In terms of the WACC, market values rather than book values should ideally be used, except for privately owned companies where market values can be unreliable. Early-stage corporate finance involves choosing funding methods based on a company's size and maturity. Bonds and bank loans are similar forms of debt but differ in terms of tradeability and terms.
Explanation:Understanding WACC and Early-Stage Corporate FinanceThe ideal use in calculating the Weighted Average Cost of Capital (WACC) is market values rather than book values. This is because market values generally provide a more accurate assessment of the actual cost of capital. Book values do not usually represent the true economic value as they are based on historical costs minus depreciation. Therefore, the correct statements in the question are:
Addressing the self-check questions on early-stage corporate finance:
From a firm's point of view, a bond is similar to a bank loan in that both represent debt and require regular interest payments. However, bonds often have longer terms and can be traded on the secondary market, unlike traditional bank loans.
Regarding the calculation of home equity:
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Beginning with __________, a body of law has grown that requires organizations to provide employees with nonhazardous working conditions.
A.)the Occupational Safety and Health Act (OSHA) of 1970
B.) the Taft-Hartley Act
C.) establishment of the National Labor Relations Board
D.) Title VII of the Civil Rights Act of 1964
E.) the Fair Labor Standards Act of 1938
Answer:
A.) the Occupational Safety and Health Act (OSHA) of 1970
The World Bank is a vital source of financial and technical assistance to developing countries around the world. It is not a bank in the common sense. It plays a different but supportive role in its mission of global poverty reduction and the improvement of living standards. It provides low-interest loans, interest-free credit, and grants to developing countries for education, health, infrastructure, communications, and many other purposes. According to the excerpt, what is the organization’s primary purpose?
a) to serve as a banking institution for countries that do not have banking systems
b) to provide loans directly to people living in poverty
c) to reduce global poverty and improve the standard of living
d) in developing countries to provide technical assistance to developed countries
Answer:
C
Explanation:
According to the excerpt, reducing global poverty and improving the standard of living is the organization’s primary purpose. Thus, option C is correct.
What is an organization?An Organisation can be defined as an entity that is made up of an individual or a group of individuals who come together for a single purpose. Then the organization can be a profitable and nonprofitable one.
According to the world when there are various sources that are being used by the bank to clear global interest. This is to reduce global poverty and as well as by providing them with money and giving them loans they are also increasing their organization's primary purpose of increasing the standard of living among the people.
Therefore, option C is the correct option.
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Sean is looking for a new job that will allow him the flexibility to work from home at least one day a week so he can care for his ailing parents. Some describe this as a boundaryless career pattern. Why?
Answer:
Boundaryless career pattern is similar as temporary workers.
Explanation:
“Boundaryless career” has been a new perspective in any organisation these days. This type of career pattern provides the employees flexibility in terms of working hours. They pay them high wages for their excellent skill set.
A person works with several organisations at a single point of time and quickly develops his career. Knowledge of such people is quite high, and companies gain from their expertise. As given in the question, Sean is provided flexibility by allowing him to work from home so that he can take care of his parents. So, this is a boundaryless career pattern.
Maria, an active partner in the Grifton/Blum CPA firm partnership, receives an annual bonus of 10% of partnership net income after deducting the bonus. For the year ended 2017, partnership income before the bonus was $220,000. Maria should receive a bonus of_________.
Answer: $19,800
Explanation: Annual Bonus is 10% of 220,000= 22,000
Net income of partnership = 220,000- 22,000= 198,000
Bonus due to maria is 198,000*10%= 19,800
Jayden is a project manager in a multinational company and is currently managing a complicated project. This has affected his mental as well as physical health. He is going through a rough phase where he is neither able to do his regular job properly nor interact with his clients cordially. Which of the following "4 Ds" of determining whether something is a mental disorder does Jayden's condition reflect?
A. Dysfunction
B. Deviance
C. Distress
D. Disturbance
Answer:
Dysfunction
Explanation:
A dysfunctional mental disorder occurs when an individual starts to behave in an unusual and abnormal way as a result of stress or mental impairment. The pattern of thought ,emotion and behavior will no longer be in line with his normal way of life as deviation from normal social life and ideal mental health becomes obvious.
Jayden's failure to do his regular job again and even cordially interact with his clients are evidences that he is going through a dysfunctional mental disorder as a result of the complicated project he is handling.
Let’s look at a company that is currently not paying dividends. You predict that in five years the company will pay a dividend for the first time. The dividend will be $0.50 per share. You expect the dividend to grow at an 8% rate per year indefinitely at that time. The required return on companies like this one is 15%. What is the price of the stock today?
a. $5.39
b. $7.14
c. $4.08
d. $3.45
e. $1.75
Final answer:
Using the Gordon Growth Model, starting with a future dividend of $0.50 with an 8% growth rate and a 15% required return, when discounted back to present value, the stock today is worth $3.45.
Explanation:
The price of the stock today can be calculated using the Gordon Growth Model formula for a stock that is expected to start paying dividends in the future. The formula PV = D / (k - g) is adjusted for the time value of money to account for the fact that the first dividend will be paid five years from now. In this scenario:
Dividend (D) in five years is $0.50.Constant growth rate (g) is 8% or 0.08.Required return (k) is 15% or 0.15.Price of stock today (PV) is calculated as the present value of the first dividend divided by the difference between the required return and growth rate, then discounted back five years.Calculation:
Expected dividend after five years (D1) = $0.50
Expected growth rate (g) = 8% = 0.08
Required rate of return (k) = 15% = 0.15
The present value of a perpetuity is D1 / (k - g). First, calculate the price of the stock in year five, which is $0.50 / (0.15 - 0.08) = $7.14. Then, discount this back to the present value using the formula PV = FV / (1 + k)^n, where FV is the future value and n is the number of years.
Price of the stock today [tex](PV) = $7.14 / (1 + 0.15)^5 = $3.45[/tex]
In the traditional labor model, the amount that an additional worker hired adds to the revenues of the firm is called the _____ of labor. Question 4 options: maximum revenue price marginal factor cost marginal product marginal fractional cost
Answer:
The correct answer is marginal product.
Explanation:
The marginal product of labor is the change in the output or total product because of hiring an additional unit of labor. In other words, the amount that an additional worker adds to the revenue is its marginal product.
It can be expressed as,
[tex]MP_{L} \ =\ \frac{\Delta Y}{\Delta L}[/tex]
The marginal product of labor depends on the quantity of capital and labor already employed.
Consumption spending is $16 million, planned investment spending is $4 million, unplanned investment spending is $2 million, government purchases are $6 million, and net export spending is $1 million. What is aggregate expenditure?
Answer:
The aggregate expenditure is $27 million.
Explanation:
The consumption spending is $16 million.
Planned investment spending is $4 million.
Unplanned investment spending is $2 million.
The government purchases are $6 million.
The net export spending is $1 million.
The aggregate expenditure is
= Consumption spending + Planned Investment + Government spending + Net export
= $(16 + 4 + 6 + 1) million
= $27 million
During which stage of team development do members accept that they are part of a project group but resist the constraints that the project and the group put on their individuality? ch11 Select one: a. Storming b. Performing c. Forming d. Adjourning e. Norming
Answer: Forming
Explanation: There are five stages of team development, the stages includes the: Forming, storming, norming, performing and the adjourning.
Each stage is a phase each team passes when they come together to achieve a common purpose.
The stage where team members accept their responsibility as a group but still have some individualistic frictions is the storming stage. This stage can either grow or scatter a team, therefore it needs to be handled carefully.
Project managers must often face the challenge of compressing the project schedule. All of the following actions can be taken to reduce the duration of the critical path EXCEPT:
a. Overlap sequential activities using finish-to-finish, start-to-start, or start-to-finish relationships.
b. Reduce the project scope and /or quality.
c. Use the float in critical path activities
d. Partially overlap sequential activities by using time leads.
Answer:
A) Overlap sequential activities using finish-to-finish, start-to-start, or start-to-finish relationships.
Explanation:
If the project manager uses finish to finish relationships, a successor activity cannot finish until the predecessor activity has not finished.
If the project manager uses start to start relationships, a successor activity cannot start until the predecessor activity has not started.
If the project manager uses start to finish relationships, a successor activity cannot finish until the predecessor activity has not started.
Answer:
Overlap sequential activities using finish-to-finish relationships
Explanation:
Overlap sequential activities using finish-to-finish relationships. This overlaping does not account for unexpected events and might not account possible relations between the legs or stages of a project
Lauren owns a bakery. She wants to increase her daily production of baked goods, so she knows she needs to acquire more resources. Which of the following actions would represent an increase in the human capital resource at her bakery?
a. repairing a broken delivery van
b. buying better-quality ingredients
c. increasing employee training
d. purchasing ingredients in bulk
e. moving into a larger space
Answer:
The correct answer is option c.
Explanation:
Resources are of several types. In economics, we classify resources into four types as land, labor, capital, and entrepreneurship. Capital is further classified as physical capital and human capital.
Human capital is a nontangible, nonphysical asset that is not mentioned on a company's balance sheet. It is the value of a worker's skills, education, training, experience, health, intelligence, etc.
In the given example, providing employee training will increase human capital resources for Lauren and it will help her efficiently utilize physical capital.
Final answer:
Increasing employee training at Lauren's bakery contributes to enhancing human capital, resulting in greater productivity and capacity for innovation.
Explanation:
Lauren's goal to increase the daily production of baked goods at her bakery necessitates the accumulation of more resources. Among the options provided, the action that would represent an increase in the human capital resource at her bakery would be c. increasing employee training. By improving employees' skills, knowledge, and abilities through training, Lauren enhances the human capital of her bakery. This investment in human capital is associated with increased productivity and better utilization of other resources such as physical capital and technology. As a result, workers are more likely to innovate and efficiently operate new equipment, contributing to the overall economic growth of the bakery.
Consider the market for electronics. Patents are granted to investors of a product or process for a certain number of years. The reason for this is to encourage innovation in the economy, without the existence of patents; it is argued that research and development for improved electronics is unlikely to take place, since there's nothing preventing another firm from stealing the idea, copying the product, and producing it.Which of the following best explains the barriers to entry that exist in this scenario?a. Legal barriersb. Exclusive ownership of a necessary resourcec. Economies of scale
Answer:
The answer is a. Legal barriers.
Explanation:
As government granted patent, copyright, trademark for a player in electronics market, they legally protect the intellectual right of that player. As a result, the government also have set up a legal barrier for any potential new players who want to join the market from taking the existing best ideas/ innovation from their starting, instead, they will have to either purchase the patent or invest in R&D for keeping up with the market most modern technology; both at a very high cost.
Ultimately, this type of legal protection will create a barrier to enter for any new player as they will have to prepare for huge expenditure for getting the best technologies at the time.
Evaluate the following two statements:_________
I. Interest on bonds must be paid in full even when the corporation operates at a loss.
II. When bonds are issued at a premium, the annual interest expense reported will be greater than.
Answer:
I. True. Bond is an corporate's liabilities rather than an equity. Thus, the bond issuance is liable to its bond's holders to pay the promised interest expense on-time and in full amount being promised at the time of issuance regardless of their business's performances.
II. False. When the bonds are issued at a premium, annual interest expense will be lower. The Premium amount will be credited at first and then being allocated through out the bond's life time ( debited). This will reduce the amount of interest expense being recorded during the year of bond's life time.
Explanation:
Gina hired Frank, an attorney, to handle her divorce. If, during face-to-face negotiations, Frank strikes the opposing attorney, Gina will be liable because Frank was her agent employee.
Answer:
false
Explanation:
An employer could be responsible for an injury caused by his/her employee only if the employee is acting within the scope of employment. Striking the opposing attorney cannot be considered acting under the scope of being an attorney representing a client, unless you are a mobster.
For example, if you are driving your company's car while shopping for Christmas and you hit a pedestrian, your company is not liable for the accident since you were not involved in any activity related to your normal work.
Final answer:
Gina is typically not liable for Frank's action of striking the opposing attorney as it falls outside the scope of his professional duties. Agency law requires the agent's acts to be within the employment scope for principal liability to arise.
Explanation:
The question relates to the legal concept of principal-agent liability, specifically within the context of an attorney (agent) acting on behalf of a client (principal). It's important to note that in most cases, a principal is not liable for the intentional torts of an agent that are outside of the scope of agency. Agency law dictates that for a principal to be held liable for the acts of an agent, the agent's acts must be within the course and scope of employment. In the scenario provided, because Frank's actions (striking the opposing attorney) would likely be considered outside the scope of his professional responsibilities as an attorney handling divorce proceedings, Gina would typically not be liable for Frank's conduct. The right to an attorney and standards of representation are addressed in cases such as Glasser v. United States, which discusses conflicts of interest, but this is distinct from the question of physical acts committed by an attorney.
The unemployment rate in Economy X when it is growing normally is 5%. When Economy X is in a recession, the unemployment rate is 10%. Drag each word or phrase to the appropriate blank space in order to complete the paragraph correctly.
For Economy X, the natural rate of unemployment ________ 5%. This rate is not due to _______ factors. It applies _______.
For Economy X, the natural unemployment rate is 5%, which isn't affected by external factors like a recession. It's the standard unemployment rate under normal economic growth, attributable to regular job market activity.
Explanation:For Economy X, the natural rate of unemployment is 5%. This rate is not due to external factors such as a recession but is the average rate at which the economy operates when it's experiencing normal growth. This natural rate of unemployment represents the number of people who are unemployed not due to a lack of job opportunities, but due to regular labor market activity, such as job-switching or searching for a better position. This rate applies whether the economy is expanding or contracting.
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Suppose that the Bank of Apples has excess reserves of $450,000 and checkable deposits of $30,000,000. If the bank has a reserve requirement of 30 percent, what is its total amount of reserves?
Answer:
$9,450,000
Explanation:
To determine the amount of reserves that the Bank of Apples has, we first have to multiply the total amount of checkable deposits by the reserve requirement, and then add the excess reserves.
($30,000,000 x 30%) + $450,000 = $9,000,000 + $450,000 = $9,450,000
An investor purchased 100 shares of MJS on June 19, 2015 at a price of $40 per share. On June 1, 2016, MJS declared a 25% stock dividend. On July 1, 2016, the investor sold 50 shares of the MJS at $50 per share.
Which of the following statements are correct?
I. The adjusted cost basis of the shares is $30
II. The adjusted cost basis of the shares is $32
III. There is a short-term capital gain on 25 shares, long-term gain on the other 25 shares
IV. There is a long-term capital gain on all of the shares sold
Answer:
IV) There is a long-term capital gain on all of the shares sold
Explanation:
Long term capital gains refers to a profit made on an asset that an individual or business has held for more than a year. In this case, the investor had a long term capital gain when he sold 50 shares at $50 per share, since their cost basis was $40 per share ($10 per share as long term capital gains). He bought the shares on June 19, 2015 and sold them on July 1, 2016.
He also had some short term capital gains, since he received 25% stock dividends on June 1, 2016.
Long-term capital gains are those you earn on assets you've held for more than a year. ... The long-term capital gains tax rates are 0%, 15% and 20%, and they're typically much lower than the ordinary income tax rate
4. The three NIMS guiding principles are:
A. Unity of effort, preparedness, resource management.
B. Flexibility, standardization, unity of effort.
C. Resources, organization, standardization.
D. Planning, response, recovery
Answer: (B) Flexibility, standardization, unity of effort.
Explanation:
The NIMS stand for the national incident management system and it basically provide the proactive and the systematic approach for guiding the all the level of organization such as government and the non-government department.
The main purpose of the NIMS is that it help in evaluate an approach by developing the command system and also minimize the impact of the business operation.
The three main NIMS principle are as follows:
Flexibility,StandardizationThe unity of effortsThe three NIMS guiding principles are unity of effort, preparedness, and resource management.
Explanation:The three NIMS guiding principles are unity of effort, preparedness, and resource management. These principles provide a framework for effective emergency response and management. Unity of effort emphasizes collaboration and coordination among all levels of government, as well as with non-governmental organizations and private sector partners. Preparedness involves planning and training so that all response personnel are ready to handle emergencies. Resource management focuses on efficiently allocating and utilizing resources during response and recovery operations.
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When using various forms of promotion to carry the promotion message, it is important that the recipients of the message interpret it in the same way. Creating a unified promotional message, where potential customers perceive the same message, whether it is in a TV commercial, or on a billboard, or in a blog, is called ____________.
A. personalized sellingB. integrated marketing communicationC. delivery cue analysisD. branding assimilation
Answer:
B. integrated marketing communication
Explanation:
Based on the information provided within the question it seems that this is called integrated marketing communication. This term refers to making sure that all promotional communications and messages are meticulously linked together when advertising a product or service, in order for the recipients of the message to interpret it in the same way regardless of the platform. Which is what is being described in this scenario.
Accredited investors are_______a.investors with incomes of no less than $5,000 in each of the last two years.b.investors whose net worth is $500,000 or less.c.investors who purchase over $5,000 of the venture's securities.d.directors, executive officers, and general partners of the issuing company.
Final answer:
An accredited investor is an investor who meets certain financial criteria set by the SEC. They have incomes of no less than $5,000 in each of the last two years.
Explanation:
An accredited investor is an investor who meets certain financial criteria set by the Securities and Exchange Commission (SEC) in the United States. The correct option for this question is:
a. investors with incomes of no less than $5,000 in each of the last two years.
Lena is a sole proprietor. In April of this year, she sold equipment purchased four years ago for $26,000 with an adjusted basis of $15,500 for $17,000. Later in the year, Lena sold another piece of equipment purchased two years ago with an adjusted basis of $8,200 for $5,500. What are the tax consequences of these tax transactions?
Lena has Selecta:
(capital gain, a capital loss, an ordinary gain, an ordinary loss) of $_______ from the sale of the first equipment.
Lena has Selecta:___________.
Answer:
Lena has a ORDINARY GAIN of $1,500 from the sale of the first equipment. Lena has a ORDINARY LOSS of $2,700 from the sale of the second equipment.Explanation:
Lena sold the first equipment for $17,000, and that resulted in an ordinary gain = $17,000 - $15,500 = $1,500. This gain was due to a §1245 depreciation recapture.
Lena sold the second equipment for $5,500, and that resulted in an ordinary loss (§1231 loss) = $5,500 - $8,200 = $2,700.
Final answer:
Lena has a capital gain of $1,500 from the sale of the first equipment and a capital loss of $2,700 from the sale of the second equipment. Both transactions involve long-term capital gains and losses since the equipment was owned for more than one year.
Explanation:
Lena, as a sole proprietor, has two separate transactions to report for tax purposes. For the first equipment, she sold it at $17,000 which was purchased for $26,000 with an adjusted basis of $15,500. The tax consequence of this transaction is a capital gain since the selling price ($17,000) is above the adjusted basis ($15,500). Therefore, the capital gain Lena has is $17,000 - $15,500 = $1,500.
For the second piece of equipment, Lena sold it for $5,500 but it had an adjusted basis of $8,200. This transaction resulted in a capital loss, calculated as $8,200 (adjusted basis) - $5,500 (selling price), which equals $2,700.
Since Lena owned both pieces of equipment for more than one year, these are considered long-term capital gains and losses. The net effect on Lena's taxes will depend on reporting the gains and losses on her tax return and her total taxable income will determine the tax rate applicable to the long-term capital gain.
The Carolina Christmas Tree Corporation grows and sells 500 Christmas trees. The average cost of production per tree is $50. Each tree sells for a price of $65. The Carolina Christmas Tree Corporation’s total revenues are?
Answer:
$7500
Explanation:
Cost of production of Carolina Christmas trees were $50 each, and 500 trees were commercialized. Then, the Corporation invested $25000, and earned $32500 when sales were over. The revenues were $7500; this comes from deducting $25000 from $32500
Final answer:
The Carolina Christmas Tree Corporation's total revenues are $32,500.
Explanation:
The Carolina Christmas Tree Corporation sells 500 Christmas trees at a price of $65 each.
The average cost of production per tree is $50.
To find the total revenues, we can multiply the number of trees sold by the sale price per tree.
Total Revenues = Number of Trees Sold x Sale Price Per Tree
Total Revenues = 500 trees x $65/tree
= $<<500*65=32500>>32,500
A firms total cost function is: TC= 500 + 150q - 20q2 + q3 what is the dollar value at the minimum of the average variable cost (avc) curve? $50?
Answer:
the correct answer is $150
Explanation:
TC=500 + 150q - 20q^2 + q^3
AVC=(150Q-20Q^2+Q^3)/Q
=150-20Q+Q^2
When AVC is at its minimum means that the marginal cost( CM) is igual to AVC, so we could consider this analysis:
CM= d(TC)/dq =150-40Q+3Q^2
CM=AVC
150-40Q+3Q^2=150-20Q+Q^2
Join similar terms:
150-150-40Q+20Q+3Q^2-Q^2=0
0-20Q+2Q^2=0
Q(-20+2Q)=0
Q_1=0 y Q_2=20/2=10
with q_1 with q_2
150-40*0+3*0=150-20*0+0 150-40*10+3*10^2=150-20*10+10^2
$150=$150 150-400+300 =150-200+100
$50= $ 50
We have two solution if we assume that q=0 like the minimum then the results is $150.
f we assume that q=10 like the minimum then the results is $50.
Sweet Acacia Industries had a beginning balance in accounts receivable of $75,360 and an ending balance of $91,160. Credit sales during the period were $645,360. Determine cash collections.
Answer:
Cash collections = $629560
Explanation:
given data
beginning balance = $75,360
ending balance = $91,160
Credit sales = $645,360
to find out
Determine cash collections
solution
we get here Cash collections as
Cash collections = Opening balance - Closing balance + credit sales ....................1
put here value we get
Cash collections = $75,360 - $91,160 + $645,360
Cash collections = $629560
The 2005 Boston Globe article discussing ticket scalping points out that the price people will pay for tickets will rise when a. supply and demand are both limited. b. supply is limited and demand is not limited. c. supply is limited and demand is not limited. d. supply and demand are both not limited.
Answer:
Supply is limited and demand is not limited.
Explanation:
According to the law of demand, there is a inverse relationship between the price of the goods and the demand for the goods. On the other hand, law of supply says that there is a direct relationship between the price of the good and supply of the good. If there is a shortage of goods in the market then this will result in a higher price for a good because of the higher demand for the product. The producers try to make more profits by charging higher prices because of the shortage in the economy.
Hence, the price people will pay for tickets will rise when the supply of tickets is limited and demand for tickets is not limited.
A product has a contribution margin per unit of $17 and sells at $25 per unit. If the break-even point is 82,000 units, calculate
a. the variable costs per unit and
b. the total fixed costs.
Answer:
a. $8 b. $1,394,000
Explanation:
The contribution margin per unit of a product is $17.
The price per unit is $25.
The break-even point is 82,000 units.
a. Contribution margin per unit = Sales per unit - AVC
$17 = $25 - AVC
AVC = $25 - $17
AVC = $8
So, the variable cost per unit is $8.
b. Fixed costs
= [tex]Breakeven\ in\ units\times Contribution\ margin\ in\ units[/tex]
= [tex]82,000\times 17[/tex]
= $1,394,000
he following information relates to current production of outdoor chaise lounges at Backyard Posh: Variable manufacturing costs per unit $ 105 Total fixed manufacturing costs $525,000 Variable marketing and administrative costs per unit $ 33 Total fixed marketing and administrative costs $250,000 The regular selling price per chaise lounge is $ 350. The company is analyzing the opportunity to accept a special sales order for 400 chaise lounges at a price of $ 200 per unit. Variable marketing and administrative costs would be $ 15 per unit lower than on regular sales. Fixed costs would increase by $ 13 comma 000. The company has the capacity to produce 35 comma 000 chaise lounges per year, but is currently producing and selling 9 comma 000 chaise lounges per year. Regular sales will not be affected by the special order. If the company were to accept this special order, how would operating income be affected? A. Decrease by $ 30 comma 800 B. Decrease by $ 17 comma 800 C. Increase by $ 30 comma 800 D. Increase by $ 17 comma 800
Answer:
Increase by $17,800
Explanation:
If the company accepts the special order for 200 chaise lounges, its profit will be:
Sales revenue = 400 x $200 = $80,000
variable production costs = 400 x $105 = ($42,000)
variable marketing and administrative costs = 400 x $18 = ($7,200)
increase in fixed costs = ($13,000)
profit resulting from the special order = $17,800
Hallie owns 20% of the common stock of the Bean Brothers Coffee Company. The company announced plans to offer an additional 10,000 shares of common stock for sale. If Hallie exercises her preemptive rights, Bean Brothers must offer her the opportunity to purchase?
Answer:
2,000 shares
Explanation:
Hallie's preemptive rights allow her to buy up to 20% of the new stocks issued, so 20% of 10,000 is 2,000.
Preemptive rights give a shareholder the right to purchase a proportionate number of shares of future shares issued, this way the investor may keep the same ownership proportion.
Economic growth in the country of Southville has slowed down in the last few months. Following a collapse in housing prices, several homeowners have defaulted on their mortgages. Given that this sector accounts for a sizeable portion of the GDP. many commentators believe that this will prompt a 'domino effect' in the economy. On a TV chat show: three industry experts are discussing the crisis and its possible impacts. Megan Greenboe is of the opinion that housing prices were driven up by speculation prior to the crisis. According to her, this crisis will eventually reduce liquidity in the economy and lead to a credit crunch. Bob Sacberg, however, does not agree with Megan. Bob feels that the increase in housing prices can be explained by the steady growth in population and were therefore driven by fundamentals. Samantha Morris meanwhile is not very convinced that the housing sector is solely responsible for the economic slowdown. She argues that a twelve percent fall in housing prices is unlikely to have a very widespread impact. Which of the following, if true, will weaken Bob's argument that fundamental factors in the housing market led to the increase in housing prices?
a. According to census data, the percentage of Southville's population that lives in rural areas has gradually been shrinking
b. The standards for obtaining a mortgage loan in Southville have been more stringent compared to many other countries
c. Prior to the crisis, the prices of existing homes also increased in proportion to the prices of new homes in Southville
d. A large proportion of home buyers in Southville were individuals who already owned one or more houses
e. The inflation-adjusted real wage in the construction industry increased by 10 percent prior to the crisis
Answer:
D) A large proportion of home buyers in Southville were individuals who already owned one or more houses
Explanation:
Bob argues that the price of houses in Southville increased because more the population, so more people equals more demand for houses, and more demand equals higher prices. But if many of the new houses were not primary residencies, then Bob's argument collapses. This would mean that the higher price for houses was not caused by fundamental factors, but is probably due to speculation.
Sandra, a manager at Evolve Corp, frequently engages her team in recreational activities. Every employee is friendly with one another. For Sandra, building a healthy work environment is the primary concern and employee performance is secondary. In the context of the Blake/Mouton leadership grid, which of the following leadership styles is Sandra using in this scenario?A) The middle-of-the-road styleB) The country club styleC) The authority-compliance styleD) The impoverished style
Answer:
B) The country club style
Explanation:
The Blake Mouton Managerial Grid tries to balance two important aspects of management: concern for your employees and concern for your company's results. Usually management theories focus on one aspect over the other but Blake and Mouton tried to develop a style where both could be achieved.
They defined five leadership styles:
Impoverished Management – Low Results/Low People Produce-or-Perish Management – High Results/Low PeopleMiddle-of-the-Road Management – Medium Results/Medium People Country Club Management – High People/Low Results: This management style focuses more on the well being of the employees, believes that happy employees work harder. In productive terms, this style is not very efficient because it lacks direction and control.Team Management – High Production/High People