Answer:
Required rate of return = 8%
Explanation:
<em>The price of a stock using the dividend valuation model is the present value of the the future dividend expected from the stock discounted at the required rate of return.
</em>
This model is represented as follows
D(1+g)/(r-g) = P
Price, D- dividend payable in now, ke- required rate of return, g- growth rate
35 = 1×(1.05)/ke-0.05
35 × (ke-0.05) = 1.05
35ke - 1.75
= 1.05
35Ke = 1.05 + 1.75
35ke = 2.8
ke= 2.8/35= 0.08
Ke = 0.08× 100 = 8%
Required rate of return = 8%
Answer:
The firm's cash flow to creditors during 2018 was –$85,000
Explanation:
The firms cash flow to creditors would be calculating by substracting the interest expense of the firm to the long-term debt taken during the period.
Cash flow to creditors = Interest expense – Net new LTD borrowing
Cash flow to creditors = Interest expense – (LTDend – LTDbeg)
Cash flow to creditors = $255,000 – ($2,210,000 – 1,870,000)
Cash flow to creditors = –$85,000
Answer:
The correct answer is D
Explanation:
Checking account is an account at the bank against that checks can be drawn by the depositor. In this account, an individual deposits the money or can spend the money.
In this case, she gave a loan of amount $10,000 and also deposited the full amount of the loan into the checking account. So, this will affect the loans as well as the deposits as both will increase with the same amount as the deposit.
Bea Moran wants to establish a long derivatives position in a commodity she will need to acquire in six months. Moran observes that the six-month forward price is 45.20 and the six-month futures price is 45.10. This difference most likely suggests that for this commodity: futures prices are negatively correlated with interest rates.
This is further explained below.
<h3>What are interest rates?</h3>
Generally, the fraction of a loan that is charged as interest to the borrower is often stated as a yearly percentage of the loan outstanding.
"lower interest rates encourage people to spend money on house upgrades"
In conclusion, Bea Moran would want to construct a long derivatives position in a commodity that she will need to buy in a little over half a year's time. Moran notes that the price of the six-month forward contract is now at 45.20, while the price of the six-month futures contract is currently at 45.10. Because of this disparity, it is quite probable that the prices of futures contracts for this commodity have an inverse relationship with interest rates.
Read more about interest rates
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Answer: C. Idiosyncratic Risk
Explanation:
Idiosyncratic risk which is also referred to as UNSYSTEMATIC RISK is the inherent risk involved when a specific asset is invested in.
The risk affects that specific asset and not the rest of the portfolio or the market. Hence it is the OPPOSITE of SYSTEMATIC RISK as Systematic risk affects all companies.
Idiosyncratic risks are more rooted in individual companies (or individual investments). Investors can mitigate idiosyncratic risks by diversifying their investment portfolios.
A Stock being dependant on a keep figure falls under this type of risk as it is unique to a certain company.
Steve Jobs was considered the Visionary behind Apple and so when he was ill and finally died, Apple Stock kept going down but not by too much.
Bless his soul.