Answer:
The correct answer is letter "C": People place a higher value on a good if they own it than they do if they are considering buying it.
Explanation:
The Endowment Effect reflects a situation in which people value an object more because they own it. The value they would give the object if they did not have it and were going to purchase it would be lower. This scenario takes place when people give a higher value to their objects because of emotional attachment.
Answer:
the answer is D terms and conditions set forth in a lending agreement to reduce the probability of non-payment
Explanation:
covenants help lenders detect deteriorating loan quality.
Answer:
Second National Bank
Present value (PV) = $5,400
Future value (FV) = $13,900
Interest rate (r) = 10% = 0.10
FV = PV(1 + r)n
$13,900 = $5,400(1 + 0.10)n
<u>$13,900</u> = (1.10)n
$5,400
2.574074074 = (1.10)n
Log 2.574074074 = n log 1.10
<u>Log 2.574074074</u> = n
Log 1.10
n = 9.9 years
None of the answers is correct
Explanation:
In this case, we will apply the formula of future value of a lump sum. The present value, interest rate and future value were provided with the exception of number of years. Thus, the number of years becomes the subject of the formula. The future value equals present value, multiplied by 1 plus interest rate, raised to power number of years.
Answer:
3.5%
Explanation:
We will apply asset pricing model to calculate cost of equity (required rate of return). The capital asset pricing model is stated as below:
Cost of equity = Risk-free rate + Beta x Market risk premium
Putting all the number together, we have:
Cost of equity (Beale) = 5.5% + 1.8 x (9% - 5.5%) = 11.8%
Cost of equity (Foley) = 5.5% + 0.8 x (9% - 5.5%) = 8.3%
Cost of equity (Beale) - Cost of equity (Foley) = 11.8% - 8.3% = 3.5%
<em />
<em>Note: You can also do quick calculation as below:</em>
<em>Cost of equity (Beale) - Cost of equity (Foley) = (Beta of Beale - Bete of Foley) x Market risk premium = (1.8 - 0.8) x (9% - 5.5%) = 3.5%</em>
<span>Simulation is an imitation of a situation or a chance behavior that accurately reflects the situation under consideration. </span>
<span>Steps in conducting a simulation in the correct order (first choice)</span>
• State the problem or question
• State the assumptions,
<span>• Assign digits to represent outcomes,
• Simulate many repetitions
• State your conclusions</span>
