1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
hram777 [196]
2 years ago
9

Consider a single period problem where the riskless interest rate is zero, and there are no taxes. A firm consists of a machine

that will produce cash flows of $210 if the economy is good and $80 if the economy is bad. The good and bad states occur with equal probability and the covariance of these states with the market portfolio is zero (no systematic risk). Initially, the firm has 100 shares outstanding and debt with a face value of $50 due at the end of the period. What is the share price of the firm
Business
1 answer:
kifflom [539]2 years ago
8 0

Assuming the firm has 100 shares outstanding and debt with a face value of $50 due at the end of the period. The share price of the firm is $0.95.

<h3>Share price</h3>

First step is to calculate the expected payoff to equity

Expected equity=[($80 ×0.5) + ($210 × 0.5)]-$50

Expected equity=($40+$105)-$50

Expected equity = $145-$50

Expected equity=$95

Now let calculate the share price

Share price=$96/100 shares

Share price=$0.95

Inconclusion the share price of the firm is $0.95.

Learn more about share price here:brainly.com/question/1166179

You might be interested in
The plaintiff explains that she acted with the value of integrity when she started her own cleaning business. What did she claim
Anit [1.1K]

Answer:

Called the clients and cancelled jobs

Explanation:

If the plaintiff worked for the defendant and left to set up her own cleaning business, then she will most likely be bound by a non-compete clause.

So if she is saying she acted with the value of integrity, then she would called any of the defendant's clients and cancelled jobs in order to respect the non-compete clause.

However after sometime the non-compete clause is no longer binding.

3 0
4 years ago
Mark owns his own business and wants to make sure that his employees arrive on time each day and take breaks as specified. He ha
olga2289 [7]

Operant conditioning is used by Mark .

<h3><u>Explanation:</u></h3>

The instrumental conditioning is the other name given for operant conditioning. It can be considered as a method of learning in which  rewards and punishments are used for modification of certain behaviors. This forms a relativity between certain behavior and the consequences of that behavior.

In the example given, Mark has decided to give rewards in order to make his employees to reach office at time. Monthly rewards are given to those employees who did not take breaks and thus he is using the principle of Operant conditioning .

6 0
3 years ago
On December 15, 2018, the board of directors of Lomas Corporation declared a cash dividend, payable on January 8, 2019 of $0.80
Tom [10]

Answer: decrease retained earnings $1.60 million and increase liabilities by $1.60 million.

Explanation:

The dividend on common shares will be:

=2,000,000 × $0.80

=$1,600,000

Then, the journal entry will be:

Debit: Retained earnings $1.6 million

Credit: Dividend payable $1.6 million

The answer will be to decrease retained earnings $1.60 million and then increase liabilities by $1.60 million.

7 0
3 years ago
On December 1, the Accounts Receivable account had a $5,000 balance. The business received $400 during the month from its charge
alex41 [277]

Answer:

$4,600 debit balance

Explanation:

Provided that

The account receivable balance = $5,000

The amount received from  its charge-account customer = $400

So after posting this transaction, the new balance in the account receivable account is

= The account receivable balance - The amount received from  its charge-account customer    

= $5,000 - $400

= $4,600 debit balance

7 0
3 years ago
Mercantile corporation has sales of $2,000,000, variable costs of $1,100,000, and fixed costs of $750,000. mercantile's margin o
pogonyaev
The break even point would be 1850000, and as Mercantile made 2000000, the margin of safety would be 150000.
4 0
3 years ago
Read 2 more answers
Other questions:
  • When Sebastian wrote the contract with BP for over two billion dollar s, he included targets for performance that had to be met
    9·1 answer
  • If you fail to provide proof of insurance, your drivers license and license plates will be suspended for up to ______
    10·1 answer
  • The Jewel Golf Club Company, which recently began using a kanban system, has had problems with high inventory levels of one of t
    9·1 answer
  • North Company sells a single product. The product has a selling price of $30 per unit and variable expenses of 70% of sales. If
    6·1 answer
  • You've decided to buy a house that is valued at $1 million. You have $150,000 to use as a down payment on the house, and you tak
    10·1 answer
  • What is the maximum amount a 45-year-old taxpayer and 45-year-old spouse can put into a Traditional or Roth IRA for 2019 (assumi
    14·2 answers
  • 1. Do you believe that training is a necessity in the implementation of new policies? Please support your answers.
    8·1 answer
  • When analyzing the Production Possibility Curve, what is the value of a good given up in order to produce more of another good?
    5·1 answer
  • Choose a real or made up company abd desvribe at least 3 variable costs the company has.
    15·2 answers
  • BK Books is an online book retailer that also has 10,000 "bricks and mortar" outlets worldwide. You are a risk-neutral manager w
    8·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!