The financial meltdown of 2008 was in part due to <u>quants </u>demonstrating the dangers of relying too heavily on the quantitative techniques of scientific management.
<h3>How did the financial meltdown of 2008 happen?</h3>
There were several reasons for the financial meltdown that the United States saw in 2008 and one of them was the overreliance on Quants.
Quants were quantitative models that were used to decide on the financial assets to invest in. They failed to predict the risks associated with Mortgage Backed Securities and this contributed in part to the meltdown.
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Answer: I. must establish an SEC-registered U.S. subsidiary.
III. can effect its business through another registered U.S. broker-dealer.
Explanation:
If a foreign broker-dealer that does not have U.S. based operations wishes to solicit customers in the United States, the broker-dealer must establish an SEC-registered U.S. subsidiary and can also effect its business through another registered U.S. broker-dealer.
Answer:
D. The order quantity is constant, regardless of the demand.
Explanation:
Basic Continuous Review Model relates to inventory stock management, where each time an inventory unit is added in or moved out the stock level is calculated again.
It do not assume that the order quantity is constant as it calculates inventory level after each order, there is no basic assumption as such.
The review model keeps on moving the stock and tries to maintain such level as by ordering the quantity sold, and it keeps on rotating, but there is no standard set for order quantity.
Answer:
Explanation:
a) investors wil receive 6% x ( 1-0.35)
= 3.9% risk free debt after tax.
After tax return from risk free preferred stock earnings must be equal.
to evaluate the cost of capital fro preferred stock = 3.9%/(1-0.15)
= 4.59%
b) the after-tax debt cost of capital = 6% x (1- 0.40)
= 3.60%.
therefore, 3.60% is cheaper than the 4.59% preffered stoch cost per capital
c) r* = 1 - [{(1 - 0.40)(1 - 0.15)} / (1 - 0.35)] = 1 - 0.7846 = 0.2154, or 21.54%
Hence, 4.59% x (1 - 0.2154) = 3.60%
