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3 years ago

What is true about preferred stocks?

2 answers:

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Common stock provides for a fixed dividend. In most cases, preferred stockdividends are paid out after common dividends. ... Both represent ownership, thoughpreferred stock represents a higher level of ownership because in a liquidationpreferred stockholders are paid before commonstockholders.

Akimi4 [234]3 years ago

8 0

Answer:

The preferred stock is an stock that gives the holder an extra privilege, usually of an economic nature, with respect to what we commonly know as ordinary shares. For example, the holder of a preferred stock has a higher hierarchy in the collection of dividends or in the distribution of the remaining assets in the event of bankruptcy by the company.

In case there are assets in liquidation, the hierarchy in the collection is better for the preferred shareholder than for the ordinary shareholder.

The responsibility of the ordinary shareholder is always limited, however, that of the preferred shareholder may not always be so under certain conditions.

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The following is a free response question released by the College Board from a previous AP exam to be used as practice for futur

astraxan [27]

Solution and Explanation:

(a). Firm in perfect competition produces at minimum efficient scale, MEC where average cost AC is minimum. The price is determined by the market supply and demand.

(b) Note that q1 is at the minimum of AC while Q* is to the left of q1. Similarly, P1 is equal to MC while P* is higher than MC. This shows that firms in perfect competition produce more and charge less than the firms in monopolistically competitive market.

(c) All firms in monopolistically competitive market as well as perfectly competitive market earn zero economic profit in the long run. This is because there is a free entry and exit

(d) Demand is steeper for firms in monopolistically competitive market so that demand is elastic. Demand is horizontal for any quantity which means it is perfectly elastic for a firm in competitive market.

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3 years ago

How do taxes influence responsible financial planning? Discuss some examples of how taxes may influence a financial plan.

insens350 [35]

Answer:

I will discuss how taxes affect the financial planning of individuals, not businesses.

The whole idea of responsible financial planning is to maximize an individual's wealth, and in order to be able to do this you generally need to minimize your tax liabilities. It doesn't mean that you shouldn't pay your taxes, but rather that the taxes that you owe should be lower.

An example about how this works is when you you invest in stocks. All dividends are taxed as ordinary income, but if you hold a stock for more than one year and then sell it making a profit, you will be taxed at a much lower rate. That is why it is always a good idea to hold stocks long enough for long term capital gains rate to apply. E.g. if you are married and your ordinary taxable income is less than $80,000, you pay 0 taxes for long term capital gains. Even couples earning up to $496,600 will pay only 15%, while their marginal tax rate on ordinary income is 35%. Remember that every cent that you save on taxes, increases your wealth, and a 20% difference is a lot.

Another example are IRA accounts. Contributions to traditional IRA accounts lower your taxable income, which is great. Any interest gained by the account will not be taxed until you retire. This allows your money to grow tax free. E.g. you have $100,000 to invest and you an earn 8% per year. If you do not pay any taxes, in 10 years you will have $100,000 x 1.08¹⁰ = $215,894.50. But if you pay a 24% tax rate on your gains, then you will only have $100,000 x [1 + (0.08 x 0.76)]¹⁰ = $180,441.

In order to reduce your taxes, you might sometimes need to postpone or accelerate some expenses or donations. E.g. you generally donate $3,000 to church, it is December and you are getting ready to sign a check. But you then realize that your current tax bracket is 12%, but since you got a raise, next year you will pay 24%. It is a good idea to write the check on January 2, since you will save $3,000 x (24% - 12%) = $360 in future taxes.

3 0

3 years ago

Read 2 more answers

A perfectly competitive market has a. only one seller. b. at least a few sellers. c. many buyers and sellers. d. firms that set

Natali [406]

Answer:

c. many buyers and sellers.

Explanation:

A perfect market for competition is a market that has a high level of competition.

It has the following features -

1. With regard to the market, knowledge is great in this rivalry between producer and consumer.

2. Free entry, and exit

3. Deals with same or homogeneous products

4. The sellers and buyers are more in this market

5 0

3 years ago

3. A company manufactures two types of products: A and B. Three resources R1, R2, and R3 are required to make these products. a.

mojhsa [17]

Answer:

(i)The units of production of Product A and B (x and y) are the decision variables

(ii)Objective is to maximize profit

(iii)Objective function, Max P=20x+50y

(iv)The Contraints are:

8x+2y $\leq$ 500....(i)

2x+5y $\leq$ 400.......(ii)

3y $\leq$ 180

x>0, y>0

Explanation:

Let the number of Product A=x

Let the number of Product B=y

Each unit of product A requires 8 units of R1 and 4 units of R2.

Each unit of product B requires 2 units of R1, 5 units of R2, and 3 units of R3

The availabilities of resources R1, R2, and R3 are 500, 400, and 180

Since R1 $\leq$ 500,

Product A requires 8 units of R1 per production unit

Product B requires 2 units of R1 per production unit

Total Unit of R1 possible is given by the inequality: 8x+2y $\leq$ 500....(i)

Since R2 $\leq$ 400,

Product A requires 2 units of R2 per production unit

Product B requires 5 units of R2 per production unit

Total Unit of R2 possible is given by the inequality: 2x+5y $\leq$ 400....(ii)

Since R3 $\leq$ 180,

Product B requires 3 units of R2 per production unit

Total Unit of R2 possible is given by the inequality: 3y $\leq$ 180....(iii)

Since the manufacturer also makes a profit of $20 and $50 for products A and B, our objective is to maximize profit

Therefore: Objective function, Max P=20x+50y ......(iv)

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3 years ago

Professor Very Busy needs to allocate time next week to include time for office hours. He needs to forecast the number of studen

Serhud [2]

Answer:

b. 77

Explanation:

The formula for forecasting is :

$F_{t}$ = $\alpha D_{t-1}$ + (1 - $\alpha$ ) $F_{t-1}$

where $F_{t}$ is forecast for the period and $D_{t}$ is the actual demand for the period.

Last week forecast is = $\alpha$ * Demand 2 weeks ago + (1 - $\alpha$ ) * Forecast 2 weeks ago

0.2 * 65 + (1 - .02) * 90 = 13

Current week forecast is = $\alpha$ * Demand Last weeks + (1 - $\alpha$ ) * Forecast Last weeks

0.2 * 50 + (1 - 0.2) * 83 = 77.

6 0

3 years ago