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meriva
2 years ago
9

The price of silver is $20 per ounce, the riskless rate of interest is 10% c.c. and storage costs are $1.00 per annum, payable q

uarterly in advance. The no-arbitrage price for a futures contract on silver with a term of 6 months is
Business
1 answer:
d1i1m1o1n [39]2 years ago
8 0

Answer:

$ 21.05

Explanation:

Thinking process:

The original price = $ 20.00

Interest  = 10 %

storage costs = $ 1.00

the new price = 0.1 × $ 20.00

                       = $ 2

However, this is paid over 6 months, so it will be = $ 2 (0.5)

                                                                                 = $ 1.00

The storage cost for 6 months = 0.5 (1.00)

                                                   = $ 0.5

The total cost at 6 months        = $ 0.5 + $ 1.00 + $ 20.00

                                                    = $ 21.05

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Fudgin [204]

Improperly capitalizing a repair and maintenance expense item as a fixed asset will result in an <u>overstatement of profit in the current year and an understatement in future years</u>.

Fixed assets seek advice from long-term tangible assets which can be used inside the operations of an enterprise. They offer long-term monetary advantages, have a useful existence of a couple of yr, and are labeled as assets, plants, and equipment on the balance sheet.

Fixed assets, additionally called lengthy-lived assets or property, plant, and the system is a term utilized in accounting for assets and belongings that can't effortlessly be transformed into cash. Fixed assets are unique from the contemporary property, which includes coins or bank accounts because the latter are liquid property.

Fixed assets are capitalized. It really is due to the fact the advantage of the asset extends past the year of buy, not like different costs, which might be length expenses benefitting handiest the duration incurred. constant assets should be recorded at a price of the acquisition

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5 0
2 years ago
Investment can be increased both by reducing taxes on private saving and by reducing the government budget deficit.
Romashka [77]

Answer:

1. Increasing

2. A. The elasticity of private saving with respect to the after-tax real interest rate

B. The response of private saving to changes in the government budget deficit

C. The elasticity of investment with respect to the interest rate

Explanation:

1. It is difficult to implement both of these policies at the same time because reducing taxes on private spending has the effect of <u><em>Increasing</em></u> the government budget deficit.

A Government budget deficit is acquired when the government spends more than it earns. The Government earns money from taxes and if it spends more than it receives in taxes, that will lead to a deficit. If taxes on Private spending are reduced, this will lead to less tax revenue for the government thereby increasing the Deficit.

2. All of the listed options are useful in determining which policy would be a more effective way to raise investment.

The elasticity of private saving with respect to the after-tax real interest rate refers to how much private saving changes in reaction to a change in the tax rates. This can enable one decide how much investment will be expected if the Government reduces or increases taxes.

The response of private saving to changes in the government budget deficit is also a useful factor to look at because private savings reduce when government deficits reduce.

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3 years ago
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3 years ago
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Another way of talking about this is to note that for the first 4 shirts that Gilberto makes, the marginal cost (MC) of making each shirt is smaller than the total revenue (MR) it generates from selling the shirt.

Beyond just the third shirt he makes per hour, the total cost of making the shirt is higher than the amount Gilberto receives; thus, opting to manufacture more than 4 shirts decreases Darnell's benefit.

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2 years ago
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There are three cash flow types that organizations should track and analyze to resolve the liquidity and solvency of the business: cash flow from operating movements, cash flow from investing activities, and cash flow from financing activities. All three are included on a company's cash flow statement.

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