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Katena32 [7]
3 years ago
15

The Bert Corp. and Ernie, Inc., have both announced IPOs. You place anorder for 1,100 shares of each IPO. One of the IPOs is und

erpriced by $17.75 and the other is overpriced by $6.25. You will receive all of the shares you ordered of the overpriced IPO, but only one-half of the shares you ordered of the underpriced IPO. What profit do you expect?
Business
1 answer:
Sati [7]3 years ago
5 0

Answer:

The profit expected from the two IPOs is $2887.5

Explanation:

For the overpriced IPO,1100 shares would be received and since the share was overpriced by $6.25, an instant loss of $6,875 ($6.25*1100) is recorded.

For the under-priced IPO ,550 shares (1100 shares divided by 2) would be received and the immediate gain recorded is $9,762.5(550 *$17.75)

Overall the two portfolios, when taken together,give an immediate gain of $2,887.50(gain of $9,762.50 less loss of $6,875 )

This is power of portfolio diversification, that managing potential investment losses by spreading one's investment.

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Floor plan loan is a type of short-term loan to finance high priced inventory in which the purchased inventory is placed as coll
topjm [15]

Answer:

Consider the following explanation.

Explanation:

1. True. It is generally seen in the automobile market. The purchased inventory serves as the collateral for the loan.

2. True. The higher capital provides support for the continued solvency of these comapanies.

3. False, The federal reserve has the right and authority to regulate finance companies.

4. This statement is true.

5. True. They also charge higher interest rates than banks for bearing the risk of poor credit of these borrowers.

5 0
3 years ago
Information on four investment proposals is given below: Investment Proposal A B C D Investment required $ (790,000 ) $ (120,000
goblinko [34]

Answer:

Explanation:

1. The formula to compute the profitability index is shown below:

Profitability index = Net present value ÷ investment required

For Proposal A, it would be

=  $331,300 ÷ $790,000

= 0.42

For Proposal B, it would be

=  $48,300 ÷ $120,000

= 0.40

For Proposal C, it would be

=  $62,000 ÷ $120,000

= 0.52

For Proposal D, it would be

=  $607,200 ÷ $1,820,000

= 0.33

2. The proposal rank preference is shown below:

Proposal     Profitability index    Rank

A                  0.42                         Second

B                  0.40                         Third

C                  0.52                         First

D                  0.33                          fourth

So, it would be C, A, B and D

7 0
3 years ago
. Department C is the first stage of Cohen Corporation's production cycle. The following equivalent unit information is availabl
allsm [11]

Answer:

1,657,000 units

Explanation:

The FIFO method is concerned with the work done in the current production period.

<u>Equivalent Units of Production - Conversion Costs</u>

To finish Opening Work In Process ( 85,000 x 80%)              68,000

Started and Completed [(1,430,000 - 85,000) x 100%]       1,345,000

Ending Work In Process 305,000 x 80%                               244,000

Total Equivalent Units of Production - Conversion Costs   1,657,000

therefore,

the equivalent units for the conversion cost calculation are:  1,657,000 units

6 0
3 years ago
. True / False. The hedonic property value method can be used to estimate lost non-use value associated with oil pollution at re
Effectus [21]

Answer:

False.

Explanation:

The hedonic property value method determines the extent that environmental or ecosystem factors affect the price of a home.  This implies that the method cannot be used to estimate lost, non-use value associated with oil pollution at remote, uninhabited locations, as stated in the question.  Since the hedonic property value method is used to estimate the housing prices that reflect the value of local environmental attributes, it is not useful for uninhabited, remote locations and properties.

6 0
3 years ago
ou wish to retire in 20 years, at which time you want to have accumulated enough money to receive an annual annuity of $32,000 f
AleksAgata [21]

Answer:

Annual contributions to the retirement fund will be $6,347.31

Explanation:

First find the Present Value of the Annuity giving payments of $32,000 annually for 25 years at the rate of 10%.

Using a Financial Calculator enter the following data

PMT = $32,000

P/y = 1

N = 25

R =  10%

FV = 0

Thus, the Present Value, PV is $290,465.28

At the time of retirement (in 20 years time) the Value of the annuity fund is $290,465.28.

Next we need to find the Payments PMT to reach this amount in 20 years time at the interest rate of 8%

Using a Financial Calculator enter the following data

FV = $290,465.28

N = 20

R = 8 %

PV = $0

Thus, the Payments, PMT required will be $6,347.3080

Conclusion :

Annual contributions to the retirement fund will be $6,347.31

3 0
3 years ago
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