A. Explain the concept of homemade leverage by providing an
example.
B. What are the Modligliani and Miller proposition by providing
an example.
Answers
A. The interest rate that an investor pays on the loan is lower than the rate of return earned on the securities, the investor will earn more than the interest paid. B. According to the Modigliani and Miller proposition, the value of the firm is independent of its capital structure, and the shareholders' gains are offset by the loss of bondholders.
A. Homemade leverage refers to the use of personal borrowing to amplify returns from an investment position.
It is the opposite of corporate leverage, where companies borrow capital from banks or issue bonds to finance operations or expansion projects.
It means that an investor can borrow money to increase the total amount invested, rather than relying solely on equity capital.
An investor can create homemade leverage by borrowing from a bank or other financial institution to buy more securities.
The interest rate that an investor pays on the loan is lower than the rate of return earned on the securities, the investor will earn more than the interest paid.
For example, a stock market investor with $10,000 could use the money as a down payment to buy $100,000 worth of stock by borrowing $90,000 from a bank.
If the stock appreciates by 10% to $110,000, the investor sells the shares for $110,000, pays back the $90,000 loan, and has $20,000 left over.
B. The Modigliani and Miller proposition states that in the absence of taxes, bankruptcy costs, and asymmetric information, the value of a firm is not affected by how it is financed.
This proposition implies that the total value of a firm is equal to the value of the firm's assets and does not depend on the capital structure used to finance those assets.
The theory was developed by economists Franco Modigliani and Merton Miller in the 1950s and 1960s.
The proposition can be illustrated with an example.
Consider a company that has $100 million in assets and no liabilities.
The value of the firm, therefore, is $100 million.
The company can finance the assets with equity or debt.
If the company issues $50 million in debt and $50 million in equity, the value of the firm remains the same, $100 million.
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Related Questions
Please help or going to jump off a really high bridge
Gates Gems bought a computer on January 1st in the amount of $5,000. It will be used by the company for 3 year and will have a salvage value of $200. What is the annual depreciation expense?
Gates Gems bought a computer on July 1st in the amount of $5,000. It will be used by the company for 3 year and will have a salvage value of $200. What is the depreciation expense that Gates Gems will record?
Karen’s Flower Shop purchased a delivery van in the amount of $12,000 on January 1st. The van has a useful life of 5 years and an estimated salvage value of $800. What is the annual depreciation expense?
Karen’s flower shop purchased a new floral cooler on August 1st in the amount of $8,900. She expects the cooler to last approximately 4 years at which time it’s value will be $1,200. What is the depreciation expense that Karen will record?
Michael’s Diner purchased new booths on January 1st for the seating area. The cost of the booths was $2,570. Michael determined that the booths wouldn’t be worth anything at the end of their useful life, which would be 5 years. What is the annual depreciation expense for the booths?
Michael’s diner purchased a delivery truck on February 1st in the amount of $10,000. The estimated useful life is 6 years and the salvage value is $500. What is the depreciation expense that Michael will record?
Ieshah’s Ice Cream Shoppe purchased a new freezer for the storeroom on October 1st for $6,500. Ieshah expects the freezer to last 5 years. The salvage value is $600. What is the depreciation expense Ieshah will record?
ABC Corporation bought a conference room table on January 1st in the amount of $2,800. It will be used by the company for 5 years and will have a salvage value of $400. What is the annual depreciation expense?
Answers
Answer:
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Explanation:
1. The annual depreciation expense for the computer bought by Gates Gems on January 1st is $1,566.67 ($5,000 - $300)/3.
2. The depreciation expense bought by Gates Gems on July 1st that it will record for the year is $783.33 ($5,000 - $300)/3 x2.
3. The annual depreciation expense for the computer bought by Karen’s Flower Shop on January 1st is $2,240 ($12,000 - $800)/5.
4. The depreciation expense that Karen will record for the first year is $802 ($8,900 - $1,200)/4 x 5/12.
5. The annual depreciation expense for the booths purchased by Michael's Diner on January 1st is $514 ($2,570/5).
6. The depreciation expense that Michael will record for the first year is $1,451.40 ($10,000 - $500)/6 x 11/12.
7. The depreciation expense that Ieshah will record for the first year is $295 ($6,500 - $600)/5 x 3/12.
8. The annual depreciation expense that ABC Corporation will record is $480 ($2,800 - $400)/5.
Thus, the above illustrations demonstrate that depreciation expense is based on time usage as it is prorated when the equipment is not used from the beginning to the end of the fiscal year.
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Why do people buy and sell under futures contracts? Select ALL that apply
A. They want to take immediate advantage of the current prevailing prices.
B. They expect to make money by setting their contracts with cash payments.
C. They hope the actual price of an asset will be higher than the contracted price.
D. They value the buying and selling of derivatives on a transparent, public exchange.
Answers
how do i friend other ppl
Answers
Answer:
got to their page and press friend
Explanation:
Answer:
lipor was right
Explanation:
go to the page and you will see "Friend".
Briefly explain two ethical values that are necessary for all accountants.
Answers
Objectivity and independence are important ethical values in the accounting profession. ... Accounting services include general accounting, auditing, tax and management advisory services. Accountants who perform more than one of these services for a client may compromise their objectivity and independence.
which event will not lead to a decrease in supply? a decrease in the product price an increase in taxes an increase in resource costs a decrease in the number of sellers in the market
Answers
The event that will not lead to a decrease in supply is a decrease in the number of sellers in the market.
Supply refers to the quantity of goods or services that producers are willing and able to offer for sale at various price levels. It is influenced by several factors, including the price of the product, taxes, resource costs, and the number of sellers in the market.
A decrease in the product price would typically lead to a decrease in supply. When the price of a product decreases, producers may find it less profitable to produce and sell the product, resulting in a decrease in the quantity supplied.
An increase in taxes can also lead to a decrease in supply. Higher taxes increase the cost of production for producers, reducing their incentive to supply goods or services at various price levels.
Similarly, an increase in resource costs, such as the cost of raw materials or labor, can also lead to a decrease in supply. Higher costs of production reduce the profitability of producing and selling goods or services, leading to a decrease in supply.
However, a decrease in the number of sellers in the market does not directly affect supply. While it may impact market competition and the overall market structure, it does not directly influence the quantity of goods or services producers are willing and able to supply at different price levels.
In summary, of the events mentioned, a decrease in the number of sellers in the market does not lead to a decrease in supply.
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New batteries are needed to power our electronic devices—our cell phones, tablets, and computers—and that market is exploding. Researchers are developing lithium-ion batteries that will be vital to clean-energy and automobile manufacturing and could open up huge new markets. Currently, the domestic production accounts for about 12 percent of the world's production. The country has a domestic supply of raw materials, but production is limited and prices remain high compared to imported batteries.
The government could invest in technology and research.
The government could purchase domestic batteries exclusively.
The government could impose heavy tariffs on all imported batteries.
The government could ban imported batteries.
Answers
Answer:
The government could impose heavy tariffs on all imported batteries.
Explanation:
Import tariffs are taxes imposed on imported commodities. Should the government impose heavy tariffs on the imported batteries, their prices in the domestic market will go up.
One of the objectives of a tariff is to protect locally produced goods from unfair competition by low-priced imports. The imposed tax become a cost to the imported batteries, which will make them more expensive. The locally produced batteries will compete favorably with the imports. The domestic industry will grow since it has raw materials and a market to sell its products.
a check received from the offeror may be held uncashed by the broker until acceptance of the offer, provided the:
Answers
When a broker receives a check from an offeror, they may hold it uncashed until acceptance of the offer is received. The offeror is the person making the offer, while the broker is the middleman who facilitates the transaction. The acceptance refers to the recipient of the offer agreeing to the terms of the offer.
This process is often used in real estate transactions, where the buyer makes an offer to purchase the property, and the broker holds the deposit check until the seller accepts the offer. This allows for a more secure transaction and ensures that the funds are available when needed.
However, it is important to note that the specific terms of holding the check may vary depending on the agreement between the offeror, broker, and acceptance. In any case, it is important to have a clear and concise agreement between all parties involved to avoid any confusion or legal issues.
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1. identify three lean tools you would recommend kempfer furniture immediately use. explain the benefits of using lean six sigma and jit.
Answers
Three lean tools that I would recommend Kempfer Furniture immediately use are value stream mapping, 5S, and kaizen events.
Value stream mapping is a tool used to analyze and improve the flow of materials and information through a process or system. By creating a visual representation of the process, Kempfer Furniture can identify areas of waste and inefficiency and develop strategies to eliminate them.
5S is a workplace organization method that involves sorting, simplifying, sweeping, standardizing, and sustaining. By implementing 5S, Kempfer Furniture can create a more organized and efficient workspace, reduce waste, and improve safety and quality.
Kaizen events are focused improvement activities that bring together cross-functional teams to identify and eliminate waste and improve processes. By conducting kaizen events, Kempfer Furniture can quickly identify and implement improvements to processes and systems, leading to increased efficiency and cost savings.
The benefits of using lean six sigma and JIT (just-in-time) include:
- Increased efficiency and productivity: Lean tools help identify and eliminate waste in processes, leading to improved efficiency and productivity.
- Improved quality: By focusing on reducing defects and improving processes, lean tools can improve product quality and reduce the likelihood of errors or defects.
- Reduced lead times: JIT principles aim to produce products or deliver services just in time to meet customer demand, reducing lead times and improving responsiveness.
- Reduced inventory costs: JIT principles also aim to minimize inventory costs by producing only what is needed, when it is needed, and in the quantities required.
- Improved customer satisfaction: By improving efficiency, quality, and responsiveness, lean six sigma and JIT can lead to improved customer satisfaction and loyalty.
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Politics is sort of like a game. And the best gamer is great at manipulating the rules.
Answers
Politics is about making agreements between people so that they can live together in groups such as tribes, cities, or countries. In large groups, such as countries, some people may spend a lot of their time making such agreements.
Assuming annual compounding, find how long it would take for the general lovel of prices to double at the following annual inflation rates: a. 1% b. 5% c, 9% d. Check your answere using the Rule of 70 or the Rule of 72 , whichever applies.
Answers
The Rule of 70 states that the number of years it takes for an investment to double is approximately 70 divided by the annual growth rate. a. 70 years, b. 14.4 years c. 8 years.
Using the Rule of 70 or the Rule of 72, we can calculate the approximate number of years it would take for the general level of prices to double at different annual inflation rates:
a. For an annual inflation rate of 1%, using the Rule of 70, it would take approximately 70/1 = 70 years for prices to double.
b. For an annual inflation rate of 5%, using the Rule of 72, it would take approximately 72/5 = 14.4 years for prices to double.
c. For an annual inflation rate of 9%, using the Rule of 72, it would take approximately 72/9 = 8 years for prices to double.
Using these rules, we can estimate the time it would take for prices to double based on the given inflation rates. It's important to note that these are approximations and may not precisely match the actual time it would take for prices to double, but they provide a useful guideline for understanding the impact of inflation over time.
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I need help ASAP with personal finance
Answers
AnswER:
What do you need help with
Explanation:
What is moral myopia? Why do you think an advertising professional might experience this phenomenon?
Answers
Answer: See Explanation
Explanation:
Moral myopia occurs when someone is unable to clearly see ethical issues. In this case, people decide not to say anything even though they see the unethical behavior of others.
An advertising professional might experience moral myopia in the sense that such person looks away when he or she sees an unethical act because of fear of losing his or her job and also because of fear of losing a customer.
jerry deposited $550.00 into a saving account at his bank. if the interest rate is 2.75%, then how much will he have after 2 years? hint: find interest first, then add to how much he had in his bank account.
Answers
Interest for 2 Years= 550*2.75/100*2=30.25
Balance of Saving account after 2 years= 580.25
What does "bank interest" mean?You pay interest when you borrow money, and banks pay you interest when you save money with them. Interest rates are expressed as a percentage of your annual savings or borrowing. Therefore, after a year, if you deposited £100 into a savings account earning 1% interest, you would have £101.
Why do banks care about interest rates?Stocks in industries like banking and utilities are particularly susceptible to changes in interest rates. Banks, in particular, derive a large portion of their revenue from the discrepancy between the cost of borrowing money and the interest rate at which they lend it (also called the spread).
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in all societies, the government decides what to produce.
Answers
In a command economy, assets and organizations are claimed by the public authority. The public authority concludes what labor and products will be delivered and what costs will be charged for them. The public authority concludes what techniques for creation will be utilized.
In a market system, shopper inclination and assets figure out who will get the labor and products created. In unrestricted economies, costs mirror the general accessibility of scant assets, and buyers who have the most cash and longing for an item will follow through on the greatest expenses.
They utilize a creation prospects bend which is a diagram that helps see what customers want more. Typically utilized between two items.
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50 POINTS PLS HELP
Write a check, fill in the check register, then reconcile the checking account.
Answers
Answer:
your answers for blank check are as follow s: Date:04/01/19.
PAY TO THE ORDER OF: City of Dallas $54.15
fifty four dollars and fifteen cents.
Memo:for a parking ticket.
what did the sellers originally pay for their property if they sold it for $268,550 and realized a 13% profit? round to the nearest cent.
Answers
The sellers originally paid $237,911.50 for their property if they sold it for $268,550 and realized a 13% profit. Round to the nearest cent.
What did the sellers originally pay for their property if they sold it for $268,550 and realized a 13% profit? The question is an example of a profit and loss question, which involves calculating the profit or loss of a business or individual. The formula for calculating profit is: Profit = Selling price - Cost price We can use the above formula to calculate the cost price of the property for the seller. We are given the selling price of the property, which is $268,550, and the percentage profit, which is 13%.So, we can write: Profit = 13/100 × Cost price$268,550 - Cost price = 13/100 × Cost price$268,550 = 113/100 × Cost price Cost price = $268,550 ÷ 113/100Cost price = $237,911.50Therefore, the sellers originally paid $237,911.50 for their property if they sold it for $268,550 and realized a 13% profit. Round to the nearest cent.
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PLEASE HELP IT IS URGENT DO NOT WASTE ANSWERS
Answers
define mountain climate with one example
Answers
Answer: See explanation
Explanation:
Mountain climate can also be referred to as highland climate or Alpine climate and it simply refers to the weather for the regions that are above tree lines.
Mountain climate also called Alpine climate can be found in the Himalayas, the Alps, the Rocky mountains, the Cantabrian Mountains, the Tibetan Plateau, Cascade mountains, the Appalachian Mountains etc.
When comparing a Variable Rate Demand Obligation (VRDO) to an Auction Rate Security (ARS), which statement is FALSE?
Answers
Answer:
Both have tender options.
Explanation:
Variable rate demand obligation and Auction rate securities both are long term bonds which have interest rate that reset weekly or monthly. This advantages the issuer with lower short term rates despite of long term security. Both of these securities are subject to credit risk of the issuer and they are marketed by broker dealers.
How can a person become a dentist
Answers
Explanation:
It generally takes eight years to become a dentist: four years to earn a bachelor's degree as an undergraduate and four years to earn a DDS or DMD in dental school. If you're interested in specializing, you'll also need to complete a dental residency (more on that below).
brainliest please
51502194 I hate you can everyone please report him
Answers
Answer: why do you hate this person so much
Explanation:
Answer:
ill put a question he has answered in the comment section and you can do whatever you wanna do with his anwers then
Explanation:
gimme brainliest
Who wants branliest???!!!
Answers
Answer:
Sure...
Explanation:
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Résumés should be written in complete sentences.
Please select the best answer from the choices provided
TRUE OR FALSE?
ANSWER: FALSE
Answers
Answer:
false lol thx
Explanation:
Sarah has decided that she never wants to go into debt. Therefore, she only uses her
debit card and cash for purchases. The store where she is planning to purchase a dining
room set charges a 15% annual interest rate for all store credit card purchases. If Sarah
saves up the cash and uses her debit card to purchase her new $1,200 dining room set,
how much will she have to pay in interest?
Answers
The amount that Sarah will have to pay as interest will be $180
Based on the information given, the following can be depicted:
Cost of dining room set = Principal = $1200
Interest rate = 15%
Time = 1 year
The simple interest will be calculated using the formula:
= PRT/100
= (1200 × 15 × 1) / 100
= 18000/100
= 180
Therefore, based on the calculations above, the interest that'll be paid by Sarah is $180.
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Remittances have a significant impact on migrants' families and communities. Identify the examples of remittances.a. A migrant worker shares Western ideas with his or her family back home.b. A migrant sends money home for family or town projects
Answers
A migrant worker sharing Western ideas with his or her family back home is not an example of a remittance. A remittance is a transfer of money or goods made by a migrant to his or her home country.
b. A migrant sending money home for family or town projects is a common example of a remittance. This money can be used for a variety of purposes such as paying for education or healthcare expenses, building a house, starting a business, or supporting family members who are unable to work.
Remittances also have a broader impact on the migrant's home country. According to the World Bank, remittances are a significant source of income for many developing countries and can help reduce poverty and improve living standards. In addition, remittances can stimulate economic growth by creating employment opportunities and increasing demand for goods and services.
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EFFECTS OF THE RUSSIAN - UKRAINE WAR
Commodity prices, including wheat, corn, have surged since Russia began its
invasion of Ukraine on 24/02/2022. Russia & Ukraine account for about 29% and
19% of global wheat and maize exports.
With Ukraine ports closed and much of Russian grain supply frozen by Western
sanctions, there are fears of tightening supplies will lead to shortages in importing
countries.
South Africa, a net exporter of maize, imports about 40% of its wheat.
The conflict will have an impact on the International wheat prices which ultimately
reflect in in SA wheat prices as well.
Adapted: econ 3x3 :editor's corner March
2022
In view of the above Information conduct a research and write a report on the impact
of the Russian - Ukraine war on the South African Economy
In your report focus on the following issues:
13
• Highlight the negative externalities that might occur in the South African
Economy, due to the above-mentioned war.
Answers
The impact of the Russian - Ukraine war on the South African Economy is that It has lead to the pushing up of prices in South Africa.
What is the impacts of the war in SA.?The Russia's invasion of Ukraine and the sanctions that were said to have been placed on Russia have made a lot of commodity prices to be going up, and thus it has adverse implications for South Africa's as there are now consumer price inflation.
Most cereals and machineries in South Africa is been imported from Ukraine and this is known to have affected their economy a lot as it has lead to food and fuel crises.
Note that the impact of the Russian - Ukraine war on the South African Economy is that It has lead to the pushing up of prices in South Africa.
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Discuss the role of the father in attachment theory
Answers
Explanation:
Both parents are considered attachment figures in attachment theory, and the child-father attachment is autonomous from the child-mother attachment. Whereas mothers are commonly involved in caregiving and providing emotional refuge, fathers are particularly involved in play and exploratory undertakings.
Which of the following budgets
would be considered balanced?
A budget where the amount you spend is greater than the amount you
earn.
A budget where the amount you earn is equal or less than to the amount
you spend.
A budget where the amount you save is less than the amount you spend.
A budget where the amount you spend is equal or less than the amount
you earn.
Answers
•Critically discuss the reason that prompted or encouraged such a corrupt practice to occur in a well-established and reputable company like Theranos.
•Analyze the performance of Theranosfrom the year 2015 to the year 2018. Do you think that there are other reasons beyond the corruption scandal that may have affected their performance?
•Do you think the incorporation of the triple bottom line could have avoided this scandal? Speculate. Do you think that incorporation of the triple bottom line framework can mitigate or eliminate the corrupt practice in any company?
Answers
The corrupt practices that occurred in Theranos, a well-established and reputable company, can be attributed to several factors. These include the pressure to deliver on promises made to investors and stakeholders, a culture of secrecy and fear of failure, and the personal motivations and actions of key individuals within the company.
Additionally, besides the corruption scandal, Theranos faced several other challenges that impacted its performance between 2015 and 2018, including regulatory issues, technological limitations, and the erosion of trust in the company. While the incorporation of the triple bottom line framework, which considers social, environmental, and financial impacts, could have potentially helped prevent the scandal, it is not a foolproof solution. It can provide a holistic perspective and encourage ethical practices, but ultimately, the effectiveness of such frameworks depends on the commitment and integrity of the individuals involved.
The corrupt practices in Theranos were prompted by a combination of factors. One major factor was the immense pressure placed on the company to deliver on its promises. Theranos had attracted significant investments and garnered a high level of media attention, leading to heightened expectations. This pressure to live up to the hype may have driven some individuals within the company to engage in fraudulent practices to maintain the illusion of success.
Additionally, Theranos had cultivated a culture of secrecy and fear of failure. The company's founder, Elizabeth Holmes, created an environment where employees were discouraged from questioning or challenging the company's claims and practices. This culture may have allowed unethical behavior to go unchecked, as employees felt compelled to comply with the prevailing narrative rather than raise concerns.
Moreover, the personal motivations and actions of key individuals played a role in the corruption scandal. Elizabeth Holmes, as the charismatic leader of the company, played a central role in perpetuating the deception. Her desire for success, fame, and personal enrichment seemingly drove her to engage in fraudulent activities, disregarding the potential harm caused to patients and investors.
In analyzing Theranos' performance from 2015 to 2018, it is evident that the corruption scandal was not the sole factor impacting the company. Theranos faced numerous other challenges during this period. Regulatory issues arose when concerns were raised about the accuracy and reliability of the company's blood-testing technology. These concerns led to investigations by regulatory bodies and the subsequent banning of Theranos' founder and former president from owning or operating a medical laboratory for a period of time.
Furthermore, technological limitations posed a significant obstacle. Theranos' claims of being able to conduct a wide range of tests using just a few drops of blood were met with skepticism and scrutiny from experts in the field. The company struggled to validate its technology and faced challenges in meeting regulatory standards.
Additionally, the erosion of trust in Theranos further impacted its performance. As the extent of the corruption and deception became public, the company's reputation suffered greatly. Investors and partners withdrew their support, and legal battles ensued. This loss of trust damaged Theranos' credibility and hindered its ability to attract new investors and partners.
While the incorporation of the triple bottom line framework, which considers social, environmental, and financial impacts, could have potentially helped prevent the scandal, it is not a guaranteed solution. The triple bottom line approach encourages companies to consider ethical and sustainable practices, fostering transparency and accountability. By emphasizing social responsibility, environmental stewardship, and financial viability, companies can develop a more holistic approach to decision-making.
However, the effectiveness of such frameworks ultimately depends on the commitment and integrity of the individuals involved. In the case of Theranos, the corrupt practices occurred despite the presence of regulatory frameworks and guidelines in the healthcare industry. The unethical behavior of key individuals within the company overrode the potential benefits of incorporating the triple bottom line approach.
While the triple bottom line framework can promote ethical practices and help identify potential risks, it cannot eliminate the possibility of corrupt practices entirely. To mitigate and prevent corrupt practices, a combination of strong corporate governance, regulatory oversight, ethical leadership, and a culture that encourages transparency and accountability is necessary.
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According to the cartoon, what actions of Standard Oil earned it the label "The Monopoly Monster"?
Answers
The action that made Standard Oil earned the label monopoly monster is that they control and owned about 90 percent of US oil.
What is Monopoly?Monopoly can be defined as a situation whereby a manufacturers owns and control virtually 100% market shares.
In summary, monopoly does not allow for healthy market competition.
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