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Natalka [10]
3 years ago
7

Many commodities have futures markets associated with them. A futures market is a prediction market that aggregates information

based on uncertain events that may impact the market, and buyers commit to a financial contract in which they obligate themselves to purchasing a fixed quantity of the asset at a specified price on a certain date. In April, 2019, the national average price of unleaded gasoline was $2.87 per gallon. At the same time, the futures price for a June contract on unleaded gasoline was $2.07 per gallon.
A. The forecasted price in the futures market suggests that unleaded gasoline prices will_____by June of 2019.
B. If the information transmitted in this market is accurate and unbiased, then the predict____the actual price we will see in June.
Business
1 answer:
arlik [135]3 years ago
5 0

Answer:

Answer is explained in the explanation section below.

Explanation:

Solution:

a.

Unleaded fuel prices are expected to fall by June 2019 according to future demand forecasts.

Since the future price is less than the spot price, it would be better for long-term buyers who can wait for the price to increase because the market is currently in BACKWARDATION. This happens due to a short-term disparity in demand and supply.

b.

If the information in this sector is reliable and impartial, the expected June price will most likely be similar to the real price we will see in June.

It is reliable if the market is accurate and impartial, i.e. the market research on which knowledge flows.

The prices of goods are either integrated or expressed in such a flow of knowledge.

So, if it's unbiased and reliable, the forecast prices would be reasonably similar to the real future price.

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Helga [31]

Answer:

C) 2 x 2 mixed factorial

Explanation:

A 2 x 2 mixed factorial design refers to a research study that uses 2 independent variables (can be more, e.g. 3 x 3). One of the variables is a within-subjects factor, in this research the flavor is the within-subjects factor. The other variable is a between-groups factor, the between-groups in this research are the two groups of participants.

6 0
3 years ago
Dole, the sole owner of Enson Corp., transferred a building to Enson. The building had an adjusted tax basis of $35,000 and a fa
faust18 [17]

Answer:

C. $40,000

Explanation:

For computing the amount of the gain recognized, first we have to calculate the gain recognized based on the adjusted basis

= Cash received + fair market value of the stock - adjusted cash basis

= $40,000 + $60,000 - $35,000

= $100,000 -$35,000

= $65,000

But the cash is received for $40,000. So, only $40,000 of gain would be recognized. As in the case of transfer, if the amount is received other than the stock so the amount which is received is recognized as a gain i.e $40,000

4 0
3 years ago
Adams Corporation's present capital structure, which is also its target capital structure is
kaheart [24]

Answer:

Task a:

The answer is $24,500.

Task b:

The answer is 17%

Explanation:

<h2>Task a:</h2><h3>What is the maximum amount of new capital that can be raised at the LOWEST  component cost of EQUITY?</h3><h3>Solution:</h3>

We already know the following:

Projected net income = $21,000

Payout ratio = 30%

Retention ratio = 70%

Debt share = 40%

Equity share = 60%

Maximum amount of capital to be raised at the lowest component cost of equity = Projected net income ×\frac{Retention ratio}{Equity share}

= $21,000 × \frac{0.70}{0.60}

= $24,500

<h3>Answer:</h3>

The maximum amount of new capital that can be raised at the lowest component of equity is $24,500.

<h2>Task b:</h2><h3>What is the component cost of equity by selling new common stock?</h3><h3>Solution:</h3>

k(e) (component cost of external equity) = [Dividend (D0)(1 + growth) / stock price(1 - flotation cost)] + growth

Formula:

k(e) = \frac{Do(1+g)}{P(1-0.20)} + 0.05

Where

Do = $2.00

G = 0.05

P = $21/88

= ($2.00(1 + 0.05) / $21.88(1-.20)) + 0.05

= ($2.10/$21.88(1-.20)) + 0.05

= ($2.10/$21.88(0.80) + 0.05

= 0.17 or 17%

<h3>Answer: </h3>

The component cost of equity by selling new common stock = 17%

5 0
3 years ago
________ exists when a large number of firms produce goods that are similar but customers believe there is a difference.
hichkok12 [17]

Answer:

Monopolistic Competition

Explanation:

4 0
3 years ago
Read 2 more answers
Change Corporation expects an EBIT of $57,000 every year forever. The company currently has no debt, and its cost of equity is 1
Deffense [45]

Answer:

a) $337,615.38

b-1) $360,910.85

b-2) $415,266.92

c-1) $362,637.36

c-2) $438,461.54

Explanation:

a) To find the current value of the company, we have:

\frac{57,000*(1 - 0.23)}{0.13}

= \frac{57,000*0.77}{0.13}

= $337,615.38

b-1) If the company takes on debt equal to 30 percent of its unlevered value.

337,615.38 + (0.23 * 337,615.38 * 0.30)

= $360,910.85

b-2) When the company can borrow at 10 percent. The value of the firm if the company takes on debt equal to 100 percent of its unlevered value will be:

337,615.38 + (0.23 * 337,615.38 * 1)

= $415,266.92

c-1) The value of the firm if the company takes on debt equal to 30 percent of its levered value:

\frac{337,615.38} {(1 - 0.23) * 0.30}

= $362,637.36

c-2) The value of the firm if the company takes on debt equal to 100 percent of its levered value:

\frac{337,615.38} {(1 - 0.23) * 0.1}

= $438,461.54

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3 years ago
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