Read the following descriptions and identify the type of risk or term being described:

Business

1 answer:

vagabundo [1.1K]3 years ago

7 0

Answer:

Foreign exchange risk

Explanation:

These are the risks that an international financial transaction could accrue because of fluctuations in the currency.

A standard measure of the risk per unit of return and this type of risk relates to fluctuations in exchange rates.

Therefore, according to the following descriptions, the type of risk or term being described is Foreign exchange risk.

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3 years ago

The predetermined manufacturing overhead rate for 2020 was $4.00 per direct labor hour; employees were paid $5.00 per hour.

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Read the excerpt from Queen Elizabeth's Address to the Troops at Tilbury.

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3 years ago

The Investments Fund sells Class A shares with a front-end load of 5% and Class B shares with 12b-1 fees of 0.75% annually as we

elena-14-01-66 [18.8K]

Answer:

The responses to the given choices can be defined as follows:

Explanation:

Assume is the investment. Each original Class A investment is of the net-front unburden. The portfolio will be worth four years from now:

$\$1,000 \times 5\% = \$50 =\$1,000 - \$50 = \$950\\\\ \$950 (1 + 0.13)^4 = \$950 (1.13)^4 = \$950 (1.630474) = \$1,548.95\\\\$

You will place the total of $\$1,000$ on class B shares, but only $12b-1$ will be paid $(13-0.75 = 12.25)$ at a rate of $12.25\%$ and you'll pay a $1\%$ back-end load charge if you sell for a four-year period.

After 4 years, your portfolio worth would be:

$\$1,000 (1 + 0.1225)^4 = \$1,437.66 \\\\ \$1,000 (1.1225)^4 = \$1000 (1.587616) = \$ 1,587.62$

Their portfolio worth would be: after charging the backend load fee:

$\$1,587.616 \times 0.99 = \$1,571.74 \\\\ Amounts \\\\ Class A \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ 1,548.95\\\\ Class B \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ 1,571.74 \\\\$

When the horizon is four years, class B shares are also the best option.

Class A shares would value from a 12-year time frame:

$\$950 (1.13)^{12} = \$950 (4.334523) = \$4,117.80 \\\\$

In this case, no back-end load is required for Class B securities as the horizon is larger than 5 years.

Its value of the class B shares, therefore, is as follows:

$\$1,000 (1.1225) 12 = \$1,000 (4.001623) = \$4,001.62 \\\\Amounts \\\\\ Class A \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ 4,117.80\\\\ Class B \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ 4,001.62\\\\$

Class B shares aren't any longer a valid option in this, prolonged duration. Its impact on class B fees of $0.75\%\ \ 12b-1$ cumulates over a period and eventually outweighs the $5\%$ the burden of class A shareholders.