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3 years ago

Hedging transactions in an active future market have zero. A. True B. False

Business

1 answer:

Evgen [1.6K]3 years ago

7 0

Answer:

A. True

Explanation:

Hedging transactions can be described as derivative that are purchased in order to reduce investment risk of investments by using options, futures or forward contracts as insurance.

A futures market refers to a central financial exchange where standardized futures contracts are bought and sole as defined by the exchange.

Generally, positive net present value (NPV) is yielded by hedging. But the NPV will be zero or even slightly negative as when the market becomes active about the future.

Based on this explanation, the correct option is A. True. That is, hedging transactions in an active future market have zero.

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Fresh Foods, a large restaurant chain, needed to determine if it would be cheaper to produce 5,000 units of its main food ingred

ICE Princess25 [194]

Answer:

Fresh Foods

Make or Buy Decision:

1. Make the ingredient in-house.

2. Make in-house is more cost effective by $3,000 ($90,000 - 87,000)

3. If 40% of the fixed overhead can be avoided if the ingredient is purchased externally:

Total cost:

To make in-house = $87,000

To buy = $78,000 ($60,000 + $30,000 x 60%)

To buy now becomes more cost effective by $9,000 ($87,000 - 78,000).

Explanation:

a) Management in production companies are always faced with the buy or make decision. For this type of decision making, the appropriate costs to analyze are the differential (incremental) costs. These are costs that make a difference between alternatives.

b) Calculation of cost:

Make Buy

Total Unit

Purchase $60,000

Direct materials $25,000 $5.00

Direct labor 15,000 3.00

Variable manufacturing overhead 7,500 1.50

Variable marketing overhead 9,500 1.90

Fixed plant overhead 30,000 6.00 30,000

Total $87,000 $17.40 $90,000

Total variable costs $57,000 $60,000

6 0

3 years ago

On November 1 of the current year, Rob Elliot invested $30,000 of his cash to form a corporation, GGE Enterprises Inc., in excha

andrew-mc [135]

Answer:

1. What is the amount reported for total liabilities and stockholders' equity on December 31?

$56,150 (same as total assets)

2. What is the retained earnings amount reported on December 31?

= total equity - common stock = $37,785 - $30,000 = $7,785

3. How much does GGE Enterprises Inc. owe to its creditors?

accounts payable = $56,150 - $37,785 = $18,365

4. How much cash is being held by GGE Enterprises Inc.?

cash = $56,150 - $8,350 - $15,500 = $32,300

5. By what amount did retained earnings increase or decrease during the period?

$7,785 - $5,000.00 from Nov. = $2,785

6. What is the amount of profit or loss during December?

profit = increase in retained earnings + dividends = $2,785 + $5,750 = $8,535

7. What were the total expenses for December?

total expenses = fees earned - December's profit = $27,250 - $8,535 = $18,715

8. How much was paid for utilities?

$18,715 - $6,450 - $4,625 - $1,220 - $400 = $205

Explanation:

the numbers are all mixed, so I looked for a similar question:

Cash ? = $56,150 - $8,350 - $15,500 = $32,300

Accounts Receivable $8,350.00

Land $15,500.00

Accounts Payable ? = $56,150 - $37,785 = $18,365

Common Stock ? $30,000

Retained Earnings = $37,785 - $30,000 = $7,785 ($5,000.00 from Nov. + $2,785 from Dec.)

Dividends $5,750.00

Fees Earned $27,250.00

Supplies Expense $6,450.00

Utilities Expense ?

Wages Expense $4,625.00

Rent Expense $1,220.00

Miscellaneous Expense $400.00

5 0

3 years ago

A consumer expenditure survey reports the following information on consumer protein spending:201820192020PQPQPQFish$2.001000$2.5

ivann1987 [24]

Answer:

(a) "Cost of living" index decrease by 14.42% between 2018 and 2019.

(b) "Cost of living" index increase by 30.73% between 2018 and 2020.

Explanation:

Note: See the attached excel file for the calculations of the "cost of living" index for eash of 2018, 2019, and 2020 using 2018 as the base year.

(a) by how much does a "cost of living" index increase between 2018 and 2019.

Cost of living index in 2018 = 100%

Cost of living index in 2019 = 85.68%

Increase (decrease) in cost of living index = Cost of living index in 2019 - Cost of living index in 2018 = 85.68% - 100% = (14.42%)

Therefore, "cost of living" index decrease by 14.42% between 2018 and 2019.

(b) by how much does a "cost of living" index increase between 2018 and 2020.

Cost of living index in 2018 = 100%

Cost of living index in 2020 = 130.73%

Increase (decrease) in cost of living index = Cost of living index in 2020 - Cost of living index in 2018 = 130.73% - 100% = 30.73%

Therefore, "cost of living" index increase by 30.73% between 2018 and 2020.

(c) by how much does a "cost of living" index increase between 2019 and 2020

Cost of living index in 2019 = 85.68%

Cost of living index in 2020 = 130.73%

Increase (decrease) in cost of living index = Cost of living index in 2020 - Cost of living index in 2018 = 130.73% - 85.68% = 45.05%

Therefore, "cost of living" index increase by 45.05% between 2018 and 2020.

Download xlsx

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3 years ago

Who wants to be good friends

NemiM [27]

Answer:

Explanation:

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3 years ago

Read 2 more answers

Find the EAR in each of the following cases: Stated Rate (APR) Number of Times Compounded Effective Rate (EAR) 7% Quarterly 17 M

inna [77]

Answer:

7.19

18.39

13,88

10.51%

Explanation:

EAR = (1 + periodic interest rate)^m - 1

m = number of compounding

a. ( 1 + 0.07/4)^4 - 1 = 7.19%

b. (1 + 0.17/12)^12 - 1 = 18.39%

c. (1 + 0.13/365)^365 - 1 = 13.88%

d. EAR =

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3 years ago