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3 years ago

Which of the statements below is FALSE?

Business

1 answer:

babymother [125]3 years ago

6 0

Answer:

The answer is option A) The false statement among the options provided is:

A preemptive right is never particularly valuable to shareholders with large ownership percentages.

Explanation:

A pre-emptive right enables investors to maintain a proportional level of ownership.

The goal of every investor is to make profit but this goal could be affected if the value of shares they hold is diluted. Hence the need for preemptive rights.

Preemptive right is a protective strategy by shareholders to maintain their share value with the option to buy a proportionate amount of shares if the company wishes to issue additional shares in the future.

Therefore, it is false to say that:

"A preemptive right is never particularly valuable to shareholders with large ownership percentages".

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Suppose that $1 lottery tickets have the following probabilities and values: 1 in 5 to win a free ticket (worth $1), 1 in 100 to

Fantom [35]

Answer:

$0.36

Explanation:

Expected value of the lottery ticket = (p1 x a1) + (p2 x a2) + (p3 x a3) + (p4 x a4)

p1 = probability of winning $1 = 1/5 = 0.2

a1 = $1

p2 = probability of winning $5 = 1/100 = 0.01

a2 = $5

p3 = probability of winning $1000 = 1/100,000 = 0.00001

a3 = $1000

p4 = probability of winning $1 million = 1/10,000,000 = 0.0000001

a4 = $1 million

(0.2 x 1) + (0.01 x 5) + (0.00001 x 1000) + (1,000,000 x 0.00001) = $0.36

4 0

3 years ago

The common stock of the C.A.L.L. Corporation has been trading in a narrow range around $145 per share for months, and you believ

user100 [1]

<u>Solution and Explanation:</u>

a) Let us calculate the value of call using Put-Call Parity,

i.e. Put + Stock = Call + Present Value of Exercise Price (note that it is 6 - months time period)

$\text { i.e. } 8.19+145=\mathrm{call}+145 / 1.09^{\wedge} 0.5$

$\text { i.e. } 8.19+145=\mathrm{call}+145 / 1.044$

Therefore, Call = $ 14.31

b1) The option strategy best suited in the given condition is - Short or Sell Straddle.

In shorting a straddle, you simultaneously sell a call and a put, thereby earning premium in both the legs of the strategy. It is a neutral options strategy wherein profits can be made when stock price is expected to remain stagnant. However it is to be noted that the profits are limited to the option premium earned on call and put but the risk is unlimited. i.e. only when you are reasonably sure as to the stock price remaining more or less constant, go for short straddle.

b2) Assuming that we went for short straddle, we earn $ 8.19 premium on put and $ 14.31 premium on call i.e. we earn maximum of $ 22.50 on this stock due to our position in options.

b3) WITHOUT CONSIDERING TIME VALUE -

Now, CONSIDERING TIME VALUE - the stock price would need to swing in either direction by ( $22.50 * 1.09 \times 0.5)=$ $ 23.49 for us to start incurring losses.

c) Buy the call, sell the put and lend $ 138.8848

Let 'Price' in the table below denote the stock price at the end of 6 months.

If we take a long position in call, the immediate CF is $ 14.31 (premium outflow).

If we take a short position in put, the immediate CF is $ 8.19 (premium inflow)

Position Immediate CF CF in 6 months CF in 6 months

(if price < X) (if price > X)

Call (Long) -14.31 0 Price - 145

Put (Short) 8.19 - (145 - price) 0

Lending Position $145 / 1.09^{\wedge} 0.5=138.88$ 145 145

Total Price Price

NOTE- FIGURES ARE SUBJECT TO ROUNDING OFF.

3 0

3 years ago

Cash and Carry is a store that carries food, clothing, and household goods at lower price margins than other nearby stores. Ther

bagirrra123 [75]

Answer: Discount store

Explanation: As the name suggests, discount store is the store in which the prices of general products are lower than other retail shops.

These stores makes it possible to provide such discounts by purchasing in bulk from the intermediary, or direct purchase from the producer or by cutting the cost of other services provided.

So, from the above we can conclude that cash and carry is a discount store.

7 0

3 years ago

Companies HD and LD have the same tax rate, sales, total assets, and basic earnings power. Both companies have positive net inco

sukhopar [10]

Answer:

Company HD pays less in taxes

Explanation:

In the case when the company HD and LD have the similar rate of tax, sales revenue, etc even both have favorable net incomes also the company Hd contains greater debt ratio due to which it has more interest expense so that means company hd would pay less taxes

Therefore the above represent the answer

and, this is the answer but the same is not provided in the given options

5 0

2 years ago

Read 2 more answers

Reports that trace the entry of and changes to critical data values are called ____ and are essential in every system.

ivanzaharov [21]

Answer:

audit trails

Explanation:

Reports that trace the entry of and changes to critical data values are called <u>audit trails</u> and are essential in every system.

8 0

3 years ago