When businesses raise the price of a needed product or service after a natural disaster, this is known as price gouging. Price gouging is something that businesses do after a natural disaster when they know consumers are going to need a specific product or service so they raise the price because they know people are going to buy it anyways. An example of this is when they raise gas prices after a natural disaster, knowing people still need gas.
Answer:
A) $5,000
Explanation:
Jermaine and Kesha can claim an American Opportunity (AO) credit for both of their daughters, Devona and Arethia.
Devona's AO credit is $2,500 (100% of the initial $2,000 qualifying expenses and 25% of the next $2,000 qualifying expenses).
Arethia's AO credit is the same as Devona's, $2,500.
The total American Opportunity credit claimed is $5,000 ($2,500 + $2,500)
<u>Solution and explanation</u>
Present value of the $1,500 monthly payments is
PMT $1,500
Annual Rate 6.05%
Number of period (NPER) 420
Present value Annuity (PVA) (calculated in excel using PV function) $261,528.41
$261,528.41
Cost of Home $310,000
Amount of principal still owe = $310,000 - $261,528.41 $48,471.59
Balloon payment in 35 years, which is the FV of the remaining principal =
Present Value $48,471.59
Annual Rate 6.05%
Number of period (NPER) 420
Future Value (calculated in excel using FV function) $400,677.90
Balloon payment = $400,677.90
Answer: <em>c. The required returns on all stocks have fallen, but the fall has been greater for stocks with higher betas.</em>
Explanation:
The Capital Asset Pricing Model formula can be applied to this question.
The formula is,
Er = rF + b( rM - rF)
Where
Er is the required return
rF is the risk free rate
b is beta
rM - rF is the market premium.
Now looking at that formula, you can tell that if market premium falls, the required return would fall as well.
However, for stocks with larger betas, they would drop more spectacularly because they would be coming from higher values to lower.
Take a stock with beta 4 vs one with beta 5 for instance.
Assume that Market premium went from 6% to 3% and a risk free rate of 3%.
<u>Beta 5 stock </u>
When market premium is 6,
= 3% + 5 (6%)
= 33%
When market premium is 3,
= 3% + 5(3%)
= 18%
<u>Beta 4 stock </u>
When market premium is 6
= 3% + 4 (6%)
= 27%
When market premium is 3
= 3% + 4 (3%)
= 15%
Notice how the stock with beta 5 fell by 15% while the stock with beta 4 fell by 12%.
Sammy's quarter-pound burger is positioned by: price-quality
<u>Explanation:</u>
The price-quality way of positioning practices the similarity within price and quality before-mentioned that it optimally values a commodity according to the feature of the commodity to retain the commodity hovering in the customer's perception. Pricing does not necessitate to be huge for more leading positioning.
Marketers frequently do price/ quality properties to locate their trademarks. Although the price is an essential factor, the commodity quality must be tantamount to, or indeed more reliable than, fighting trademarks for the positioning strategy to be active.