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blagie [28]
3 years ago
7

Arbitrage means taking advantage of temporary differences in market prices to make a profit. Assume two real estate companies, A

and B, both operate in New York area and focus on office properties. You have determined that Company A's shares have an intrinsic value of $20 per share but are trading at $22 per share, while Company B's shares are worth $25 per share but are trading at $22 per share. What would a rational investor (or an arbitrageur) do to take advantage of this price difference (no short-selling constraint and transaction fee)
Business
1 answer:
Nadusha1986 [10]3 years ago
7 0
Please help me with my questions
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What should you do if the severity of risk is low and the frequency of the risk event occurring is high?
borishaifa [10]

If the severity of risk is low and the frequency of the risk event occurring is high thanwe should Avoid the risk.

High Frequency/ High Severity- Risks are almost certain to occur and when they occur impact will be very high. In such a case it is best to use Avoidance as a risk management technique. If avoidance is not possible then prevention and insurance techniques can be considered. High frequency/ Low severity- This more serious risk and occurrence is high but the impact is low. Examples of such risks include workers’ injuries and shoplifting. A common way to manage this type of risk is through Prevention.

Low frequency/ High severity- The impact of these kinds of risks is very high and can bankrupt a business. Insurance is the best technique to manage these risks that have low loss frequency and high loss severity. Low frequency/ Low severity- Retaining and self-insuring the risk. Risk occurrence is low and impact is also very low. In most cases, the costs of managing them outweigh the cost of retaining them.

Learn more about risk frequency here:- brainly.com/question/254161
#SPJ4

4 0
2 years ago
A firm has an opportunity to invest $95,000 today that will yield $109,250 in one year. If interest rates are 4%, what is the ne
Goryan [66]

Answer:

The net present value (NPV) of this investment is C) $10,048

Explanation:

Net present value (NPV) is the value of the future cash flows over the entire life of an investment discounted to the present.

The firm  invests $95,000 today that will yield $109,250 in one year. The interest rates of the investment are 4%. The net present value (NPV) of this investment:

NPV = $109,250/(1+4%) - $95,000 = $10,048

​

3 0
3 years ago
The total debits in the After-Closing Trial Balance will equal:______
Mnenie [13.5K]

Complete Question:

Shown below is a trial balance for Novelty Toys, Inc., on December 31,after adjusting entries:

                                         Novelty Toys, Inc.

                                  Trial Balance December 31

Cash                                                $7,750

Accounts Receivable                     $6,375

Office Equipment                           $11,250

Accumulated Depreciation                                      $3,000

Accounts Payable                                                     $3,875  

Capital Stock                                                             $11,250

Retained Earnings                                                     $0

Dividends                                                                   $3,750

Fees Earned                                                             $22,750

Salaries Expense                                                      $8,000

Advertising Expense                      $1,625  

Depreciation Expense                   <u>$2,125 </u>              <u>                </u>

                                                       $40,875             $40,875

The total debits in the After-Closing Trial Balance will equal:

Select one:

a. $25,375.

b. $29,125.

c. $40,875.

d. $18,125.

Answer:

$25,375

Explanation:

The After-Closing Trial Balance is prepared once the closing entries are posted. This results in closing of expense and income accounts for the year and the resulting balance taken forward to retained earnings. This means that After-Closing Trial Balance would contain only permanent general accounts which are balance sheet items. In the given scenario, the balance sheet debit balances are as under:

Cash                                                $7,750

Accounts Receivable                     $6,375

Office Equipment                           <u>$11,250 </u>

Total Debit Balance                      <u>$25,375</u>

Hence the option A is correct.

7 0
3 years ago
Match the association type with the person that best fits the description: personal association a. your parents b. the president
Lady bird [3.3K]

Answer: A. Is the answer

Explanation: I took the quiz and got it right

3 0
3 years ago
Read 2 more answers
Scenario 9-1 For a small country called Boxland, the equation of the domestic demand curve for cardboard is Q D = 200 − 2P , whe
Ksenya-84 [330]

Answer:  a. benefits Boxlandian consumers by $672 and harms Boxlandian producers by $598.50.

Explanation:

Equilibrium price will be at level where quantity demanded equals quantity supplied.

200 − 2P = -60 + 3P

200+60 = 5P

5P = 260

P = $52

Equilibrium Quantity Demanded = 200 − 2P = 200 - 2 * 52 = 96 units

In a no-trade situation the demand in Boxland is 96 units at a price of $52. If they were to buy at the world price of $45, they would benefit;

= (96 * 52) - (96 * 45)

= 4,992‬ - 4,320‬

= $672

Producers however would produce the following at a price of $45;

Q S = -60 + 3P

= -60 + 3(45)

= 75 units

They would be supplying less units and be hurt.

7 0
3 years ago
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