Answer:
D. Spending on services is smaller than the amount of consumption spending on durable and nondurable goods.
Explanation:
For developed countries like the U.S, there is a lot of stress in consumption of services such as good health care, appropriate and quality education and among others. These services contribute to a larger proportion of consumption component of GDP than both durable and nondurable commodities. Therefore, the statement “spending on services is smaller than the amount of consumption spending on durable and non-durable goods” is not correct
Answer:
ALL OF THE ABOVE
Explanation:
Behavioral finance is an interesting mix of psychology and finance which deals with the effect of psychology on the behavior of investors.
Looking at the options given in the scenario they all show traits of investors behaving in a way that portrays psychological reaction
Hence it can be concluded that Problems with behavioral finance include ALL OF THE FOLLOWING:
I. The behavioralists tell us nothing about how to exploit any irrationality.
II. The implications of behavioral patterns are inconsistent from case to case, sometimes suggesting overreaction, sometimes underreaction.
III. As with technical trading rules, behavioralists can always find some pattern in past data that supports a behavioralist trait.
Answer:
False Statement:
B. Only II is False.
Explanation:
If the cash flow from a project is farther out, the present value will be lower, all else being equal. This is because of the time value of money. This concept states that the money you receive today is higher in value than the same amount received in the future. And if the future is father out, then the value of the money will continue to reduce in relative value based on this time value of money concept.
Answer:
The correct answer is letter "A": Mary Beth grows cotton. She finds that she can always sell her entire crop at the market price. However, if she asks a price that is even slightly higher she cannot sell any of her cotton.
Explanation:
Perfect Competition is a market where competition is at the highest degree possible. Perfect competitive markets have the following characteristics:
- <em>All companies sell the same goods or services. </em>
- <em>All companies are price takers. </em>
- <em>All firms have relatively small market shares. </em>
- <em>Buyers have full product and price information. </em>
- <em>The industry is characterized by low or no barriers to entry and exit of the industry.</em>
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Thus, <em>in Mary Beth's case, she cannot ask for a different price than the one of the market because in a perfectly competitive market it is controlled by supply and demand. Companies cannot set the price.</em>
Answer:
1. Measure of the percentage change in earnings before interest and tax or operating cash flow:
B) Degree of operating leverage
2. P/E Ratio of 10 indicates that:
c. The value of the stock will be 10 times the initial investment at the time of maturity.
Explanation:
Company B's degree of operating leverage is the financial measure that shows the degree of change of the operating income of the company in relation to a change in her sales revenue. With this measure, investors and analysts of Company B are able to evaluate how sales impacts the company's operating income. There are many ways to measure a company's degree of operating leverage. One of the methods subtracts the variable costs of sales and divides that number by sales minus variable costs and fixed costs.
Company A's P/E ratio or price/earnings ratio is the measure of the relationship between the current market price and its earnings per share. It is used to evaluate the value of the company's stock. It points out whether the company's stock is undervalued, overvalued, or correctly valued.
