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Tom [10]
3 years ago
14

A share of common stock is not a derivative, but an option to buy the stock is a derivative because the value of the option is d

erived from the value of the stock. True False
Business
1 answer:
ruslelena [56]3 years ago
8 0

Answer:

True

Explanation:

Common stock such as ordinary share implies the holder has shares of ownership in a company. The holders of common stock are entitled to dividend which a share of profit of the company and the also enjoy voting rights. Common stock usually performs better than other financial investment like bonds and preferred shares and has the biggest potential for long-term gains. However, the gain usually fluctuates because will only rise if the company perform well, but the gain will fall if the performance of the company is poor. Common stocks are usually purchased through brokerages.

However, a derivative is a financial security that derives its value from an underlying asset (e.g. common stock) or group of assets (also known as a benchmark). The derivative is a contract between two or more parties and its price depends on the change in the underlying asset. Examples of underlying assets for derivatives are stocks, bonds, commodities, currencies, and among others. It is possible to buy or dell derivatives over-the-counter (OTC) or on an exchange.

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Paradise Travels is an all-equity firm that has 9,000 shares of stock outstanding at a market price of $27 a share. Management h
Vesna [10]

Answer:

$1.97

Explanation:

EBIT/9,000 = [EBIT - $25,000*(0.073)] / [9,000 - ($25,000 / $27)]

EBIT / 9,000 = [EBIT - $1,825] / 8074.07

EBIT = $17,739

EPS = [EBIT - $25,000*(0.073)] / [9,000 - ($25,000 / $27)]

EPS = [$17,739 - $25,000*(0.073)] / [9,000 - ($25,000 / $27)]

EPS = $1.97

7 0
2 years ago
Which of the following are included in M2?
alexira [117]

Answer:

c. I , III, and IV

Explanation:

M1 and M2 are amongst the ways of measuring money supply of an economy.

M1 basically includes physical currency and coins, demand deposits, traveler's checks, and other checkable deposits.

M2 is regarded as a broader classification than M1 since it includes assets that are highly liquid but are not cash.

M2 includes M1 plus savings deposits, money market deposits, certificate of deposits less than $100,000 and money market mutual fund balances which can be readily redeemed.

Unlike the types of financial assets defined as money that are included in money supply, credit card transactions create loans that the borrower must pay later and hence are excluded from M2.

Hence M2 will include $5,000 certificate of deposits, $ 1000 in traveler's checks and $ 500 in piggy bank i.e option (c)

5 0
3 years ago
Kenesha Co. reported income before interest expense and income taxes of $30,000; interest expense of $3,000; and income taxes of
tiny-mole [99]

Answer:

the times interest earned ratio is 10

Explanation:

The computation of the times interest earned ratio is shown below:

Times interest earned ratio is

=  income before interest expense and income taxes ÷ interest expense

= $30,000 ÷ $3,000

= 10

hence, the times interest earned ratio is 10

We simply applied the above formula so that the correct value could come

And, the same is to be considered

3 0
3 years ago
The stockholders' equity section of Sheridan Company balance sheet at December 31, 2019, appears below:
dimulka [17.4K]

Answer:

Sheridan Company

1. Journal Entries:

Jan. 18 Debit Cash $1,920,000

Credit Common stock $800,000

Credit Paid-in capital in excess of par $1,120,000

To record the issuance of 80,000 shares of common stock at $24 per share.

Aug. 20 Debit Treasury stock $260,000

Debit Paid-in capital in excess of par $416,000

Credit Cash $676,000

To record the repurchase of 26,000 shares of Sheridan Company common stock at $26 per share to be held in the treasury.

Nov. 5 Debit Cash $1,600,000

Credit Common stock $500,000

Credit Paid-in capital in excess of par$1,100,000

To record the issuance of 50,000 shares of common stock at $32 per share.

2. Stockholders' Equity Section of Sheridan Company

Balance Sheet at December 31, 2019:

Paid-in capital

Common stock, $10 par value, 410,000 shares authorized;

330,000 issued and outstanding     $4,600,000

Paid-in capital in excess of par           3,054,000

Treasury stock                                      (260,000)

Total paid-in capital                             7,394,000

Retained earnings                                 900,000

Total stockholders' equity               $8,284,000

Explanation:

a) Data and Calculations:

Stockholders' Equity Section of Sheridan Company

Balance Sheet at December 31, 2019:

Paid-in capital

Common stock, $10 par value, 410,000 shares authorized;

330,000 issued and outstanding     $3,300,000

Paid-in capital in excess of par            1,250,000

Total paid-in capital                             4,550,000

Retained earnings                                  800,000

Total stockholders' equity                $5,350,000

b) Transaction Analysis:

Jan. 18 Cash $1,920,000 Common stock $800,000 Paid-in capital in excess of par $1,120,000

Aug. 20 Treasury stock $260,000 Paid-in capital in excess of par $416,000 Cash $676,000

Nov. 5 Cash $1,600,000 Common stock $500,000 Paid-in capital in excess of par$1,100,000

Common stock:

Dec. 31, 2019:  330,000 issued and outstanding     $3,300,000

Jan. 18, 2020:    80,000 issued of new shares             800,000

Nov. 5, 2020:    50,000 issued of additional shares    500,000

Dec. 31, 2020: 460,000 issued and outstanding    $4,600,000

Paid-in capital in excess of par

December 31, 2019            $ 1,250,000

Jan. 18 issue                           1,120,000

Aug. 20 treasury stock           (416,000)

Nov. 5 issue of new shares  1,100,000

December 31, 2020          $3,054,000

Retained Earnings:

December 31, 2019    $800,000

Net income for 2020    100,000

December 31, 2020  $900,000

6 0
2 years ago
What is importing?<br> HELP FAST PLS THX
emmainna [20.7K]
It's when goods or services is entering in a country from abroad to buy
8 0
3 years ago
Read 2 more answers
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