of dividend in year 1 = 3.4× 1.17× 1.0845^(-1)=3.668

PV of dividend in year 2 = 3.4× 1.17^2× 1.0845^(-2) = 3.9572

<em>PV of dividend in year 3</em>

This will be done in two(2) steps:

Step 1- PV in year 2 terms

3.4× 1.17^2× 1.05/(0.0845- 0.05)= 141.651

Step 2- PV in year 0

141.6513913× 1.0845^(-2)= 120.4375

Current piece of stock = 3.668 + 3.957 + 120.4375 = 128.062

Current price of stock =$128.062

5 0

3 years ago

Firms outside of trading areas run the risk of being shut out of the single market by the creation of a Multiple Choice ""trade

swat32

Answer:

"trading fortress."

Explanation:

Trade can be defined as a process which typically involves the buying and selling of goods and services between a producer and the customers (consumers) at a specific period of time.

Firms outside of trading areas run the risk of being shut out of the single market by the creation of a "trade fortress." A trade fortress serves as a barrier for the exchange of goods and services.

Free trade policy includes the adoption and implementation of tariffs and quotas between countries.

Trade policies tariffs and quotas will most likely benefit domestic producers of the protected good and harm domestic consumers of the protected good as they're made to pay for the consumption of imported products. Hence, under free trade there are more societal benefits due to the specialization of domestic goods.

Tariffs can reduce both the volume of exports and imports in a country.

6 0

3 years ago

FarCry Industries, a maker of telecommunications equipment, has 2 million shares of common stock outstanding, 1 million shares o

Ulleksa [173]

Answer:

18.52%

Explanation:

Calculation for the what would be the equity weight

Using this formula

Equity weight =E÷E+P+D

Let plug in the formula

Equity weight=$2,000,000×$27÷$2,000,000×$27+$1,000,000×$14.50+$10,000×.98×$1,000

Equity weight=$14,500,000÷$78,300,000

Equity weight=.1852×100

Equity weight=18.52%

Therefore what would be the equity weight is 18.52%

7 0

3 years ago

You are a risk-averse investor who is considering investing in one of two economies. The expected return and volatility of all

galben [10]

Answer:

It's best to invest in the second economy

Explanation:

The question does not provide information on the hypothetical economic expectations of the two economies, but as a risk-averse investor, it's a better idea to try to "spread" the risk instead of concentrating it.

In the first economy, conditions might or might not be good. If they are good, returns will be extraordinary because all stocks will provide good returns, but if conditions take a turn for the worse, all stocks prices will fall and the financial consequences will be catastrophic.

In the second economy, results might never be as good as in the first economy, but they also will not ever be as bad. The risk is spread between various stocks, and while some may fall in price, others will rise, and viceversa. For a risk-adverse investor, this a far better option.

3 0

3 years ago

What is an incentive

Anit [1.1K]

A thing that motivates or encourages someone to do something

4 0

4 years ago

Read 2 more answers