Answer:
The correct answer is b. It implies that prices reflect all available information.
Explanation:
The efficient market hypothesis is a theory initially enunciated by Eugene Fama (1970). It states that the current price of an asset in the market reflects all available information that exists (historical, public and private).
This theory considers that any news or future event that may affect the price of an asset will make the price adjust so quickly that it is impossible to obtain an economic benefit from it. Given this, it is considered a waste of time and money to try to analyze the values, since there will be no undervalued or overvalued assets in the market.
Answer:
c. 7.98; .92.
Explanation:
My calculations varied slightly (0.02% and 0.01%), but the error might be a rounding error. Option C is the logical answer since the difference is minimum.
real rate returns from stocks:
15% - 2.8% = 12.2%
7% - 2.8% = 4.2%
4% - 2.8% = 1.2%
18% - 2.8% = 15.2%
average real return = 8.2% arithmetic mean
average real return = 8% geometric mean
real rate returns from US T-bills:
6% - 2.8% = 3.2%
3% - 2.8% = 0.2%
2% - 2.8% = -0.8%
4% - 2.8% = 1.2%
average real return = 0.95% arithmetic mean
average real return = 0.93% geometric mean
The right side of any account is B the credit side
Answer: See attachment
Explanation:
a. What is Poplock’s year 1 depreciation expense for each asset?
See attachment. Note that the depreciation for the assets were calculated as the original basis × the rate. e.g for Computer equipment, the Depreciation was, the original basis of $5000 × the rate of 20% which equals $1,000.
b. What is Poplock’s year 2 depreciation expense for each asset?
Check attachment.
Depreciation for computer = $1600
Depreciation for day grooming furniture = $1714
Depreciation for popup truck = $3200
Depreciation for commercial building = $6923
