B. Be called in for an interview because that's the first thing they see and it gives the general details
Answer:
Pembroke= $105,000
Multinomah= $120,000
Explanation:
Giving the following information:
The materials used by the Multinomah Division of Isbister Company are currently purchased from outside suppliers at $90 per unit. These same materials are produced by the Pembroke Division.
The Pembroke Division can produce the materials needed by the Multinomah Division at a variable cost of $75 per unit. The division is currently producing 120,000 units and has capacity of 150,000 units. The two divisions have recently negotiated a transfer price of $82 per unit for 15,000 units.
Pembroke= 15,000*(82 - 75)= $105,000
Multinomah= 15,000*(90 - 82)= $120,000
The question is incomplete. Here is the complete question:
The following annual returns for Stock E are projected over the next year for three possible states of the economy. What is the stock’s expected return and standard deviation of returns? E(R) = 8.5% ; σ = 22.70%; mean = $7.50; standard deviation = $2.50
State Prob E(R)
Boom 10% 40%
Normal 60% 20%
Recession
30% - 25%
Answer:
The expected return of the stock E(R) is 8.5%.
The standard deviation of the returns is 22.7%
Explanation:
<u>Expected return</u>
The expected return of the stock can be calculated by multiplying the stock's expected return E(R) in each state of economy by the probability of that state.
The expected return E(R) = (0.4 * 0.1) + (0.2 * 0.6) + (-0.25 * 0.3)
The expected return E(R) = 0.04 + 0.12 -0.075 = 0.085 or 8.5%
<u>Standard Deviation of returns</u>
The standard deviation is a measure of total risk. It measures the volatility of the stock's expected return. The standard deviation (SD) of a stock's return can be calculated by using the following formula:
SD = √(rA - E(R))² * (pA) + (rB - E(R))² * (pB) + ... + (rN - E(R))² * (pN)
Where,
- rA, rB to rN is the return under event A, B to N.
- pA, pB to pN is the probability of these events to occur
- E(R) is the expected return of the stock
Here, the events are the state of economy.
So, SD = √(0.4 - 0.085)² * (0.1) + (0.2 - 0.085)² * (0.6) + (-0.25 - 0.085)² * (0.3)
SD = 0.22699 or 22.699% rounded off to 22.70%
Answer:
B) sale; decrease
- If the Fed wants the federal funds rate to stay at that level, then it should undertake an open market <u>SALE</u> of bonds, everything else held constant. If the Fed does nothing, however, the federal funds rate will <u>DECREASE</u>.
Explanation:
The federal funds rate is the rate at which banks make overnight loans to other banks or financial institutions. If the supply of money is too high, then the interest rates will start to decrease.
Money is like any other good, and its price is determined by the supply and demand. The higher the supply, the lower the equilibrium price. The equilibrium price of money is the interest rate.
If the Fed wants to avoid the decrease in the interest rate, it must absorb excess supply of money, and the only way it can do it is by selling bonds.
Answer: To afford to retire
Explanation: The life cycle theory was established by Modigliani in 1957. This theory states that a rational individual manages its expenses with the motive of saving sufficient amount till his or her retirement.
As per this theory, the individual consumes almost same amount of income which leads to the situation of borrowing in times of low income and savings in times of high income.
However the minor differences leads to savings high than borrowings in times of low income the individual significant lowers his or her capital expenditure.
