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3 years ago

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Why is investing in a mutual fund less risky than investing in a particular company’s stock?

2 answers:

amm18123 years ago

8 0

Risk is measured by the probability of loss. If one invested everything he had in 1 specific stock, and that stock drops in a major way, then he loses a lot. This is a high-risk setup. On the other hand, if one divides his portfolio into several stocks, then his risk is much lower, because it is less likely that all those stocks drop at the same time. So this is how mutual funds diversify their portfolios to lower risk, and the right answer is C.

MAVERICK [17]3 years ago

6 0

Answer:

Why is investing in a mutual fund less risky than investing in a particular company’s stock?

A.

Mutual funds only invest in blue-chip stocks.

B.

Investments in mutual funds are more liquid.

C.

Mutual funds hold a diversified portfolio of stocks.

<em><u>D. </u></em>

<em><u>Investments in mutual funds offer a higher rate of return. </u></em>

Explanation:

#platofam

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Answer:

Issue of 7,000 shares of no-par common stock for $15 per share

Financing Activity (FA).

Issue of 2,800 shares of $70 par, 6 percent noncumulative preferred stock at $80 per share

Financing Activity (FA)

Explanation:

Issue of 7,000 shares of no-par common stock for $15 per share

This represents capital funding and is included in the Cash Flow Statement as Cash Flow from Financing Activity.

Issue of 2,800 shares of $70 par, 6 percent noncumulative preferred stock at $80 per share

This transaction also represents capital funding and is included in the Cash Flow Statement as Cash Flow from Financing Activity.

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3 years ago

Read 2 more answers

Kingbird Industries had one patent recorded on its books as of January 1, 2020. This patent had a book value of $249,600 and a r

dimulka [17.4K]

Answer:

The amount patent(s) should be reported on the December 31, 2020, balance sheet, assuming monthly amortization of patents, is $32,300.

Explanation:

This can be calculated as follows:

Patent book value = $249,600

Remaining useful years January 1, 2020 = 8

Remaining useful months of the patents from January 1, 2020 = Remaining useful years January 1, 2020 * 12 8 * 12 = 96

Monthly Patent book value = Patent book value / Remaining useful months = $249,600 = $2,600

Patent book value amortized from January 1, 2020 to December 1, 2020 = Monthly Patent book value * 12 = $2,600 * 12 = $31,200

Legal fee incurred = $93,500

Number of months from January 1, 2020 to December 1, 2020 = 11

Relevant months of legal fee incurred starting from December 1, 2020 = Remaining useful months of the patents from January 1, 2020 - Number of months from January 1, 2020 to December 1, 2020 = 96 - 11 = 85

Monthly legal fee = Legal fee incurred / Relevant months of legal fee incurred starting from December 1, 2020 = $93,500 / 85 = $1,100

Amount to report = Patent book value amortized from January 1, 2020 to December 1, 2020 + Monthly legal fee for December 1, 2020 only = $31,200 + $1,100 = $32,300

Therefore, the amount patent(s) should be reported on the December 31, 2020, balance sheet, assuming monthly amortization of patents, is $32,300.

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3 years ago

Victoria Company reports the following operating results for the month of April.

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Answer:

Victoria Company

1. No Changes:

Break-even point in units = 7,398

Break-even point in dollars = $369,900

Margin of safety = $80,100

2. With changes in sales price and costs:

Break-even point in units = Fixed expense/Contribution margin per unit

= 8,220

Break-even point in dollars = Fixed expense/Contribution ratio

= $390,437

Margin of safety in dollars

= $122,563

Explanation:

a) Data and Calculations:

VICTORIA COMPANY

CVP Income Statement

For the Month Ended April 30, 2020

Total Per Unit

Sales (9,000 units) $450,000 $50

Variable costs 225,000 25.00

Contribution margin 225,000 $25.00

Fixed expenses 184,950

Net income $40,050

Break-even point in units = $184,950/$25 = 7,398

Break-even point in dollars = $184,950/0.5 = $369,900

Margin of safety = $450,000 - $369,900 = $80,100

Management's decision to reduce selling price by 5%

New selling price = $47.50 ($50 * 95%)

Unit sales = 10,800 (9,000 * 1.2)

Total Per Unit

Sales (10,800 units) $513,000 $47.50

Variable costs 270,000 25.00

Contribution margin 243,000 $22.50

Fixed expenses 184,950

Net income $58,050

Break-even point in units = Fixed expense/Contribution margin per unit

= $184,950/$22.50

= 8,220

Contribution ratio = $22.50/$47.50 = 0.4737

Break-even point in dollars = Fixed expense/Contribution ratio

= $184,950/0.4737

= $390,437

Margin of safety in dollars = Budgeted Sales - Break-even Sales

= $513,000 - $390,437

= $122,563

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