Answer:
Please see explanation
Explanation:
To answer the given question, first we will calculate the theoretical future price which shall be determined using continuous compounding formula as follows:
Theoretical future price=400*e^(10%-4%)*4/12
=$408.08
The actual future price of a contract deliverable in 4 months is only $405 which means that the index future price is too low in relation to the index.
The suitable arbitrage strategy shall be:
1. to purchase the future contracts
2.Short sale the shares which are underlying the index
Answer:
1. Steel
2. A Mutual Fund
3. The number of shares of stock sold in a previous day
4. Capital Gains
Explanation:
1. Investment commodities are investments in raw materials or primary goods that are still to be processed such as Agricultural produce and precious metals. Steel falls under this category.
2. A Mutual Fund works by pooling the resources and monies of various people and then investing it in various companies as a single portfolio. This way even though your funds might be little, you can still be able to diversify investments and make a good return.
3. When stock is listed for sale on a particular day, its trading figures for the previous day are listed as well.
4. Capital gain is a way to gain a return when the value of your investment has increased. When you sell that asset at the new price which is higher than the price you bought it, you make a capital gain on the transaction. For instance, R. Taylor bought stock for $100 in 2005 and it is now selling at $900 and Taylor sells it, Taylor now has a capital gain of $800.
Answer:
The correct answer is c. human capital conveys positive externalities.
Explanation:
Externalities are defined as consumption, production and investment decisions made by individuals, households and companies and that affect third parties that do not participate directly in those transactions. Sometimes those indirect effects are tiny. But when they grow up, they can be problematic; That is what economists call "externalities." Externalities are one of the main reasons that lead governments to intervene in the economy.
Positive externalities: In this case, it is about the difference between private and social benefits. For example, research and development activities are widely considered as generating positive effects that transcend the producer (usually the company that finances them). The reason is that research and development enrich general knowledge, which contributes to other discoveries and advances. However, the profitability perceived by a company that sells products based on its own research and development activities does not usually reflect the profitability perceived by its indirect beneficiaries. When externalities are positive, private profitability is lower than social profitability.
The point at which it is no longer advantageous to buy in bulk is known as marginal. It is the incremental increase in a benefit to a consumer caused by the consumption of an additional unit of good.Marginal benefits normally decline as a consumer decides to consume more and more of a single good.
Answer:B. If the payback period is less than the maximum acceptable payback period, accept the project.
Explanation:
The payback period measures if a capital investment is profitable.
The payback period measures how long it takes to recover the amount invested in a capital project. It calculates how long it takes for the cash flows generated from a capital project to be equal to the cost.
For example if a project costs $10,000. It cash flows in year 1,2,3 and 4 are $5000, $3000, $2000, $6000. The payback period is 3 years. If the company has a maximum acceptable payback period of 2 years, then the company won't take on the project because its payback period is more than the maximum acceptable payback period.
If the company has a maximum acceptable payback period of 4 years, then the company would take on the project because its payback period is less than the maximum acceptable payback period.
