Profit, Competition, Cost and Demand are the element which the approaches for pricing fixing are oriented around.
Pricing refers to the process of determining the value that a producer will receive in the exchange of services and goods produced with final consumers or middle men.
- The aim of generating profit is one of the element considered for price fixing.
- Competition levels with other companies in the industry will influence price fixing because consumers pocket have to be considered.
- Level of Cost incurred during production of the goods and services also play a great role in price fixing.
- Demand from the market also influence price setting on a product.
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Answer:
The correct answer is forward; high.
Explanation:
A spot rate is the settlement price agreed in a spot contract, which facilitates the purchase and sale of a good, value or currency on the spot date, which is normally two business days after the trading date. On the other hand, a forward rate is the settlement price in a forward contract, which facilitates the purchase and sale of a good, value or currency when the terms are agreed but delivery and payment will occur at a future date.
Buyers and sellers look for a spot rate to make an immediate purchase or sale. A forward rate is considered to be market expectations for future prices. It can serve as an economic indicator of how the market expects the future to perform, while spot rates are not indicators of market expectations and are instead the starting point for any financial transaction.
Therefore, it is normal for forward rates to be used by investors, who may believe they have knowledge or information about how the prices of specific items will move over time. If a potential investor believes that actual future rates will be higher or lower than the forward rates established on the current date, it could indicate an investment opportunity.
Answer:
A. all the combinations of inputs that yield the same total output.
Explanation:
An isoquant is a negatively sloped curve that shows all the combinations of inputs that yield the same total output.
Answer:
B) Diluted weighted shares is always greater than or equal to basic weighted average shares
Explanation:
<em>Basic Earnings per Share = Earnings Attributable to Holders of Common Stock ÷ Weighted Average Number of Common Stocks</em>
Diluted Earnings per Share includes the Potential voting rights in the calculation of Weighted Average Number of Common Stocks and thus its weighted shares is always <u>greater than or equal </u>to basic weighted average shares.
Earnings per Share used Weighted Shares Outstanding at Period End instead of just Outstanding Shares at Period End.
Answer and Explanation:
. What would happen if we use the WACC for all projects regardless of risk?
Ans. If we use the WACC for all projects, we might end up favoring risky projects. We could also potentially reject +NPV less risky project. Thus will lead to poor decision making. We must adjust the WACC to accommodate for risk of a project.
. Assume the WACC = 15%
Project Required Return IRR
A 20% 17%
B 15% 18%
C 10% 12%
which project would be accepted if they used the WACC for the discount rate ? explain why .
Ans. Considering WACC of 15%, acceptable projects would be - Project A & B, since these have IRR>WACC.
. which project would be accepted if you use the required return based on the risk of the project ? explain why
Ans. Considering required rate of return given:
Project Required Return IRR
A 20% 17%
B 15% 18%
C 10% 12%
Reject A (since IRR < Required return)
Accept B & C (since IRR > Required return)
