Answer:
C) Sell £2,278.13 forward at the 1-year forward rate, F1($/£), that prevails at time zero.
Explanation:
given data
State 1 State 2 State 3
Probability 25% 50% 25%
Spot rate $ 2.50 /£ $ 2.00 /£ $ 1.60 /£
P* £ 1,800 £ 2,250 £ 2,812.50
P $4,500 $4,500 $4,500
solution
company holds portfolio in pound. so to get hedge, they will sell that of the same amount.
we get here average value of the portfolio that is
The average value of the portfolio = £ (0.25*1800 + 0.5*2250 + 0.25*2812.5)
The average value of the portfolio = 2278.13
so correct option is C) Sell £2,278.13 forward at the 1-year forward rate, F1($/£), that prevails at time zero.
Answer:
$60.87
Explanation:
You can solve this question using time value of money concept. Since this is a dividend paying stock, the recurring dividends are annuities, next year's price is the future value, total duration is 1 year. Use these to calculate the current price; PV
Total duration; N = 1
Interest rate per year ; I/Y = 15%
Future value; FV = 63
Recurring dividend payment; PMT = 7
then compute the present value; CPT PV = 60.87
Therefore, the intrinsic value of this stock is $60.87
Answer:
i added the graph of both markets as an attachment
The answer is market B or 2. This market a higher level of unemployment.
When elasticity of supply increases, we have it that the suppliers would have greater market power.
In market B, we have it that the elasticity of supply is bigger than that if A. This means that the supplier has more market power in this market than in market A.
Since the elasticity us greater in this market, then we would have change in unemployment due to a fall in demand to be more here than in A.
Answer:
1) Colt Carriage Company
Income Statement
For the month ended April 202x
Revenues:
- Adults passengers $186,300
- Children $81,000
- Total revenues $267,300
Variable costs:
- City fees $26,730
- Souvenirs $7,425
- Brokerage fees $11,340
- Carriage drivers $52,650
- Total variable costs <u>$98,145</u>
Contribution margin $169,155
Period costs:
- Depreciation $2,900
- Horse leases $48,000
- Marketing expenses $7,350
- Payroll expenses $7,600
- Total period costs <u>$65,850</u>
Operating profit $103,305
2) If the total amount of passengers increase by 10%, then all variable costs will increase by 10% except brokerage fees which would increase only by 6%. Revenues should also increase by 10%. Period costs should not change.
Contribution margin should increase by 10.29% and operating profit would increase by 16.81%.
Explanation:
since the information is not complete, I looked it up:
Revenues
13,500 passengers:
8,100 x $23 = $186,300
5,400 x $15 = $81,000
total $267,300
variable costs:
fees paid to the city 10% of total revenue
souvenirs $0.55 per passenger
brokerage fees 60% of total tickets x $1.40
carriage drivers $3.90 per passenger
fixed costs:
depreciation $2,900
horse leases $48,000
marketing expenses $7,350
payroll expenses $7,600
Answer:
<u>Time</u>
Explanation:
There is a trade off between time spent in travelling and engaging into some other activity.
In Economics, Opportunity cost refers to the next best alternative. It represents the foregone benefits of an activity sacrificed in return for another activity.
In the given case, Jane is willing to pay extra online than travel all the way and get the blanket at a much cheaper rate. By doing so, Jane has saved time as well as energy which would've been spent in 50 miles drive.
Consumer decision making process involves the whole process between a consumer identifying his need and ultimately making the purchase.
The given case corresponds to the influence of available time or the time constraint which affects consumer decision making process.