Answer:
C. Straight deductible
Explanation:
Straight deductibles are deductibles that specifies the amount (either in percentages or dollars terms) of a loss that one is expected to pay for each loss before the insurance company pays for the remaining cost. It is the deductible that is attached to each loss and it is subtracted before any loss payments is made. In this situation, the sum of $500 that Jenny must pay of any physical damage loss to her car is what we refer to as a straight deductible. These types of deductibles are used in the most personal lines of insurance like property, medical and so on.
Corrieten Company purchased equipment and incurred these costs:
Cash price $24,000
Sales Tax 1,200
Installation and testing 400
Insurance during transit 200
Total costs $25,800
What amount should be recorded as the cost of the equipment?
A. $24,000
B. $25,200
C. $25,400
D. $25,800
Answer: D. $25,800
Explanation:
Given the following :
Cash price - $24,000
Sales Tax - $1,200
Installation and testing - $400
Insurance during transit - $200
Total price = cash price + sales tax + installation and testing + insurance during transit
Total price = $24,000 + $1,200 + $400 + $200
Toral price = $25,800
Total cost of equipment that should be recorded is $25,800
The seller and the buyer agreed to a purchase price of $270,000 with the closing to occur on June 15. The seller's loan balance after the June 1 payment was $170,000. with an interest rate of 6%.The monthly payment was $1,800 principal and interest. What was the loan balance the day of closing, and how much interest did the seller owe the bank
Answer:
Loan balance is $170,000
Interest Due is $425
Explanation:
Loan outstanding is the amount of liability which payable by the business at any date. Interest is charged on the loan, yearly, semiannually, quarterly and monthly.
On Closing Day only 15 of interest has been accrued.
Interest Expense = Loan outstanding x Interest rate x Time portion = $170,000 x 6% x 15/360 = $425
So, Loan balance is $170,000
Interest Due is $425
Gertrude Kelp owns three boats that participate in commercial fishing for fresh Pacific salmon off the coast of Alaska. As part of her business she hires a captain and several crew members for each boat. In the market for fresh Pacific salmon, there are thousands of firms like Gertrude's. While Gertrude usually catches a significant number of fish each year, her contribution to the entire harvest of salmon is negligible relative to the size of the market. If the price of fresh Pacific salmon were to decrease significantly, it is most likely that Gertrude would:________.
A. hire more crew members.
B. reduce her demand for crew members.
C. become a seller in at least one factor market.
D. hire more boats.
Answer: B. reduce her demand for crew members.
Explanation: The fact that, in spite of Gertrude's significant harvest, it still has a negligible contribution to the salmon market highlights the competitiveness of the salmon market and as such Gertrude has no say or influence on the market market price of salmon.
Therefore, If the price of fresh pacific salmon were to decrease, Gertrude would most likely have to reduce it's demand for crew members so as to cut the variable cost of production(labor) , hence, stabilizing the difference in cost of production and revenue.
Potential real GDP is A. the level of GDP attained when only some firms have excess capacity. B. the level of GDP attained when all firms are producing at capacity. C. the level of GDP attained when all firms have excess capacity. D. the level of GDP attained when most firms are producing at capacity and unemployment is low.
Answer: Option B
Explanation:
Potential real GDP is the level of output that comes due to the rising inflation. Potential GDP is significant as the people who frame the policies of the country utilize the differences that arrive between the potential GDP and the gaps to find what the economy requires whether reduced or increased money flow.
It is assumed that the potential real GDP can be attained when the level of GDP is attained it means that all the firms are producing at the same capacity.
The correct answer is B. Potential GDP is the level of GDP attained when all firms are producing at capacity, representing an economy's most efficient output level. This implies full utilization of resources and zero cyclical unemployment.
Potential GDP is the level of GDP achieved when all firms produce up to their potential, and this indicates the level of economic efficiency. This means efficient use of resources and zero unemployment. The correct answer is B. Potential GDP is a construct that represents the level of GDP that an economy could achieve if all resources (land, labour, capital and entrepreneurship) were used to their best advantage. This means that the economy is producing at a satisfactory level of output without overcapacity or underutilization of resources. In the long run, the potential GDP level determines the real GDP level. When economists talk about 'potential GDP', they mean the output that the economy could achieve in the event of zero unemployment, although there is both unemployment and structural unemployment. Gross domestic product can ensure that the economy maintains its normal level of unemployment..Michaela and carolyn are discussing changes to the benefits program at their organization. michaela would like to see the organization provide more lifestyle benefits such a doggy day care. carolyn is pushing for more dental and disability coverage. what consideration in providing benefits programs are michaela and carolyn discussing?
Answer:
mix
Explanation:
Based on the scenario being described it can be said that the consideration that both Michaela and Carolyn are discurssing are in regards to mix. Meaning the product mix, which refers to the different products or services that the company, or in this case benefits programs can offer the customers. Which is why Michaela and Carolyn are both tossing out different ideas.
Historically, money has not always been of uniform quality. for example, diamonds were often used as a form of money, but every diamond is different. what problem occurs when money is not of a uniform quality? people will hoard high-quality money and spend low-quality money. as a result, the money used in transactions will be of inferior quality. people will turn to commodity money if they don't trust paper money. people will rely on barter rather than accept money as payment. unlike pennies and nickels, which cost more to produce than they are worth, paper money and quarters are: a good store of value examples of token money useful as a medium of exchange cattle can be used as money but can also be slaughtered for food. cattle are an example of: commodity money fiat money ideal money
Answer:
what problem occurs when money is not of a uniform quality?
People will hoard high-quality money and spend low-quality money. As a result, the money used in transactions will be of inferior quality.One of Isaac Newton's most popular inventions are the coin edge grooves. Before people would file metal coins to gather gold or silver dust that they would later melt. By adding edge grooves to the coins, that was reduced. Before when people traded with non-uniform coins, good coins were actually more valuable because they were not filed yet. If you had to choose which coins to use, you would always prefer to use the filed coins of inferior quality.
unlike pennies and nickels, which cost more to produce than they are worth, paper money and quarters are:
examples of token moneyToken money is any note (bill) or coin whose value is not related to the material of which they are made of. E.g. a $100 dollar bill is worth much more than a small piece of paper.
Public policies a. may be able to improve either economic efficiency or equality. b. may be able to improve economic efficiency but cannot improve equality. c. may be able to improve equality but cannot improve economic efficiency. d. cannot improve either equality or economic efficiency.
Answer:
A. May be able to improve either economic efficiency or equality.
Explanation:
Public policies: These are the government's policies meant for the public´s benefit and it is tailored to translate vision into action to execute planning and get the desired result. These policies are important to resolve public issues efficiently and effectively with equality. It should be formed under the laws and regulations of the state.
There are five stages of policy making process:
Agenda setup.Policy formulation.Decision making.Implementation Evaluation.Collection of a $1,000 Accounts Receivable A. decreases a liability $1,000; increases stockholders' equity $1,000. B. has no effect on total assets. C. increases an asset $1,000; decreases stockholder's equity $1,000. D. increases an asset $1,000; decreases a liability $1,000.
Answer:
B. has no effect on total assets.
Explanation:
Both cash and accounts receivable are assets. When a sale is made on credit, the entries required are debit accounts receivable and credit revenue.
On receipt of cash, debit cash and credit accounts receivable.
Hence the collection of a $1,000 Accounts Receivable will have no effect on total assets as one asset was credited ( a reduction) while the other was debited(an increase) by the same amount.
Answer:
B) has no effect on total assets.
Explanation:
When an account receivable is collected, the following journal entry should be made:
Dr Cash 1,000
Cr Accounts receivable 1,000
Since both cash and accounts receivable are current assets, that transaction doesn't affect liabilities or equity, and doesn't change total assets either. Cash will increase while accounts receivable will decrease.
Scotts fertilizer has a 4-step program for lawn care. each step features a different product. scotts sells the fertilizer as a set containing one bag of each of the 4-step products. if scotts decided to sell each product individually rather than as a set, it would be an example of which pricing strategy? a. dumpingb. dynamic pricingc. minimal pricingd. underpricinge. unbundling
Answer: Unbundling
Explanation:
In general bundle offer means combining two or three small things together to form an offer product. While unbundling is the opposite of the bundling here one offer is split into two or three small things.
If the 4 step fertilizer products are sold together then the products are bundled. Here Scotts fertilizer firm plans to sell the 4step products each separately which is known as unbundling strategy. Through unbundling strategy the value is created for different customers without bringing a new product.
Comparative advertising works best when ________. A. it elicits cognitive and behavioral motivations simultaneously B. it elicits affective motivation, followed by cognitive motivation C. consumers are processing advertising in a detailed, analytical mode D. the firm is trying to minimize brand dilution
Answer: Option B
Explanation:
In comparative advertising the product of the company is shown superior to the product of the other competitor company. When the competitor organisations are motivated by seeing the advertisement they try to prove their products are better than the other products in the market.
When there is affective motivation with cognitive motivation the competitor companies try to make sense of the current situation and take decisions accordingly. It also compels the competitors to prove their products are best.
An individual who works at a bookstore routinely takes home ballpoint pens and Post-it notes, uses the copy machine to make personal copies, and makes long-distance phone calls on the store's line. However, he would never consider stealing money from the cash register, even if he knew he could get away with it. What is this behavior called?
This behavior is called pilfering
Explanation:Pilfering is somebody who's good at stealing without the other person acknowledging. This commits to steal things, particularly from the place where you work. The sociology definition of pilfering is stealing lesser items in tiny amounts, usually again and again.
The study exposes that factors such as social solidarity amidst workers, social pressure and 'promoting' working circumstances as offering to mail robbery, pilfering and abusing of postal parcels. Pilfering small items from manufacturers are all conventional behaviors since they are currently employed by a reasonably large dimension, if not bulk, of the population.
Many of the responsibilities associated with working in a professional sport organization, such as the National Football League (NFL) or the Big Ten, entail responsibilities similar to those found in collegiate athletic administration.
True / False.
Answer:
False
Explanation:
Many of the responsibilities associated with working in a professional sport organization is similar to the responsibilities found in collegiate athletic administrations
Collegiate athletic administration is a body that regulates student athletes from North American it generally covers unprofessional and university level competitive games and it is non-profit . while professional sport organizations have vast responsibilities that are applicable to collegiate athletic administration
Selection of an inventory costing method by management does not usually depend on
Answer:
THE FISCAL YEAR END.
Explanation:
Selection of an inventory costing method by management does not usually depend on THE FISCAL YEAR END
Answer:
The fiscal year end
Explanation:
Cost accounting information is designed for managers. Since managers are making decisions only for their own organization, there is no need for the information to be comparable to similar information from other organizations. Instead, the important criterion is that the information must be relevant for decisions that managers, operating in a particular environment of business including strategy, make. Cost accounting information is commonly used in financial accounting information, but first we are concentrating on its use by managers to take decisions. The accountants who handle the cost accounting information add value by providing good information to managers who are making decisions. Among the better decisions, is the better performance of one’s organization, regardless if it is a manufacturing company, a bank, a non-profit organization, a government agency, a school club or even a business school. The cost-accounting system is the result of decisions made by managers of an organization and the environment in which they make them.
The specific identification method of inventory costing attaches the actual cost to an identifiable unit of product. Firms find this method easy to apply when purchasing and selling large inventory items such as cars.
Ace Deliveries, a courier service provider, built a strong reputation over a short period of six months. Inundated with customers, the company decided to expand its fleet of vans and enlarge its delivery networks and to stop offering the discounts it was offering to some market segments. Because it was the holiday sales season, higher pricing made good business sense. The pricing Ace Deliveries is using is ______.
Answer:
both revenue-oriented and operations-oriented
Explanation:
revenue-oriented pricing can be understood the strategic price level that the producers set to maximize the amount of profit they earn. As it can be seen from the given passage, the company starts noticing more about the earnings, so that they decided to cut down on the discount offering to the customers and set higher price. By that, it can help raise the revenue of the company.
Meanwhile, operations-oriented pricing is price strategy that the company adopts to optimize productive capacity as well as the efficiency of the manufacturing procedure. This is indicated in the actions of expanding fleet of vans and enlarge delivery networks of the company to raise the productivity.
Sadie runs a local ice cream stand and is developing a new type of ice cream sundae. She just sent a press release to the local newspaper and updated her website with information about the new sundae. Based on this information, Sadie is most likely in the _____ stage of the new-product development cycle.
Answer:
commercialization
Explanation:
The new product development cycle often includes:
+) New product strategy: The objectives and goals of the new products should be researched and determined clearly.
+) Idea: The ideas should be generated and collected from brainstorms or opinions from internal and external environment.
+) Screening: All ideas collected should be condensed to figure most appropriate and feasible ones.
+) Testing: develop the idea into a structural and detailed concepts
+) Business Analysis: Evaluate if the new products are suitable with the market demand and the company's objectives, image or not.
+) Development: Enhance the products to meet the requirements of the company and of the market
+)Market testing: Implement a trial run of the product to test if the marketing mix strategy is appropriate and effective or not.
+) Commercialization: Officially introduce the final products to the market, the public.
As given, Sadie has already sent a press to newspaper and updated information to announce about the new products - introduce with the public.
A company has beginning inventory of 300 units at $ 5.25 each; They purchased 400 units at $ 6.00 each on June 2; On June 15, they also purchased 500 units at $6.75 each. A physical count of merchandise inventory at the end of the month revealed that 600 units were sold. What is the cost of goods sold using the weighted average inventory method? Round all answers to the nearest dollar. But as always do not round any intermediate calculations, only round your final answer. Group of answer choices $6.125 $3,975 $7,350 $3,675
Solution:
Beginning inventory of 300 units at $ 5.25 each
Purchased 400 units at $ 6.00
Purchased 500 units at $6.75 each
Now,
$5.25 + [($6 ÷ 400) × (600 - 300)] = $1,131
= ( $5.25 + 0.015 ) x 300
= 5.265 * 300
= $1580
Campbell's has been marketing soup in Japan for more than 40 years. Early on, Japanese consumers were not receptive to ads featuring the Campbell Kids and the "M'm M'm Good" slogan. This compelled Campbell's to develop ads featuring a talking soup can known as "Mr. Campbell." Campbell's also developed soup varieties for Japan with fish as the main protein source and spices that reflect local preferences. As described here, which of the following strategies has Campbell's used in Japan:________.
a. product-communications extension.
b. product extension-communications adaptation.
c. product adaptation-communications extension.
d. product-communication adaptation.
e. product invention.
Answer:
D, product-communication adaptation
Explanation:
Product adaptation can be defined as the process of modifying a product to make it useful for a variety of users.
Communication adaptation can also be defined as the change in a product's communication as a result of a change in product strategy.
Product-communication adaptation can be defined as the modification of a product for a variety of users but ensuring that the marketing of the product is through standard communication channels.
In the case of Campbell adapted his product to look like M'm M'm Good product but ensured that he used a standard communication channel (ads) to market his product.
Cheers.
Final answer:
Campbell's approach in Japan can be classified as product adaptation (creating new soup varieties) with communications extension (using a new character while retaining core brand messages).
Explanation:
In this scenario, Campbell's utilized a product adaptation-communications extension strategy. This approach involves making alterations to the core product so that it better fits with local tastes and preferences, which is exactly what Campbell's did by creating new soup varieties that had fish as the main protein source and incorporated local spices in their recipes for the Japanese market. Simultaneously, they continued to leverage the brand's traditional value proposition through a new advertising character, 'Mr. Campbell,' rather than changing their brand messaging which aligns with the 'communications extension' aspect. Option c is correct .
This strategy contrasts with product invention, which would entail creating an entirely new product specifically for the local market, or communication adaptation, which would require modifying the promotional message to match local cultural nuances.
Joe Perone was a member of Caddy, Shack, & Perone, a general trading partnership. He died and the partnership is being liquidated in a bankruptcy proceeding, but Perone's estate is substantial. The creditors of the partnership are seeking to collect on their claims from Perone's estate. Which of the following statements is true insofar as their claims are concerned?
Partnership creditors and Perone's personal creditors are on an equal footing regarding the assets of Perone's estate.
Rely on information provided by a corporate officer
All limited partners' capital contributions must be paid in cash.
Answer:
i didn't even read it i just need some point's
The creditors of the partnership have priority over Perone's personal creditors in liquidating the assets of Perone's estate.
Explanation:In terms of claims against Joe Perone's estate, the creditors of the partnership and Perone's personal creditors are not on an equal footing. Partnership creditors have priority over Perone's personal creditors when it comes to collecting on their claims from Perone's estate. This is because in a general trading partnership, the partners are personally liable for the debts of the partnership, and the creditors of the partnership have a claim on the partnership's assets first.
Mr. Pierpont has wealth of $200,000. He wants to keep at least $80,000 in bonds at all times, and will shift $10,000 into bonds from his checking account for each percentage point that the interest rate on bonds exceeds the interest rate on his checking account. If the interest rate on checking accounts is 4% and the interest rate on bonds is 9%, how much does Mr. Pierpont keep in his checking account?
Answer:
Mr Pierpont should keep 70,000 in his checking account
Explanation:
Given that:
The total wealth is = $200,000
He wants to keep at least $80,000 in bonds, so he can keep a maximum of $120,000 in checking accounts.
The the interest rate on checking accounts is 4% and the interest rate on bonds is 9%. a difference of 5.1 is known between this two interest rate
The interest rate in checking accounts is lower than interest rate of bond
4% is lesser than 9% in vice versa it is higher by 5%
A 5% difference will shift the 50,000 into bonds, because the need to shift 10,000 for every 1% that is taking from the checking account and then put in the bond.
Therefore, 120,000-50,000 = 70,000
Firms using the differentiation strategy need to respond quickly to environmental opportunities and threats. The structural features that are best for these requirements are centralization, specialization, and many rules and procedures. True or false?
Answer:
False
Explanation:
Differentiation strategy as the name implies can be defined as a business strategy in which a firm develops a new product or service with the aim of standing out from products and services of other competitors.
Differentiation strategy is good because it gives room for non-price competition. That means that competition between between firms are not based on prices at all.
Also, the differentiation strategy allows for brand loyalty. That is, brands of competitors have their customers without stress.
Cheers.
Deli-Lite has a contract with a foreign client to provide low-fat deli trays. Deli-Lite does not have one of the items the foreign client wants on the trays, so it decides to contract with Green Source to fulfill this contract. What is this an example of?
Answer:
Outsourcing
Explanation:
Remember, Deli-Lite contracts with another company to fulfil it's obligation.
Usually outsourcing involves a contract between a company requesting services or as in Deli-Lite case product supply request to another company.
Therefore, because of the outsourcing contract Green would provide low-fat deli trays for the foreign clients.
JVL Inc. sells its only product for $10 per unit. Variable costs are $4 per unit and total fixed costs are $40,000. The company is currently selling 10,000 units per year. By how much will profits increase if sales increase 1,500 units?
Answer:
$9,000
Explanation:
Profit = Total revenue - Total cost
Total cost = Total fixed cost + Total variable cost
Fixed cost = $40,000
Variable costs = variable cost per unit × total output = $4 × 10,000 = $40,000
Total cost = $40,000 + $40,000 = $80,000
Total revenue = price × output = $10 × 10,000 = $100,000
Profit = $100,000 - $80,000 = $20,000
If sales increases by 1500, output would be 11,500
Total variable cost = 11500 × $4 = $46,000
Total cost = $40,000 + $46,000 = $86,000
Revenue = $10 x 11500 = $115,000
Profit = $115,000 - $86,000 = $29,000
Increase in profit = $29,000 - $20,000 = $9,000
I hope my answer helps you
Answer:
$9,000
Explanation:
Current income statement:
total revenue = $10 per unit x 10,000 units = $100,000
total variable costs = $4 per unit x 10,000 units = (40,000)
total fixed costs = ($40,000)
net profits = $20,000
If sales increase by 1,500 units:
total revenue = $10 per unit x 11,500 units = $115,000
total variable costs = $4 per unit x 11,500 units = (46,000)
total fixed costs = ($40,000)
net profits = $29,000
net income increased by $29,000 - $20,000 = $9,000
you can also calculate this using the contribution margin per unit = selling price - variable cost per unit = $10 - $4 = $6 per unit
Since the company has already passed its break even point and was making a profit, every additional unit sold increases net profits = 1,500 units x $6 per unit = $9,000
A firm decides to scale back its operations due to projections of slower demand. It will move from a large building to a smaller size office space. It will be paying less in total costs, although its costs per unit of output will be larger. The firm's average cost curve exhibits at these points
Question Options:
constant returns to scale.
diseconomies of scale.
rising fixed costs.
economies of scale.
Answer: ECONOMIES OF SCALE.
Explanation: Economies of scale in business refers to the characteristics of a production process in which an increase in the scale of the firm causes a decrease in the long run average cost of each unit. Here, production is efficient and the best value is received from the resources available thereby making costs per unit of output will be larger.
Answer:
hi your question lacks the required option here are the options
constant returns to scale. dis economies of scale. rising fixed costs. economies of scale.Answer : economies of scale
Explanation:
The Firm's average cost curve will exhibit at the point of economies of scale. economies of scale is the advantage enjoyed by business when they scale up (increase their scale of operation ) the advantage is that the cost per unit of production decreased while when the firms scales back ( reduction in their scale of operation the costs per unit of output will be larger.
and this is due to the fact that the total fixed cost remains the same and this will negatively affect the Average fixed cost of the firm The firm scaling back will find its average cost curve exhibiting itself under the economies of scale.
Given the following account balances at year end, how much are total intangible assets on the balance sheet of Alisha Enterprises?
Sales revenue, $45,000,000;
Cash, $1,500,000;
Copyrights, $500,000;
Accounts receivable, $4,000,000;
Land, $15,000,000;
Equipment, $25,000,000;
Trademarks, $1,000,000; and Goodwill, $4,500,000.
The company also paid $2,000,000 for research & development during the current year.
a. $11,500,000
b. $7,500,000
c. $5,500,000
d. $9,500,000
Answer:$6000000
Explanation:
Given
Trademarks 1,000,000
Goodwill 4,500,000
Copyrights 500,000
Total 6,000,000
Total intangible assets is $6,000,000
Intangible assets are the assets which cannot be touched or seen. In the above example the copyrights, trademarks and goodwill are intangible assets. While sales revenue, cash, land, equipment, accounts receivables are tangible assets. The amount paid for research and development is also tangible assets in the future when they turn into patents, copyrights or trademark they become as intangible assets.
Brent, a single taxpayer, has a 24% marginal tax rate. He is considering an investment that will earn qualified dividends at a rate of 7% before tax. What is Brent's after-tax rate of return on the securities
Final answer:
Brent's after-tax rate of return on an investment earning 7% in qualified dividends, given his 24% marginal tax rate and 15% tax rate on qualified dividends, would be 5.95%.
Explanation:
To calculate Brent's after-tax rate of return on an investment earning qualified dividends at a pre-tax rate of 7%, we need to understand how dividends are taxed. Since Brent is in the 24% marginal tax bracket, his qualified dividends are likely taxed at a lower rate. In the U.S., for the year 2023, for example, individuals in the 24% marginal tax bracket are typically taxed at 15% on qualified dividends. Therefore, to compute the after-tax rate of return, we apply this 15% tax rate to the 7% return.
The calculation would look like this:
After-tax rate of return = Pre-tax rate of return × (1 - Tax rate on dividends)
After-tax rate of return = 7% × (1 - 0.15)
After-tax rate of return = 7% × 0.85
After-tax rate of return = 5.95%
Therefore, Brent's after-tax rate of return on the securities would be 5.95%.
In exhibit 15-7, if mr. brown pays out all of the proceeds of the loan to mr. john white who is going to make the renovations of the restaurant, the lower walloon national bank will now have: $6,000 in reserves, $4,000 in loans, and $10,000 in checkable deposits. $10,000 in reserves, $8,000 in loans, and $2,000 in checkable deposits. $2,000 in reserves, $4,000 in loans, and $10,000 in checkable deposits. $2,000 in reserves, $8,000 in loans, and $10,000 in checkable deposits. $0 in reserves, $8,000 in loans, and $10,000 in checkable deposits.
Answer:
The Lower Wallon National bank will have ;
$2000 reserve, $8000 in loans and $10,000 in checkable deposit.
Explanation:
To check for this, we are going solve it by saying;
The required reserve ratio = 20% so 20% of 10,000 = $2000 in reserve
10,000 - 2000 = $8000 in loans
$10,000 in checkable deposit.
therefore; $ 10,000 is in checkable deposit.
Due to ____, market forces should realign the relationship between the interest rate differential of two currencies and the forward premium (or discount) on the forward exchange rate between the two currencies. forward realignment arbitrage triangular arbitrage covered interest arbitrage locational arbitrage
Answer:
Covered Interest Arbitrage
Explanation:
The Covered Interest Arbitrage is a term that refers to arbitrage trading approach in which a stockholder take the chance to gain advantage from the disparity in interest rate between two nations.
The trading strategy helps in its verifiability, quantifiability, consistency, and objectivity
It is designed to profit the investor from the differences in interest rates between two countries, when buying and selling foreign currencies.
When a market is small or there's a high level of competition, there's a possibility that the earnings on covered interest rate arbitrage won't yield much.
Answer: The options are given below:
a. forward realignment arbitrage
b. triangular arbitrage
c. covered interest arbitrage
d. locational arbitrage
The correct option is C. Covered Interest Arbitrage
Explanation: Covered interest arbitrage is a technique whereby an investor uses a forward contract to hedge against exchange rate risk. Covered interest rate arbitrage is the practice of using favorable interest rate differentials to invest in a higher-yielding currency, and hedging the exchange risk through a forward currency contract.
Covered interest arbitrage is possible if and only if the cost of hedging the exchange risk is lower than the additional return generated by investing in a higher-yielding currency - hence the word, arbitrage.
When there is a small market or there exists a high level of competition, then the possibility will occur that the earnings on covered interest rate arbitrage will not yield much.
If the Federal Reserve adopts an expansionary monetary policy, A) interest rates fall and credit is tight. B) interest rates rise and credit is tight. C) interest rates rise and credit is abundant. D) interest rates fall and credit is abundant.
Answer: interest rates fall and credit is abundant.(D)
Explanation:
Monetary policy is the macroeconomic policy used by the central bank of a country to achieve its macroeconomic objective such as full employment, economic growth, price stability etc. It involves the use of money supply and interest rate to control the economy.
Expansionary monetary policy is when a central bank uses interest rate and money supply to stimulate the economy. This is done by increasing the money supply, and lowering the interest rates. This leads to increase in aggregate demand and also boosts economic growth.
Answer:
interest rates fall and credit is abundant
Explanation:
The Federal Reserve's monetary policy is one of the ways in which the U.S. government tries to regulate the nation's economy by controlling the money supply. It needs to balance economic growth with increasing inflation. If it adopts an expansionary monetary policy, it increases economic growth but also accelerates the rate of inflation. If it adopts a contractionary monetary policy, it seeks to reduces inflation but also inhibits growth
When the Federal Reserve decreases the reserve ratio, it lowers the amount of cash that banks are required to hold in reserves, allowing them to make more loans to consumers and businesses. This increases the nation's money supply and expands the economy
Monetary policy is the macroeconomic policy used by the central bank of a country to achieve its macroeconomic objective such as full employment, economic growth, price stability etc. It involves the use of money supply and interest rate to control the economy.
Expansionary monetary policy is when a central bank uses interest rate and money supply to stimulate the economy. This is done by increasing the money supply, and lowering the interest rates. This leads to increase in aggregate demand and also boosts economic growth.
When there is a full forward cover with the spot rate equal to the forward rate all of the following are true EXCEPT: A. The currency hedge ratio is equal to 1. B. The hedge is asymmetric. C. The total position is a perfect hedge. D. There is no uncovered exposure remaining.
Answer:
B. The hedge is asymmetric.
Explanation:
Hedging refers to a technique or a mechanism whereby firms and individuals aim for risk reduction, arising out of uncertain and volatile business situations, which may result into a heavy loss.
For example, an exporter entering into a forward contract to eliminate or reduce the risk of arising out of a future situation wherein, future receipts denominated in a foreign currency, receivable at a future date, may be less than same receipts receivable at current spot exchange rate as on today.
Currency hedge ratio depicts the proportion of total exposure which is covered by hedge w.r.t the total exposure itself.
Asymmetrical hedge refers to covering an exposure by an opposite position wherein the chances of earning profits are higher than the losses current position can lead to. Such an hedge would be similar to covering a call option with a put option. Asymmetrical refers to being of dissimilar or non equal size. Here, it refers to the dissimilarity between prospective profits and losses.
Under a perfect hedge, the loss position in a scenario is completely covered i.e 100% by a prospective gain in other situation, with there being negative correlation between the two scenarios such as if scenario 1 yields a profit, scenario 2 would yield a loss and vice versa.
Suppose that Juan Carlos is filling out a survey that he received in the mail. The survey would do if the price of his favorite toothpaste increased. Juan Carlos reports that nee thpaste increased. Juan Carlos reports that he would switch to a different brand. The survey asks what he would do if the price of all toothpastes increased o if the price of all toothpastes increased. Juan Carlos reports that he must use toothpaste, so he would have to adiust his spending elsewhere. These examps illustrate the importance of:_________
a. the definition of a market in determining the price elasticity of demand.
b. a necessity versus a luxury in determining the price elasticity of demand.
c. changes in total revenue in determining the price elasticity of demand.
d. the time horizon in determining the price elasticity of demand.
Answer:
A. The definition of a market in determining the price elasticity of demand.
Explanation:
Price elasticity of demand is the height of responsiveness of demand or purchase to changes in price. It shows how consumers or buyers would react to the demand for a product when the price of their favourite brand increases.
Reaction of consumers in the market place is one of the determinants of price elasticity of demand. It tells how buyers will switch to different brand of products if the price of their favourite brand increases. It also shows how consumers will adjust their spending abilities if the price of all the brands are increased at the same time.
Alternatively, consumers would demand for the brand that falls within the limit of their spending.