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Yanka [14]
3 years ago
10

Old Economy Traders opened an account to short-sell 1,000 shares of Internet Dreams from the previous question. The initial marg

in requirement was 50%. (The margin account pays no interest.) A year later, the price of Internet Dreams has risen from $40 to $50, and the stock has paid a dividend of $2 per share. (LO 3-4)
a. What is the remaining margin in the account?

b. If the maintenance margin requirement is 30%, will Old Economy receive a margin call?

c. What is the rate of return on the investment?
Business
1 answer:
Molodets [167]3 years ago
4 0

Answer:

a) 8,000

b) Yes

c) -60%

Explanation:

a) 8,000

b) Yes

c) -60%

) 8,000

a.the trader puts up=20000(1000*50%*40)

he lost $10000(1000*$10)

if he trader pays $2000 in dividend

the remaining margin=20000-10000-2000

$8000

b.) margin rate=equity /liability

8000/50000*100%=

16% , so we have a margin call

c.Equity decreases from 20000 to 8000 in 1 year

return= -12000/20000=-0.60

=-60%

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A construction company entered into a fixed-price contract to build an office building for $28 million. Construction costs incur
Radda [10]

Answer:

$3.2 million

Explanation:

The revenue and gross profit or loss which the company identify in the first and second year if it recognizes revenue upon contract completion is calculated below.

Total costs = Incurred costs + estimated costs to complete = $8 million + $12 million = $20 million

Revenue to recognize = $8m/$20m*$28m = $11.2 million

Gross Profit = Revenue recognized less costs incurred

= $11.2m - $8m = $3.2 million

4 0
3 years ago
The only way to decrease your lifestyle budget is by completely eliminating an item.
N76 [4]

Answer:

False

Explanation:

A budget is a financial plan used for the estimation of revenue and expenditures of an individual, organization or government for a specified period of time, often one year. Budgets are usually compiled, analyzed and re-evaluated on periodic basis.

The first step of the budgeting process is to prepare a list of each type of income and expense that will be part of the budget.

A lifestyle can be defined as the way and manner an individual chooses to live his or her life. Similarly, a lifestyle budget comprises the cost of goods and services an individual has chosen to spend his or her money on.

Basically, completely eliminating an item isn't the only way to decrease a lifestyle budget because there could be similar items that even cost way more than the eliminated item.

Some of the benefits of having a budget is that it aids in setting goals, earmarking revenues and resources, measuring outcomes and planning against contingencies.

7 0
2 years ago
When launching a new venture, finding a way to begin doing business must ______________ generate cash flow, build credibility, a
dsp73

Answer: evaluate

Explanation:

7 0
3 years ago
Is unchopping tree possible?.(Unchopping Tree)​
MArishka [77]
No it is not possible
8 0
3 years ago
A researcher is testing a new painkiller that claims to relieve pain in less than 15 minutes, on average. a. State the hypothese
zmey [24]

Answer:

a. H0 : U ≥ 15

   Ha : U < 15

b. Type I error is incorrectly conclude that the pain is reduced in less than 15 minutes.

c. Type II error is fail to conclude that time for pain reduction is less than 15 mints when actually its less than 15 minutes.

Explanation:

Null hypothesis is a statement that is to be tested against the alternative hypothesis and then decision is taken whether to accept or reject the null hypothesis.

Type I error is one in which we reject a true null hypothesis.

Type II error is one in which we fail to reject the null hypothesis that is actually false.

6 0
3 years ago
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