All categories

3 years ago

Interest rates and decisions

Business

1 answer:

svetoff [14.1K]3 years ago

4 0

Answer:

a. No, the firm needs to take the volatility of short-term rates into account.

Explanation:

Short term interest rates are more volatile than the long term interest rates. If the company chooses to finance its operations solely from short term financing than it will need to incorporate the affect of volatility in the short term interest rates to identify the net returns. The volatility should be calculated with the risk factor and required rate of return of the funds.

You might be interested in

Annissa has been working in the Boulevard Building Company for seven years. She is dedicated to her work and tries to follow the

Brums [2.3K]

Answer: True

Explanation:

The following statement is true, i.e. In accordance to the equity theory, she will try to change the working habits. The equity theory mostly concentrates on evaluating whether the allocation of commodities and resources is impartial to both of the relational partners. Here, equity is evaluated by contrasting the ratio in between the costs and rewards for each individual.

3 0

3 years ago

The price of a stock is:_______.a) the future value of all expected future dividends, discounted at the dividend growth rate. b)

goldfiish [28.3K]

Answer:

The answer is D.

Explanation:

The price of a stock is also known as price of equity. This is the price the equity of a company is presently worth. The price the potential investors will be able to purchase it. One of the ways of calculating price of a stock is the Dividend Discount Model which can be calculated by:

Ke = (D1÷Po) - g

Ke is the Cost of equity(i.e the required rate of return for investors)

D1 is the next year dividend payments

Po is the price of the stock

g is the expected dividend growth rate

To get Po, we can rewrite the formula as:

Po = D1÷Ke - g÷Ke

We can see now that the expected future dividends will be discounted at the ''Ke'' which is the investors'required rate of return

5 0

3 years ago

Huron Company produces a commercial cleaning compound known as Zoom. The direct materials and direct labor standards for one uni

noname [10]

Answer:

DM variances:

Price 2650

Quantity -4,800

Labor Variances:

Rate:-2,000

Efficiency 1400

Explanation:

DM variances:

Price

(std - actual) x actual quantity

(2.4 - 2.2) x 13,250 = 2,650

Quantity

(standard quantity - actual quantity) x std price

(7.5x1,500 - 13,250) x 2.4 = -4,800

Labor Variances:

Rate:

(std rate - actual rate) x actual hours

(7 - 9) x 1,000 = -2,000

actual rate = actual cost/actual hours = 9,000/1,000 = 9

Efficiency

(std hours - actual hours) x std rate

(1,500 x 0.8 - 1,000) x 7 = 1400

7 0

2 years ago

Karl opens a savings account with $2500. He deposits $1500 every year into the account that has a 0.75% interest rate, compounde

zhuklara [117]

Answer:

Total FV= $29,335.25

Explanation:

First, we need to calculate the future value of the initial investment ($2,500) using the following formula:

FV= PV*(1 + i)^n

PV= $2,500

i= 0.0075

n=10*12= 120 months

FV= 2,500*(1.0075^120)

FV= $6,128.39

Now, the future value of the $1,500 annual deposit:

FV= {A*[(1+i)^n-1]}/i

A= annual deposit

We need to determine the effective annual rate:

Effective annual rate= (1.0075^12) - 1= 0.0938

FV= {1,500*[(1.0938^10) - 1]} / 0.0938

FV= $23,206.86

Total FV= $29,335.25

5 0

3 years ago

The volatility of Home Depot share prices is 20% and that of General Motors shares is 20%. When I hold both stocks in my portfol

pochemuha

Answer:

The question is either incomplete or not possible to calculate as information is inadequate

Explanation:

3 0

3 years ago

Read 2 more answers