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Elenna [48]
3 years ago
12

Over a 38-year period an asset had an arithmetic return of 12.4 percent and a geometric return of 10.3 percent. Using Blume’s fo

rmula, what is your best estimate of the future annual returns over 6 years? 10 years? 19 years?
Business
1 answer:
alina1380 [7]3 years ago
7 0

Answer:

Blume's formula combines the geometric and arithmetic means of an asset to be able to predict its returns in a given period.

The formula is;

= Geometric Mean*(T-1)/(N-1) + Arithmatic Mean *(N-T)/(N-1)

Where,

T = Period in question

N = Total period

6 years

= 10.3%*(6-1)/(38-1) + 12.4%*(38-6)/(38-1)

= 12.1 %

10 years

= 10.3%*(10-1)/(38-1) + 12.4%*(38-10)/(38-1)

= 11.89%

19 years

= 10.3%*(19-1)/(38-1) + 12.4%*(38-19)/(38-1)

= 11.38%

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Define agency costs, and describe agency costs of financial distress and agency benefits of leverage
Aleks04 [339]

Answer:

In accounting, agency costs are the costs of hiring an agent in order for him/her to act on behalf of a principal. In finance, agency costs are much broader since they imply costs that may appear due to conflicts of interests between the agent and the principal. E.g. a manager who seeks to accomplish short term goals in order to collect a bonus but hurts the long term objectives and goals of the stockholders.

Agency costs of financial distress refers to the costs associated with conflicts of interest that may result in a company being insolvent, specially in the long run. This type of costs are not necessarily related to operating costs, instead they result from management decisions and strategies, e.g. higher cost of capital or debt, or even excessive spending.

Agency benefits of leverage result from stockholders benefiting from the agent's decision to keep equity low, and if needed, obtain financing from debt sources.

5 0
4 years ago
A warranty protects consumers against what? A. Defective or damaged products B. Government regulations C. Anticompetitive behavi
nirvana33 [79]

Answer:

C. Anticompetitive behaviors

Explanation:

A warranty protects consumers against anticompetitive behaviors.

6 0
3 years ago
Six people are introduced at a business convention if each person shakes hands with each of the others how many handshakes will
Leviafan [203]

<span>If 6 people meet and shake hand with each other. First person will shake hand with other 5, second person had already shaked hand  with 1st person and shake hand with other 4, and so on…</span>

So, the total no. of handshakes= 5+4+3+2+1=15 shakes

The other way to calculate this is by the formula n (n+1)/2

Where n is the no. of shake hands by very first person and that is 5.

So, the total no. of handshakes=5(5+1)/2

= 5(6)/2

=30/2

=15 shakes

3 0
3 years ago
Rayco Ski Shop purchased 500 pairs of skis from Skitron. Rayco is located in Colorado. Skitron's business is in Tennessee. The p
Oduvanchick [21]

Answer: Destination contract

Explanation: The contract is described as a destination contract. A destination contract is one in which the risk of loss is on the seller until completion of his delivery obligations under the destination contract. Should the goods be destroyed or damaged while in transit, the seller bears the risk of loss. However, the seller is no longer liable after the goods have been safely delivered at the buyer's destination. Common ways to spot a destination contract include: a) FOB (Free on Board): when delivery term in the contract states "F.O.B Colorado". b) Ex Ship c) No arrival, no sale...

The transactions in a destination contract is governed by the Uniform Commercial Code (UCC).

4 0
3 years ago
A nonprofit organization has generated a following of people who have created websites about the organization. Most of these sit
balandron [24]

Answer: b) By redirecting the URLs, those URLs will no longer rank independently on search engines, moving other (potentially negative) sites up higher in the rankings

Explanation:

The Non-profit Organization is shooting itself in the foot by purchasing the more positive sites and then setting them up in such a way that they will be redirected to their home page.

This is because when sites merely redirect, they lose their independence ranking. As this happens their place will be taken on search engines.

Seeing as the Nonprofit did this more with positive sites, there is a high chance that the sites that will replace those positive sites will be negative sites meaning that when people search for the Organization, they might see more negative information.

5 0
4 years ago
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