Answer:
Stock Y is overvalued and Stock Z is undervalued.
Explanation:
The stock is fairly valued when the required rate of return on the stock is equal to its expected return. If the expected return on the stock is more than the required rate of return, the stock is undervalued and vice versa.
The required rate of return on the stock is calculated under the CAPM approach suing the following formula.
r = rRF + Beta * rpM
Where,
- rRf is the risk free rate
- rpM is the risk premium on market
r of Stock Y = 0.052 + 1.3 * 0.077 = 0.1521 or 15.21%
The required rate of return of Stock Y (15.21%) is more than its expected rate (14.9%) which means the stock is overvalued.
r of Stock Z = 0.052 + 0.95 * 0.077 = 0.12515 or 12.515%
The required rate of return of Stock Z (12.515%) is less than its expected rate (12.8%) which means the stock is undervalued.
Answer:
a. price bundling
Explanation:
Price bundling in business can be defined as a strategic process which typically involves the combination of several goods and services into a single unit for a relatively lower price or cost.
One of the potential benefits of price bundling from the company's perspective is that customers will be buying a larger range of services or products from the company than they otherwise might have.
Answer:
A. The loan provide Blue Corporation with a business bad debt deduction.
Explanation:
A tax payer can make claim for the deduction and write off of a business debt in as much the debt has a link with his trade , there exist a creditor/debtor relationship and the debt becomes worthless in the year that the deduction was claimed. Moreover, it must be ascertained that the tax payer or creditor is in the business of lending money before the bad debt deduction can be allowed, the loan must also be a bonafide debt and the tax payer must prove that the debt becomes worthless in the current year of deduction.
It is to be noted however that a loan can become worthless for a number of reasons as determined by the Tax court ; fall in debtor's business or value of the debtor's assets, serious financial hardships encountered by the debtor, his earning capacity, his refusal to pay the debt, business climate etc
Carnegie had unlimited control of the steel industry during the 1880s. He had monopoly over the steel business and it was up to him how he did the pricing and what services he offered. During the 1890s, the government had taken action to limit Carnegies control over the steel industry. Regulations crippled Carnegie's business.
Answer:
Eugene's taxable income is $10,800
Explanation:
in case of separate filling, if one spouce sellected itemized deduction then other will also have to use itemized deduction.
taxable income = $25,000 - $14,200
= $10800
Therefore, Eugene's taxable income is $10,800.
