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3 years ago

Which of the following is a potential disadvantage when considering long-term loans as an option for raising capital?

Business

1 answer:

12345 [234]3 years ago

6 0

Answer:

A potential disadvantage when considering long-term loans as an option for raising capital is:

D. They require diluting ownership in organizations.

Explanation:

This potential disadvantage becomes a reality when the long-term loans are converted into shares. At this point, the ownership in the organization is diluted. Ownership dilution reduces the percentage of the ownership of shares in the entity. The investment becomes less attractive to the original owners since more owners are brought on board.

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You are attempting to value a call option with an exercise price of $109 and one year to expiration. The underlying stock pays n

Ivenika [448]

Answer:

The value of the call option today is $14.29

Explanation:

The two-state stock pricing model is one that prices are based on the assumption that there is no arbitrage profit opportunity as well as the fact that the call option's value will be the present value(PV) of the expected future winnings for long call.

Now, value of the call option if the prices go up will be;

142 - 109 = $32

While if the prices go down, it will be;

76 - 109 = -$33

The call option in this case can only be utilized when the market value exceeds the exercise price.

Therefore, the expected winnings value after one year will be;

Value after one year = (32 × 0.5) + (0 × 0.5)

Value after one year = $16

We used 0 in the multiplication because the call wouldn't be utilized for when the prices go down.

one year from now the long call can be expected to earn $16 .

Thus, today the present value of this amount will be the price of the call option if we take into cognizance that here will be no arbitrage profit opportunity.

With risk-free rate of interest is 12%, we have;

PV = 16/1.12 = $14.29

3 0

3 years ago

Assume that at the end of 2018, Clampett, Inc. (an S corporation) distributes long-term capital gain property (fair market value

boyakko [2]

Answer: Income J. D. recognize as a result of the distribution: $45000

Explanation:

First we'll compute the share of gain on distribution,

Share of the gain on the distribution = $40,000 - $25,000

i.e. $15,000

Now , we'll add the increase in basis from gain from property distribution,

i.e. ($15,000 original basis + $15,000 increase in basis from gain from property distribution)

So income to be recognized :3000+15000 = $ 45000

6 0

3 years ago

Read 2 more answers

The standard direct labor hours allowed is computed as a.Unit Labor Standard × Actual Output. b.Unit Labor Standard × Practical

Vladimir [108]

Answer:

a. Unit Labor Standard × Actual Output.

Explanation:

The standard direct labor hours allowed is the number of hours held for per unit based on the actual number of units produced. It can be determined by multiplying the unit labor based on standard per hour with the actual output

In mathematically,

Standard direct labor hours allowed = Unit Labor Standard × Actual Output

Hence, all other options are wrong

5 0

3 years ago

Which firm would an economist most likely label as an oligopolist? Choose one: A. This firm is one of many successful pest exter

RoseWind [281]

Answer:

C. This firm is one of a handful of cement manufacturers in a small country. There are barriers to entry due to the necessity of controlling specific resources to make cement.

Explanation:

An oligopoly is defined as a market situation where a few businesses exist in a given market, with none of them having ability to keep others from having significant influence.

A monopoly is when only one supplier exists in a market, a duopoly is when there are 2 suppliers, while an oligopoly is when number of supplier is more than 2.

But the number must be small enough that the actions by one firm significantly affects others.

When a firm is one of a handful of cement manufacturers in a small country, and there are barriers to entry due to the necessity of controlling specific resources to make cement. It is an oligopoly

7 0

3 years ago

Ariel is saving money to purchase a new computer before she leaves for college in two years. She wants to open a special account

Anna35 [415]

Answer:

b. Shop around for the depository institution with the highest interest rates for their savings accounts. She would be able to make regular savings deposits and earn interest while she is saving up for the computer.

Explanation:

Firstly, depository institutions are instiutions that are legally allowed to accept monetary deposits from customer. Examples savings bank, loan banks e.t.c

However, Ariel is better off depositing her money in a financial institution that will yield high interest for her and enable better save to purchase her dream computer.

3 0

4 years ago