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3 years ago

Which of the following statements is true? Multiple Choice

Business

1 answer:

icang [17]3 years ago

4 0

Answer:

1. Economic investment refers to the creation and expansion of business enterprises.

Explanation:

Economic investments: increase of the capital of a company. This can range from human resources, equipment, facelities, raw materials and others. in general it refers to tangible assets used into the business operations,

While Financial investments refer to allocation of cash to achieve a certain yield over a period. In financial investment we can find bonds, stock, rela state ventures, derivates among others. If it is traded with the expectation of a financial gain (cash inflow in the future are greater than cash outflow at purchase) could be considered this type of investment.

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Your Uncle Mike is approaching retirement and he asks for your advice for a safe place to invest several thousand dollars. He wa

zmey [24]

Answer:

d. treasury and top-grade corporate bonds pay interest two times each year

Explanation:

Treasury bonds represent the best solution for investing, having in mind the low-risk aspect and the fact that they are issued by the government. Treasury and top-grade corporate bonds always pay semiannual interests.

Junk bonds should not be even considered in risk-free options, as a junk bond is a bond issued by a struggling company, which may happen not to pay any interest sometimes.

Common stock does not necessarily have to pay quarterly dividends, as some companies pay dividends monthly, or even annually. Also, the risk is still lower in treasury bonds, as common stock becomes questionable in the case of company liquidation. If and when that happens, common stockholders gain rights to company assets only after bondholders and preferred shareholders become paid.

The default risk is present in all bonds, including Yankee bonds, which are issued by foreign companies in the USA.

6 0

3 years ago

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

Evgen [1.6K]

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.

7 0

3 years ago

Land in the Marcellus Shale natural gas play is currently leasing for $10,000 per acre. 100 acres are needed in order to drill f

WARRIOR [948]

Answer:

You can find your answer in attached document.

Explanation:

7 0

3 years ago

Tunnel Incorporated provided the following information regarding its single product: Direct materials used $ 250 comma 000 Dire

Paha777 [63]

Answer:

increase of $283,058

Explanation:

Consider the incremental Costs and Revenues arising from accepting a special order.

The company has excess capacity therefore, the current fixed overheads would be irrelevant (will have been incurred whether or not the special order is accepted. Also fixed expenses are irrelevant since regular sales will not be affected by this special order.

Sales (9,500× 52) 494,000

Direct materials (250,000/43,000×9,500) (55,233)

Direct labor (470,000/43,000×9,500) (103,837)

Variable manufacturing overhead (120,000/43,000×9,500) (26,512)

Variable selling and administrative (65,000/43,000×9,500) (14,360)

Additional fixed manufacturing overhead costs (11,000)

Net Income 283,058

Therefore an increase of $283,058 would be expected from accepting a special order.

8 0

3 years ago

Krell Industries has a share price of $ 22.77 today. If Krell is expected to pay a dividend of $ 1.09 this year and its stock pr

hoa [83]

Answer:

Dividend yield is 4.79%

Cost of equity is 11.64%

Explanation:

The dividend yield on Krell Industries share price is the dividend of $1.09 divided by the price of the share today of $22.77

dividend yield=$1.09/$22.77=4.79%

The equity cost of capital can be calculated from the share price formula given below by changing the subject of the formula to cost of equity,r.

stock price=Do*(1+g)/r-g

Do is the dividend paid this year of $1.09

g is the dividend growth of dividend which is computed thus:

g=share price at end of the year-share price now/share price now

g=($24.33-$22.77)/$22.77=6.85%

r is the unknown

stock price is $24.33

24.33=1.09*(1+6.85%)/(r-6.85%)

24.33=1.164665 /r-6.85%

r=(1.164665 /24.33)+6.85%

r=11.64%

3 0

3 years ago