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Anna [14]
3 years ago
10

Your product fails about 2% of the time, on average. Some customers purchase the extended warranty you offer in which you will r

eplace the product if it fails. Would you want to price the extended warranty at 2% of the product price?
Business
1 answer:
aalyn [17]3 years ago
7 0

Answer:

1) adverse selection will lead those who are more reckless to purchase the warranty

2) moral hazard will lead those who purchase to be more reckless

Explanation:

Adverse selection might be a factor if more people bought the goods that were at a more higher risk to abuse the product compared to the customer who is at low risk to misuse the product. Change in behavior called moral hazard could happen after the customer buys the insurance. This moral hazard could happen if the customers who buys the insurance tend to be careless in using the product. This could cause the fail rate to increase, and might make the company to replacing more units.

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Why are job referrals valuable to both job seekers and employers?​
Leto [7]
A successful referral makes an employee feel better about the company they work for
5 0
3 years ago
3. The Johnson Company will pay an annual dividend of $2.05 next year. The company has increased its dividend by 3.5% a year for
vlada-n [284]

Answer:

A share of this stock be worth$ 21.88 four years from now

Explanation:

Amount of annual dividend that will be paid the next year = $ 2.05

increase in dividend by 3.5% = \frac{100+3.5}{100} = increase by a factor of 1.035

Since there is a 14% return, overall increase in dividend = \frac{1.035}{0.14 - 0.035} = 9.857

<em>Note:</em>

<em>0.035 was obtained from </em>\frac{3.5}{100}<em>= 0.035 (dividend increase)</em>

<em>0.14 was obtained from </em>\frac{1.4}{100}<em> = 0.14 (percentage return required)</em>

over the next 20 years his new value of dividend will be

New value of dividend = $2.05 + 9.857 = 11.907

Converting to a percentage,

\frac{100+11.907}{100}= 1.1907

Net dividend increase =

Dividend returns minus increase in dividend for 20 years is given as

14% - 3.5% = 10.5%

From the above, the

Worth of a share of his stock 4 years from now can be computed by

(dividend X Percentage increase in 20 years)/ net percent dividend increase  + (increase in 4 years/ net dividend increase) X 100

\frac{(2.05 (1.1907))  }{10.5} + \frac{(2.2729)}{10.5} × 100  =$21.88

∴ A share of this stock be worth$ 21.88 four years from now

4 0
4 years ago
______, an investor is able to replicate a corporation's capital structure by borrowing funds and using those funds along with h
Anika [276]

With homemade leverage, an investor is able to replicate a corporation's capital structure by borrowing funds and using those funds along with her own money to buy the company's stock. This is further explained below.

<h3>What is homemade leverage?</h3>

Generally,  When an investment in a firm that does not use leverage is converted into the impact that leverage has on investment by using personal borrowing, this is an example of homemade leverage.

In conclusion, By utilizing borrowed money plus her own finances to acquire shares in a firm, an investor might "do her own leverage," or mimic the capital structure of a publicly traded company.

Read more about homemade leverage

brainly.com/question/15083730

#SPJ1

6 0
2 years ago
The amount of money you earn at your job, and the manner in which you receive that money, is called_____.
zhenek [66]

I believe it’s Compensation

6 0
3 years ago
A state constructs an office building. The construction is financed with: (1) a transfer of $1 million from the General Fund; (2
Zolol [24]

Answer:

$8 million

Explanation:

There are total 4 sources involved.

But the government grants are reduced from the cost of the the project. It is not recorded as other financing sources.

Also the earnings from bond proceeds shall not be considered for the other financing sources, as that is mere use of income.

Use of general fund in these capital projects will account for such other financing sources.

Cash received from issue of bonds for this project will also account for such capital fund.

Thus, total other financing sources = $1 million + $7 million = $8 million

4 0
3 years ago
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