Answer:
a. Janice must adjust the total value 2018 GDP for inflation.
Explanation:
Gross domestic product is defined as the amount of goods and services produced by a country in a particular period. It is a measure of economic growth of the country.
Real GDP is calculated from GDP by adjusting for inflation of deflation. Real GDP gives a more clear picture of the economy since it considers the reality of inflationary effect on prices.
For example when prices go up and GDP is used, it will seem the country is producing more. Which is a wrong assumption.
Real GDP give a more accurate insight into a countrie's productivity.
Answer:
e. the expected return on a security is positively and linearly related to the security's beta.
Explanation:
As per CAPM: Expected return (ER) = Rf + \beta (Rm - Rf)
Lets assume risk free return (Rf) as 5%, \beta as 2 and expected market return (Rm) as 10%
then, ER = 5% + 2 (10% - 5%) = 15%
However if lets assume all the other factors remain the same and \beta increases to 3
then, ER = 5% + 3 (10% - 5%) = 20%
Similarly if \beta reduces to 1
then, ER = 5% + 1 (10% - 5%) = 10%
So higher the \beta higher is the risk and hence higher the expected return. Hence expected return on a security is positvely and linearly related to the security's beta
Answer:
The journal entry is given as follows;
Explanation:
Accounts Receivable-Valley Spa Dr.$7,930
Interest Revenue (7,800*10%*2/12) Cr.$130
Notes Receivable Cr.$7,800
Answer:
EBIT
Explanation:
TIE = EBIT/ Interest expense
So, TIE = EBIT/ Interest expense = 3.5 ⇒ EBIT = 3.5 * Interest expense
