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Finger [1]
3 years ago
11

Suppose Sam would like to use $6,000 of his savings to make a financial investment. One way of making a financial investment is

to purchase stock or bonds from a private company. Suppose RoboTroid, a robotics firm, is selling stocks to raise money for a new lab—a practice known as finance. Buying a share of RoboTroid stock would give Sam the firm. In the event that RoboTroid runs into financial difficulty, it will be paid first. Suppose Sam decides to buy 100 shares of RoboTroid stock.
Which of the following statements are correct? Check all that apply.

a. The price of his shares will rise if RoboTroid issues additional shares of stock. b. RoboTroid earns revenue when Sam purchases 100 shares, even if he
purchases them from an existing shareholder.
c. Expectations of a recession that will reduce economy-wide corporate profits
will likely cause the value of Sam's shares to decline.
d. Alternatively, Sam could make a financial investment by purchasing bonds
issued by the U.S. government.
e. Assuming that everything else is equal, a U.S. government bond that matures 30 years from now most likely pays an interest rate than a U.S. government bond that matures 10 years from now.
Business
1 answer:
grin007 [14]3 years ago
7 0

Answer:

The correct options are option C and Option D.

Explanation:

Lets look at each option in turn and evaluate whether they are correct or incorrect

Option A: Incorrect. This can be understood by thinking in terms of the classic demand and supply of a given item. If the company issues more shares, there will be a greater amount of shares in the market for a potential investor to buy. This additional supply of shares will put a downward pressure on the price of the shares which will cause the share price to decrease.

Option B: Incorrect. When a company issues shares to raise money, it is known as equity finance. By doing so, the company is increasing its capital which is recorded in the balance sheet under the heading of "share capital". Another statement that will be impacted is the cash flow statement under the heading of cash flow from financing activity. The income statement will not be impacted. If Sam purchases shares from another investor, the company's statements will not be impacted.

Option C: Correct. Expectations of a recession that reduce corporate profits for make investors expect a lower return on investment if they invest in a corporation's shares. This will dampen the demand, thereby decreasing the price.

Option D: Correct. An investor measures the opportunity cost of an investment by generally comparing it to the risk free return that they can get on US bonds. So the investor can alternatively invest in US govt instruments.

Option E: Incorrect. A bond maturing 30 years from now will carry a DIFFERENT interest rate due to the varying tenor. The tenor of a bond affects the risk profile of an investment in the bond which makes bonds of differing maturities offer different returns in line with expectations concerning economic performance.

You might be interested in
What makes a politicized internal environment so unhealthy?A. The fact that political infighting consumes a great deal of organi
aliina [53]

Answer:

A. The fact that political infighting consumes a great deal of organizational energy.

Explanation:

When we discuss internal environment of any organization, it includes all the people inside the organization, when we use the term politicized, it impacts negatively on the organization, as it states that there is a political characteristic in the organization.

This is negative as this represents some negative and unethical practices in a corporate entity.

This further impacts the organization in its performance. This might lead to negative results, or in simple terms might not allow the people in organization to perform and give their 100% of input.

Thus, statement A is correct.

3 0
2 years ago
a company uses the weighted average method of process costing. it had 40,000 units in beginning inventory, which were 70% comple
eduard

A company uses the weighted average method of process costing. It had 40,000 units in the beginning inventory, which were 70% complete as to materials and 80% complete as to conversion and during month it started 110,000 units. At the end of the month, 32,000 units were in inventory which 65% complete as to materials and 60% complete as to conversion. <u>The total cost accounted for the month is $1,614,360 with cost per equivalent unit of productions for direct material is $5.70 and for conversion is $4.87</u>

Weighted average method is an approach to valuing a company's business inventory stock and determines the average cost of all inventory items.

Please reference to the first picture for more information about this case.

From the information we know that:

Beginning work in process inventory:

Direct materials costs                 $158,200

Conversion costs                        $193,600

Total beginning inventory cost                   $351,800

Costs added during the month:

Direct materials costs                $632,960

Conversion costs                       $629,600

Total costs added during the month        $1,262,560

Total production costs                               $1,614,360

                                    Units      Materials%     Conversion%

Beginning inventory  40,000         70%                80%

Unit started                 110,000

Ending inentory          32,000        65%                60%

To find the costs per equivalent units of production, we need to know the total equivalent units of production first.

The total equivalent units of production could be found by adding the units completed and transferred out with units of ending work in process. The equivalent units completed and transferred out could be calculated by adding the unit started at the month to the beginning inventory and eliminating the ending inventory units. Please make sure that the beginning inventory amount calculated here should be counted as 100% instead of the presented percentage in the case.

Equivalent units of production                         Direct materials  Conversion

Equivalent units completed and transferred out  129,200            130,800

Equivalent units for ending work in process         20,800              19,200

Total equivalent units of production                     138,800             169,199

Cost per Equivalent unit of production        Direct materials  Conversion

Costs of beginning work in process inventory  $158,200        $193,600

Costs added during month                                 $632,960        $629,600

Total costs                                                            $791,160          $823,200

Equivalent units of production                             138,800           169,199

Costs per equivalent units of production              $5.70              $4.87

For more complete calculation, please refer to the second image below.

Learn more about Weighted Average Method here: brainly.com/question/15095915

#SPJ4

3 0
1 year ago
Your business has two branch stores. The recent physical inventory reports that the merchandise value for each store is: Store A
miv72 [106K]

Answer: Shrinkage for Store A ($40,890), Store B ($28,370)

Given:

Merchandise Value of Stores A and B

<span>A1 $454,385, and  B1 $586,855</span>

Book Value of Stores

<span>A2 $495,275, and  B2 $615,225</span>

Shrinkage<span> refers to the loss of inventory from whatever source.   </span>

Shrinkage for each store is computed as:

Book Value – Merchandise Value

Shrinkage for Store A

A2-A1

495,275-454,385

$40,890

 

Shrinkage for Store B

B2-B1

615,225-586,855

<span>$28,370</span>

6 0
3 years ago
LO 2.3Which of the following methods of cost estimation relies on only two data points?
denis23 [38]

Answer:

the high-low method

Explanation:

The high-low method -

It is the method used by comparing the total cost of the highest level of activity with the lowest level of activity , is referred to as the high - low method.  

This method is used in order to separate the fixed and variable costs for a limited amount of data .

Hence , this method compare the data of two points .

Therefore , the correct option from the given options is the high - low method.

7 0
3 years ago
Corporate bonds issued by Johnson Healthcare currently yield 8 percent. Municipal bonds of equal risk currently yield 6 percent.
Vedmedyk [2.9K]

Answer:

a tax-rate for 25% will make the investor be indifferent between there two bonds

Explanation:

The Municipal bonds are tax free. Therefore, do not pay the income tax for their interest.

We need to set and equation for the net yield of the bonds after tax, which equal the municipal bond:

debt after tax:

cost of debt ( 1 - t) = after-tax

we want to equalize 8% pre-tax with 6% after-tax

0.08 ( 1 - t ) = 0.06

t = 1 - 0.06/0.08 = 1 - 0.75 = 0.25 = 25%

a tax-rate for 25% will make the investor be indifferent between there two bonds

3 0
3 years ago
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