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balandron [24]
3 years ago
10

A firm practicing unrelated diversification can make better capital allocations to its subsidiary businesses than the external c

apital market can for all the following reasons EXCEPT: a. corporate headquarters can allocate capital according to more specific criteria than is possible with external market allocations. b. corporate headquarters has more complete information about the subsidiary businesses than the external capital market. c. the firm can acquire other firms with innovative products instead of allocating capital to research and development. d. corporate headquarters can more effectively discipline underperforming management teams through resource allocation than can the external market.
Business
1 answer:
Maslowich3 years ago
7 0

Answer: C. the firm can acquire other firms with innovative products instead of allocating capital to research and development

Explanation:

Unrelated Diversification is regarded as a diversification which takes place when a company adds an unrelated product to its business. For example, when an television manufacturer enters into a clothing business.

A firm practicing unrelated diversification can make better capital allocations to its subsidiary businesses than the external capital market can for all the following reasons except when the firm can acquire other firms with innovative products instead of allocating capital to research and development.

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The stock of Big Joe's has a beta of 1.40 and an expected return of 12.10 percent. The risk-free rate of return is 4.6 percent.
leonid [27]

Answer:

5.403%

Explanation:

Calculation for the expected return on the market

Using this formula

Expected return =(Expected return-Risk-free rate of return)/Stock beta +Risk-free rate of return

Where,

Expected return=12.10%

Risk-free rate of return=4.6%

Stock beta =1.40%

Let plug in the formula

Expected return =(0.121-0.046)/0.014+0.046

Expected return =0.075/0.014+0.046

Expected return=5.357+0.046

Expected return =5.403%

Therefore the expected return on the market will be =5.403

7 0
3 years ago
The LFH Corporation makes and sells a single product, Product T. Each unit of Product T requires 1.5 direct labor-hours at a rat
insens350 [35]

Answer:

the budgeted direct labor cost is $441,000

Explanation:

The computation of the budgeted direct labor cost is shown below:

Budgeted direct labor cost

= Budgeted production ×  hours per unit × rate per hour

= 28,000 units × 1.5 × $10.50

= $441,000

Hence, the budgeted direct labor cost is $441,000

So the correct option is B.

7 0
3 years ago
Serendipity Inc. is re-evaluating its debt level. Its current capital structure consists of 80% debt and 20% common equity, its
Dmitriy789 [7]

Answer:

8.76%

Explanation:

Using the CAPM formula:

Ke = Rf + Beta Factor * Risk premium

Here

Rf is 5%,

Beta Factor is 1.6

And

Risk Premium is 6%

By putting values, we have:

Ke = 5% + 1.6 * 6%

Ke = 14.6%

Now we will find new firm's cost of equity under 40% debt by simply multiplying it with the equity percentage:

Weighted Cost of Equity = 14.6% * 60% = 8.76%

8 0
3 years ago
Susan started a cake decorating business that failed. She is convinced that she lacked the necessary funds to promote her busine
Georgia [21]

Answer: Undercapitalization

Explanation:

Undercapitalization is defined as the situation where a person or entity of any kind does not have sufficient funds or capital to run their business and pay the costs it has. This type of situation usually occurs when the business is not selling the necessary amount of products or services to generate the amount of income necessary to meet all the payments it has.

When an entity or business is undercapitalization, in many cases they have had to take measures such as downsizing, fewer materials to create the product, or ultimately, if none of this works, having to close the business.

4 0
3 years ago
Minimizing Inventory. An electronics store sells 100 digital storage devices per year. It costs $18 to store one storage device
jarptica [38.1K]

Answer:

Expl one year. To reorder, there is a fixed cost of $36, plus $11 for each storage device.anaMinimizing Inventory. An electronics store sells 100 digital storage devices per year. It costs $18 to store one storage device for one year. To reorder, there is a fixed cost of $36,tion:

4 0
2 years ago
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