Answer:
The difference of $400 in the prices of the securities is called Option D: the spread.
Explanation:
Reese buys securities and after 8 months when the prices go up, she sells the securities in a higher amount. There is difference of $400 in these prices. This difference is called the spread.
Spread is basically difference in the price of the same good at different dates. The securities Reese bought are sold 8 months later. So, it is the spread, Option D.
In case of price override, the price of the commodity is changed after application of discount. Price dispersion is the difference of price different sellers are giving at the same time. Thrift refers to spending money carefully. Thus, all the others options a, b and c are incorrect.
You are creating the wbs for a project. The work can be completed within a reporting period shows that you have decomposed a work package to an appropriate level.
Work Package
A work package is a component of the work breakdown structure that allows project management to identify the actions required to complete the work. As such, a work package can be viewed as a sub-project that, when merged with other work package units, forms the finished project. By dividing the work into work packages, numerous teams can work on different aspects of the project concurrently or sequentially. Each team adheres to the processes outlined in the work package plan and completes them by the deadline. When all teams have completed their particular work packages, the project as a whole comes together and the objectives are met.
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Answer:
Cost of equity capital is 0.122 or 12.2%
Explanation:
The WACC or weighted average cost of capital is the cost of a company's capital structure. The capital structure may contain one, two or all of the following components namely debt, preferred stock and common equity. The WACC is calculated by taking the weighted average of the each components cost.
WACC = wD * rD * (1 - tax rate) + wP * rP + wE * rE
Where,
- w represents the weight of each component
- r represents the cost of each component
- D, P and E represent debt, preferred stock and common equity respectively
To calculate the cost of equity capital, we first need to find out the weight of each component in the capital structure.
debt to equity = 1.5
So, debt = 1
equity = 1.5
Total assets = 1 + 1.5 = 2.5
wD = 1/2.5 = 0.4
wE = 1.5/2.5 =0.6
Using the WACC formula,
0.096 = 0.4 * 0.057 + 0.6 * rE
0.096 = 0.0228 + 0.6 * rE
0.096 - 0.0228 = 0.6 * rE
0.0732 / 0.6 = rE
rE = 0.122 or 12.2%