Prepare journal entries to record each of the following four separate issuances of stock.

"A mutual fund manager of a "high technology" fund feels that the market for this sector will remain flat in the next coming mon

qaws [65]

Answer: C. narrow-based calls

Explanation:

Narrow based calls would include calls from one industry. The mutual fund is an "High technology" firm which means that it is a narrow based fund for instance as it is interested only in one industry being the High Tech industry.

The manager should invest in Narrow based calls that focus on the sector if he anticipates that the market will remain flat for the sector. Narrow based Calls are more volatile because they are specific and with the volatility comes higher premiums to be charged.

Should he wish to make income against the portfolio, he should sell these knowing that the options will not be called as the market will remain flat.

5 0

3 years ago

Assume the real rate of interest is 3.00% and the inflation rate is 6.00%. What is the value today of receiving 14,488.00 in 13.

OverLord2011 [107]

Answer:

Present Value= $15,874.25

Explanation:

Giving the following information:

Assume the real rate of interest is 3.00% and the inflation rate is 6.00%. What is the value today of receiving 14,488.00 in 13.00 years?

<u>This is a rare case where the interest rate is negative:</u>

Interest rate= 0.03 - 0.06= -0.03

Having said this, the present value is higher than the final value:

PV= FV/ (1+i)^n

PV= 14,488/ 0.97^3= $15,874.25

6 0

3 years ago

What is the present value of $2,025 per year, at a discount rate of 7 percent, if the first payment is received 6 years from now

Marysya12 [62]

Answer:

The correct answer is $20,369.65.

Explanation:

According to the scenario, the computation of the given data are as follows:

Payment (pmt) = $2,025

Discount rate ( rate) = 7%

Time period ( Nper) ( 6 -23 years) = 18 years

So, we can calculate the Present value by using financial calculator.

Attachment is attached below.

So, Present Value = $20,369.65

7 0

3 years ago

Sam’s Appliance Outlet has variable expenses of 40% of sales. The manager reported monthly fixed expenses of $270,000. The month

solong [7]

Answer:

$125,000

Explanation:

total sales = ?S

variable expenses = S x 40%

fixed costs = $270,000

operating income = $75,000

S - 0.4S - $270,000 = $75,000

0.6S = $75,000 + $270,000 = $345,000

S = $345,000 / 0.6 = $575,000

total sales = $575,000

margin of safety = total sales - break even point

break even point = $270,000 / 0.6 = $450,000

margin of safety = $575,000 - $450,000 = $125,000

The margin of safety represents how much can a company's sales can fall until it reaches the break even point.

7 0

3 years ago

Oriole Company sells three different categories of tools (small, medium and large). The cost and market value of its inventory o

Vladimir79 [104]

Answer:

$440,140

Explanation:

According to the accounting principle, the inventory should be valued at lower of cost or market value. The calculation is shown below:

Cost Market Lower value

Small $68,650 $56,490 $56,490

Medium $283,710 $237,140 $237,140

Large $146,510 $177,300 $146,510

Total $440,140

Hence, the ending inventory would be valued at $440,140

5 0

3 years ago