Answer:
A bond portfolio and a stock portfolio both provided an unrealized pretax return of 8% to a taxable investor. If the stocks paid no dividends, we know that the ________.
The after-tax return of the stock portfolio was higher than the after-tax return of the bond portfolio.
Explanation:
The returns from the bond portfolio are taxed at the corporate rate while returns from stock investments are taxed at a lower rate. It is well-known that the risks from stock are higher than the risks from bonds. As a result, the stock investments always attract higher returns and less tax, as the investor can postpone the tax for a longer term. Again, stock investments can be for the long-term unlike bonds that have defined periods.
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Answer:
1. Operating plan.
2. Operating plan.
3. Financial plan.
4. Dividend policy.
5. B and C.
Explanation:
1. Operating plan: provides detailed implementation guidance for a firm's operations, as well as a forecast of the company's expected future free cash flows.
2. Operating plan: provides the inputs necessary for a risk management evaluation using sensitivity analysis, scenario analysis, or simulations.
3. Financial plan: Is based on knowledge of the amount of funds necessary to compensate the firm's shareholders, and the mix of debt and equity capital used to finance the firm.
4. Dividend policy: sets forth specific targets for cash or share distributions to the firm's shareholders.
Capital structure: describes specific targets for the mix of debt and equity used to finance a firm.
Financial planning can be defined as the process of estimating the amount of capital required for the smooth operations of the business and determine how to achieve the firm's set goals and objectives.
Hence, the following statements are true about financial planning;
I. Once a firm's forecasted financial statements are prepared, the firm must determine how much capital it will need to support these plans.
II. Management must monitor operations after implementing a financial plan to detect deviations from the plan and adjust accordingly.
Answer
The answer and procedures of the exercise are attached in the following archives.
Step-by-step explanation:
You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.
Answer:
9.17%
Explanation:
Interest on Note B = $227,000 * 8% * 6/12
Interest on Note B = $9,080
Remaining Interest = $16,300 - $9,080 = $7,220
Annual Interest Rate = $7,220 / $135,000 * 12/7
Annual Interest Rate = 0.0916825397
Annual Interest Rate = 9.16825397
Annual Interest Rate = 9.17%
