Answer:
Portfolio return = 7.3%
Explanation:
<em>The portfolio expected rate of return would be the weighted average expected rate of return</em>
Weighted average expected rate of return=
12%× (1000/(3500+1000) + (3,500/(1000+3500)× 6%= 0.073333333
Expected rate of return = 0.073333333
× 100 = 7.3%
Portfolio return = 7.3%
Answer:
The cost of equity= 11.21%
Explanation:
VL=Value UnLevered + Debt*Tax Rate =EBIT*(1-Tax Rate)/Unlevered Cost of Capital +Tax *Debt
=1900*(1-34%)/10.3%+34%*4000
=13534.76
Value of equity = $13,534.76 – 4,000 =9434.757
Cost of Equity = Cost of Unlevered Equity +(Debt/Equity)*(1-Tax Rate)*(Cost of Unlevered Equity-Cost of Debt)
=10.30%+(4000/9434.757)*(1-34%)*(10.3%-7%)
=11.21%
The correct answer would be the third option. A bond is issued at premium when a bond's stated interest rate is higher than the market interest rate. It is a type of bond wherein it offers a rate that is higher than what is the present interest rates. It is a bond usually issued in nations like Canada and United Kingdom. In UK, these bonds are deemed as lottery bonds which is being issued by the National Savings and Investment of their government. In Canada, on the other hand, it is called as Canada Premium bond which offers a high interest rate at the moment it is issued as compares to a Canada Savings Bond.
Answer: net exports
Explanation:
Balance of payment simply shows the estimation of the inflows and outflow of a nation's money for a certain year. It should be noted that current account of the balance of payment consists of three main components which are the trade in Goods, the trade in services, and the transfer payments.
The trade in goods is segregated into imports and export. This therefore makes the net exports volatile and vital because it has higher share in a current account.
Answer:
<u>Advantages</u>
Dividends
These are payments to shareholders as a way to share the profits the company has accumulated.
This is an advantage to the issuing company because they are usually not under any obligation to pay Dividends with respect to common Equity. As a result profits can be plowed back into the company to increase profitability.
Repaid
This refers to the fact that shareholders do not have to be repaid for their investment like debt holders are. Stock Holders bought a piece of the company instead of loaning money to the company so they do not have to be paid back. This is an advantage because it frees up Cashflow for the company as well as allowing it to maintain a better credit rating due to lower debts.
Future Buy-Back
This is a clause inherent in most shares. It means that the Issuing company can choose to buy back the stock at a given time in future.
This is an Advantage because it allows the Issuing company to regain control of the company at a future date.
<u>Disadvantages</u>.
Shareholders
Shareholders are people or entities who buy shares in the Issuing company. As such, they are owners in the company and have voting rights on decisions that the company makes. This is a disadvantage because it means loss of Independence for the company who now legally have to take the opinions of shareholders into account.
Net Profit After Tax
This is money that the company has after paying off interests and then taxes. This is the money that the company retains. Having shareholders means that a company may have to pay shareholders from this amount instead of retaining all of it thereby making it at a disadvantage to the Issuing company.
One Vote per Share
This means that every shareholder has a vote for every share they hold in the company. This means that Shareholders therefore have a say in the affairs of the company. This is a disadvantage to the Issuing company because it means a loss of Independence for them when decisions need to be made.
