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3 years ago

A key reason that actively managed funds have lower returns than index funds with a similar level of risk is that:

1 answer:

5 0

Arbitrage reducing the returns of actively managed funds is a key reason that actively managed funds have lower returns than index funds with a similar level of risk

To add, actively managed funds typically have higher fees than passively managed funds.

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One example of a microeconomic question is, "How will prices in the clothing industry change if the government bans imports from

fredd [130]

Answer:

True

Explanation:

Microeconomics is a branch of economics that studies the decisions individuals and firms make in response to changes in economic factors. These factors include price, resources etc. it studies how firms and individuals allocate and make decisions about resources

The question is looking at the effect of price on an industry. This is what microeconomics study

Macroeconomics is a branch of economics that studies the economy as a whole. Macroeconomics studies economic aggregates such as inflation, unemployment, GDP and growth rate.

6 0

3 years ago

Vivian worked as a manager at her company. She was asked to order a few cars that would be used by company employees. Which best

Arada [10]

To ensure that her company is being socially responsible, Vivian should ensure that the cars are environmentally friendly. Being socially responsible means you do what is best for planet, people, and profits. In this case, taking care of the planet means choosing the car that is the most environmentally friendly.

3 0

3 years ago

The stock of Nogro Corporation is currently selling for $10 per share. Earnings per share in the coming year are expected to be

V125BC [204]

Answer:

a) required rate of return = 10%

b)Also, if there is no growth then Return on Equity will be equal to the Required rate of return. Hence there won't be any change.

c) a cut in the dividend payout to 25% will have no effect or impact and as such the stock price will remain the same.

A complete elimination of dividend will not affect the stock price as well.

Explanation:

The question is in three parts and will be answered accordingly

a) The Required Rate of Return = (The Dividend Expected for the next year/ Current Price of Stock) + the Growth rate

First, we calculate the Dividend expected per share for the next year

=earnings per share x Dividends pay out ratio

=$2 /$10 = 20%

Secondly, we now calculate the return on equity as follows

= Expected Earnings Per share / Current Selling price

= $2 x (1-50%) = 10%

The third is to calculate the Growth rate =

Return on Equity x (1 - Dividend payout ratio)

= 20% x (1-50%) = 10%

Using this with the formula of required rate of return

= ($1 /$10) +10% = 20%

b) First the assumption is that all earnings were paid as dividend with no reinvestment and in this scenario, the lack of reinvestment will mean no growth. Also, if there is no growth then Return on Equity will be equal to the Required rate of return. Hence there won't be any change.

c) Because the Return on Equity is equal to required rate of return, it means a cut in the dividend payout to 25% will have no effect or impact and as such the stock price will remain the same.

A complete elimination of dividend will not affect the stock price as well.

6 0

3 years ago

Planning is often called the primary management function because _____________.

lesantik [10]

Planning is often called the primary management function because,

a. it establishes the basis for all the other things managers do

-Mabel <3

4 0

3 years ago

During 2020, Karen Building Company constructed various assets at a total cost of $12,600,000. The weighted average accumulated

Ivan

Answer:

a. $842,250

b. $842,250

Explanation:

The computation is shown below:

a. For avoidable interest

Weighted average Interest rate applied avoidable interest

accumulated expenditures

$5,205,000 10% $520,500

$2,925,000 11% $321,750

Total $842,250

($8,130,000 - $5,205,000)

Working note for interest rate applied

Particulars Principal Interest

12% ten year bond $6,047,000 $725,640

9% 3 year bond $3,023,500 $272,115

total $9,070,500 $997,755

Now the interest rate is

= $997,755 ÷ $9,070,500

= 11%

2. Now the total interest capitalized is

Total interest is

= $520,500 + $725,640 + $272,115

= $1,518,255

And, the total avoidable interest is $842,250

So we considered the lesser amount i.e. $842,250

6 0

3 years ago