Answer: a. 3
b. 1 and 2
Explanation:
a. Gains from trade are possible only when there are comparative advantages in production of a good. German worker takes 400 hours to produce a car and 2 hours to produce wine. While, a French worker takes 600 hours to produce cars and X hours to produce wine.
Opportunity cost of producing car for a Greman worker is
wine case
Opportunity cost of producing wine for a German worker is
Gains from trade are possible only when the French worker face a different opportunity cost than the German worker for both the goods.
Correct option is 3.
b. Germany will export cars and import wine only when it has a comparative advantage in producing cars and France has a comparative advantage in producing wine. This is possible when the opportunity cost of producing cars in Germany is smaller than that of France.
Opportunity cost of car in Germany < Opportunity cost of car in France
Therefore, when it take France less than 3 hours to produce a case of wine, Germany will import wine from France and export Cars to France.
Correct options as 1 and 2.
Answer:
The correct answer is B) Option B has a higher present value at time zero.
Explanation:
We use spreadsheets to compare both options.
We have to calculate
- future value
- present value
<u>Option A</u>
Net Present Value (NPV) 10534,87
Future value 12.547
<u>Option B</u>
Net Present Value (NPV) 10692,05 is higher than option A
Future value 12.734 is higher than option A
Answer:
$45.28
Explanation:
The computation of price of a forward contract is shown below:-
Cash flows Future Value Amount Amount
A $45.60 $45.6 × exponential(0.021 × 2) $47.55599
B $1.10 $1.10 × exponential(0.021 × 1) $1.123344
C $1.15 $1.15 × exponential(0.021 × 0) $1.15
So, The value of forwards contract = Amount of A - Amount of B - Amount of C
= $47.55 - $1.12334 - $1.15
= $45.28
Answer:
3. retained earnings.
Explanation:
When a company earns profit, taxes are deducted to find the net profit or net earnings. From these, it pays dividends at a certain dividend payout ratio; which is usually dividends/ net profit. Whatever remains is reinvested back into the company for funding potential profitable projects and other expansions and are referred to as retained earnings. This gives the retention rate which is basically (1 - payout ratio).
Answer:
The answer is 14.87%
Explanation:
Solution
Given that:
A large company stock had an average return of =12.59%
The average risk free rate = 2.58%
A small company stocks average is =17.45
The next step is to find the risk premium on small-company stocks for this period
Thus,
The risk premium on small-company stocks = Average return on small-company stocks - average risk-free rate
So,
Risk premium on small-company stocks = .1745 - 0.258
=0.1487
Therefore the risk premium on small company stocks for the period was 14.87%