Answer:
c. List EZ Lawn stock on foreign stock exchanges to offset any currency losses.
Many foreign companies do this and list their stocks as ADRs in the US, so this is a method that actually works. The problem is that will listing American stocks in foreign markets help? Probably you could list some stocks in European, Japanese or even Canadian markets. But most foreign exchange markets pose a higher risk than a currency exchange risk.
Explanation:
Currency risk refers to the possibility that a company that engages in international trade losses money due to variations in the exchange rate between their domestic currency and a foreign currency. The best way to protect a company are currency hedged funds that trade currency exchange futures, but this option isn't included in the list.
a. Concentrate all of the EZ Lawn outsourcing to one or two neighboring nations. ⇒ This will increase the risk since it is similar to investing all your money in one single stock, it can be great or it can be a disaster.
b. Re-locate a team of EZ Lawn managers overseas to stay abreast of currency changes. ⇒ You can do this from anywhere in the world, you do not need to relocate someone.
d. Assign an EZ Lawn manager the task of monitoring currency fluctuations. ⇒ Similar to option B, it just takes a few seconds to do it and anyone can do it. It is something so basic that every company should do it. It is like telling someone that they shouldn't forget to keep breathing. It can help you deal with currency fluctuations, but it doesn't protect you from them.
Answer:
C, Paying money to farmers directly
Explanation:
Deadweight loss is defined as a loss in the economic efficiency that occurs when the market equilibrium for a good or service is not met/acheived/attained.
It can also be called excess burden or inefficiency of allocations.
From the question, the smallest dead weight loss will be to pay money directly to farmers as this will try to create almost an equilibrium for the goods produced by the farmers. Paying money directly to farmers will also ensure that the prices of goods and services are agreeable and of benefit to both the farmers, consumers/buyers and the government as well.
Cheers.
Answer:
e. The NPV method assumes that cash flows will be reinvested at the cost of capital, while the IRR method assumes reinvestment at the IRR. Explanation:
Under the NPV method that is the Net Present Value method, discount rate used is cost of capital of a company, that is Weighted Average Cost of Capital. This is to ensure that the company is able to meet its current financing cost.
Under the IRR method the rate is calculated at which the return of investment and cost of such project or investment is equal, if it is more than cost of capital the project is acceptable.
Therefore, statement e stating that the NPV method uses the cost of capital and IRR uses the IRR rate is correct.
Answer:
y = 0.76923076923 or 76.923076923% rounded off to 76.92%
So, 76.92% of the portfolio should be invested in risky portfolio.
Explanation:
The portfolio standard deviation for a portfolio consisting of two securities with one of them being the risk free security is calculated by multiplying the standard deviation of the risky security by the weightage of investment in the risky security as a proportion of the overall investment in portfolio. The formula can be written as follows,
Portfolio STDEV = Weight of Risky Asset * STDEV of risky asset
30% = y * 39%
30% / 39% = y
y = 0.76923076923 or 76.923076923% rounded off to 76.92%
Answer:
The correct answer is the second option: Decrease; Increase.
Explanation:
To begin with, in the construction area the managers understand that when the company starts to build higher the building costs decrease due to the fact that is now working with bigger numbers so that means that the volumen of equipment, materials and commodities are high enough to decrease the costs due to the volumen managed, meanwhile the warehousing equipment costs tend to increase due to the same reason as before, now the company is working with bigger numbers so that means more equipment, materials and commodities to put in bigger warehouse and for more time.