In a market economy, what is TRUE of all trade?

Fill in the blanks: Stock prices fall if investors either expect _________ growth rates or require _________ returns.A. higher,

devlian [24]

Answer:

C. lower, higher

The reason for this is that when growth rates are lower investors will be willing to pay less for the stock is because low growth rate mean that the capital gains will be less as stock price is less likely to increase in the future and dividend growth is also less. Also the DDM model D*(1+G)/1-R shows that mathematically a lower growth rate would mean lower stock price

Also Higher required returns mean that the investor requires higher returns to buy the stock, because he may view the stock as risky and requires higher returns for the risk he is taking or he may have a higher opportunity cost (for eg interest rates may be high) with other investments. Mathematically the DDM model D*(1+G)/R-G shows us that a higher R would mean lower stock price.

Explanation:

7 0

3 years ago

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Martin Enterprises needs someone to supply it with 118,000 cartons of machine screws per year to support its manufacturing needs

Bezzdna [24]

Answer:

$15.66 per carton

Explanation:

118,000 cartons of machine screws

equipment cost $785,000

depreciation per year = $785,000 / 5 = $157,000

fixed manufacturing costs $415,000 per year

variable costs per carton = $10.05 x 118,000 = $1,185,900

initial investment in net working capital $68,000

tax rate 24%

discount rate 12%

price per carton?

initial investment = -$853,000

CF₁ = [(R - $1,600,000 - $157,000) x 0.76] + $157,000 = 0.76R - $1,178,320

CF₂ = [(R - $1,600,000 - $157,000) x 0.76] + $157,000 = 0.76R - $1,178,320

CF₃ = [(R - $1,600,000 - $157,000) x 0.76] + $157,000 = 0.76R - $1,178,320

CF₄ = [(R - $1,600,000 - $157,000) x 0.76] + $157,000 = 0.76R - $1,178,320

CF₅ = [(R - $1,600,000 - $157,000) x 0.76] + $157,000 + $68,000 = 0.76R + $1,110,320

$853,000 = (0.76R - $1,178,320) / 1.12 + (0.76R - $1,178,320) / 1.12² + (0.76R - $1,178,320) / 1.12³ + (0.76R - $1,178,320) / 1.12⁴ + (0.76R + $1,110,320 ) / 1.12⁵ = 0.6786R - $1,052,071.43 + 0.6059R - $939,349.49 + 0.541R - $838,704.90 + 0.483R - $748,943.66 + 0.4312R + $630,025.39

$853,000 = 2.7397R - $4,209,094.87

$5,062,094.87 = 2.7397R

R = $5,062,094.87 / 2.7397 = $1,847,682.18

total revenue = $1,847,682.18

revenue per carton = $1,847,682.18 / 118,000 = $15.6583 = $15.66

8 0

3 years ago

Q4) An investment offers a total return of 12.8 percent over the coming year. Janice thinks the total real return on this invest

Blizzard [7]

Answer:

inflation rate= 5.8%

Explanation:

Giving the following information:

An investment offers a total return of 12.8 percent over the coming year. Janice thinks the total real return on this investment will be only 7 percent.

<u>The real return on investment includes the effect on inflation. </u>

Real rate of return= total return - inflation rate

0.07=0.128 - inflation rate

inflation rate= 0.058= 5.8%

7 0

2 years ago

Laura is using rent-to-own store to purchase a computer valued at $1,000. she is paying $25 per week for 104 weeks(2 years). why

aev [14]

Thank you for posting your question here at brainly. I hope the answer will help you. Feel free to ask more questions.
The loan contribute negatively to her financial well-being is because it takes longer for here to finish paying off the credit.

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3 years ago

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Elmer’s utility function is U(x, y) = min{x, y2}. If the price of x is $25 and the price of y is $15 and if Elmer chooses to con

Arte-miy333 [17]

Answer:

the income is $1,330

Explanation:

The computation of the income is shown below;

Given that

U(x, y) = min{x, y2}

Price of x is $25

ANd, the prcie of Y is $15

So,

25X + 15Y = M

if Y = 7,

So,

At eqm, X = Y^2 = 49

Then ,

M = 25 × 49 + 15 × 7

= 1225 + 105

= 1330

Hence, the income is $1,330

The same should be relevant and considered too

6 0

3 years ago