Question 7 (3 points)

Which one of the following is not a function of money? A. Medium of exchange. B. Store of value. C. Open market operation. D. U

Lisa [10]

Answer:

The correct answer is C

Explanation:

Money is the term which is described as something which serves as exchange medium, store of value and a unit of accounting. It is a exchange medium in the terms, that the person will agree to receive it by making a transaction.

In short, when depositing the money into any financial institution like banks, then this states the store of value function of the money.

Therefore, the one which is not the function of money is that it has the operations in the open market.

3 0

3 years ago

Suppose a foreign investor who holds tax-exempt Eurobonds paying 10.50% is considering investing in an equivalent-risk domestic

timurjin [86]

Answer:

14.58%

Explanation:

Return on Bond is the actual rate that is received by an investor on investment in bond.

As per given data

After Tax return = 10.50%

Tax Rate = 28%

Deduction of 28% withholding tax will be made on the return of the bond in that country where investment is made and investor will have return net of tax.

We can calculate the after tax return on the bond as follow

After tax return = Before tax return x ( 1 - Tax rate )

10.5% = Before tax return x ( 1 - 28% )

0.105 = Before tax return x ( 1 - 0.28 )

0.105 = Before tax return x 0.72

Before tax return = 0.105 / 0.72

Before tax return = 0.1458 = 14.58%

4 0

3 years ago

Which of the following statements is CORRECT? a. Because most stock ownership is concentrated in the hands of a relatively small

lbvjy [14]

Answer:

d. The potential exists for agency conflicts between stockholders and managers.

Explanation:

A problem of the agency is a conflict of the interest of relationships where one party is expected to act in another best interest and usually refers to the conflicts of the interest between the companies management and the stockholders.

6 0

3 years ago

Over the next three years, Distant Groves will pay annual dividends of $.65, $.70, and $.75 a share, respectively. After that, d

olganol [36]

Answer:

The share is worth $5.68 today.

Explanation:

The current price of the stock can be calculated using the DDM or dividend discount model. The DDM values the stock based on the present value of the expected future dividends from the stock.

The following is the formula for the price of the stock today,

P0 = D1 / (1+r) + D2 / (1+r)^2 + ... + Dn / (1+r)^n + Terminal value / (1+r)^n

The terminal value is the cumulative value of all the future dividends calculated when the dividend growth becomes zero or constant. In case the dividend growth becomes constant, like in this case, the terminal value is calculated as follows,

Terminal value = Dn * (1+g) / r - g

Where,

g is the Constant growth rate in dividends

So, the price of this stock today is,

P0 = 0.65 / (1+0.145) + 0.70 / (1+0.145)^2 + 0.75 / (1+0.145)^3 +

((0.75 * (1+0.02) / (0.145 - 0.02)) / (1+0.145)^3

P0 = $5.678 rounded off to $5.68

6 0

3 years ago

Red Hot Chili Peppers Co. had the following activity in its most recent year of operations.Classify the items as (1) operating—a

lora16 [44]

Answer:

a. Purchase of Equipment - (3) investing

b. Redemption of bonds payable - (4) financing

c. Sale of building - (3) investing

d. Depreciation - (1) operating—add to net income;

e. Exchange of equipment for furniture - (5) significant noncash investing and financing activities

f. Issuance of capital stock - (4) financing

g. Amortization of intangible assets - (1) operating—add to net income

h. Purchase of treasury stock - (4) financing

i. Issuance of bonds for land - (5) significant noncash investing and financing activities

Explanation:

The cash flow statement categories the company's transactions in a financial period into 3 groups; these are operating, investing and financing.

The net profit/loss, depreciation, changes in current assets (other than cash) and liabilities are considered as operating activities including income taxes.

The sale of assets, interest received, purchase of investments are examples of investing activities while the issuance of stocks, debt principal deduction (loan settlement), issuance of debt securities etc are examples of financing activities.

7 0

3 years ago