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podryga [215]
3 years ago
12

Which one of the following statements best defines the efficient market hypothesis? A. Efficient markets limit competition. B. S

ecurity prices in efficient markets remain steady as new information becomes available. C. Mispriced securities are common in efficient markets. D. All securities in an efficient market are zero net present value investments. E. Profits are removed as a market incentive when markets become efficient
Business
1 answer:
lubasha [3.4K]3 years ago
5 0

Answer:

The correct answer is letter "D": All securities in an efficient market are zero net present value investments.

Explanation:

The Efficient Market Hypothesis (EMH) states that neither public or insider information cannot help in an attempt to beat the market because stocks already show all available information possible. Thus, neither using technical or fundamental analysis could be useful to predict future stock price movement.  

<em>In other words, in a market under EMH all stocks are zero Net Present Value (present value inflows minus present value outflows) investment vehicles.</em>

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Angela Fox and Zooey Caulfield were food and nutrition majors at State University, as well as close friends and roommates. Upon
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Answer:

  a) maximize 12x+16y subject to x+y≤60; x+2y≤80; 2x-3y≥0; x-9y≤0.

  b) 40 fish and 20 beef dinners

  c) $800

Explanation:

Let x and y represent the numbers of fish and beef dinners to prepare, respectively. Then the relations these values must satisfy are ...

  x + y ≤ 60 . . . . . a maximum of 60 dinners will be sold

  0.25x + 0.50y ≤ 20 . . . . . kitchen hours cannot exceed 20

  x/y ≥ 3/2 . . . . . . at least 3 fish dinners for each 2 beef dinners will be sold

  y ≥ 0.10(x +y) . . . . at least 10% of dinners sold will be beef

While satisfying these relations, we want to maximize the profit function:

  p = 12x +16y

a) The linear programming problem can be formulated as ...

  Maximize 12x +16y, subject to ...

  • x + y ≤ 60
  • x + 2y ≤ 80
  • 2x - 3y ≥ 0
  • x - 9y ≤ 0

__

b) The graph shows the constraint inequalities with the comparison symbol reversed. The effect of that is to shade the area that is NOT part of the solution set, leaving the feasible region white. The vertex of the (white) feasible region that makes the profit line farthest from the origin is the solution we're looking for. Once the profit line is plotted so we can compare its slope to the lines bounding the feasible region, it becomes clear which vertex is the one that maximizes profit.

The solution is (x, y) = (40, 20).

  • 40 fish dinners
  • 20 beef dinners

__

c) The maximum earnings are estimated to be ...

  ($12)(40) +($16)(20) = $800

5 0
3 years ago
Roderick is in 11th grade and wants to attend college to become a marine biologist. He knows he will need funds. What should he
Alecsey [184]

Answer – B (He could fill out a FAFSA form to determine what financial aid he would qualify for)

 

<span>The Free Application for Federal Student Aid (FAFSA) form can be filled out annually by both current and soon-to-be college students in the United States to determine whether they are qualified for student financial aid.</span>

6 0
3 years ago
Read 2 more answers
Use the following information to answer questions 4a.1-4a.5 Gerrell Corp. is comparing two different capital structures. Plan I
maxonik [38]

Answer:

Gerrel Corp.

EPS (Earnings per share) = Earnings after Tax/Number of outstanding shares

Plan I:

EBIT =                    $90,000

Interest =                 $4,750 ($95,000 x 5%)

Pre-Tax Income = $85,250

Income Tax Exp.      34,100 ($85,250 x 40%)

After Tax Income  $51,150

EPS = $51,150/18,000 = $2.84 per share

Plan II:

EBIT =                    $90,000

Interest =                 $9,500 ($190,000 x 5%)

Pre-Tax Income = $80,500

Income Tax Exp.     32,200 ($80,500 x 40%)

After Tax Income  $48,300

EPS = $48,300/14,000 = $3.45 per share

Plan III:

EBIT =                    $90,000

Pre-Tax Income = $90,000

Income Tax Exp.     36,000 ($90,000 x 40%)

After Tax Income $54,000

EPS = $54,000/22,000 = $2.45 per share

Explanation:

a) Data and Calculations:

Plan I = 18,000 shares + $95,000 debt

Plan II = 14,000 shares + $190,000 debt

Difference = 4,000 shares + $95,000 debt

Share price = $95,000/4,000 = $23.75

EBIT = $90,000

Interest Rate = 5%

Corporate Tax Rate = 40%

b) Capital Structure:

Plan I: (Equity and Debt)

Shares of 18,000 x $23.75 + $95,000 debt = $522,500 in total capital

Plan II: (Equity and Debt)

Shares of 14,000 x $23.75 + $190,000 debt = $522,500 in total capital

Plan III: (All-equity plan):

Shares of 22,000 x $23.75 = $522,500 in total capital

c) The Earnings per share is the measurement of the Net Income to stockholders divided by the number of outstanding shares.  It gives an idea about the profitability of the entity, especially with regard to the profit made for common stockholders.  The EPS is also one of the metrics used in the calculation of the P/E ratio to indicate whether a company's shares are undervalued or overvalued.

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3 years ago
Geri is a minor. Without her parents’ knowledge, she signs a contract to buy an airline ticket to Hawaii for spring break. Geri’
brilliants [131]
<span>Geri is a minor. Without her parents' knowledge, she signs a contract to buy an airline ticket to Hawaii for spring break. Geri's parents are liable for no part of the price of the ticket. This is because minors lack the legal capacity to make a contract.</span>
8 0
3 years ago
Convexity implies that duration predictions: I. Underestimate the percentage increase in bond price when the yield falls. II. Un
mestny [16]

Answer:

The correct answer is I. Underestimate the percentage increase in bond price when the yield falls; IV. Overestimate the percentage decrease in bond price when the yield rises.

Explanation:

Convexity is the relationship between price and profitability of a bond. The duration has to do with the period in which the bonds mature, where some variables such as redemptions are taken into account in order to finally be able to measure the risk of changes in interest rates.

7 0
3 years ago
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