This question is about regulations in banking industry:
a) What is the asymmetric information problem and how does it contribute to our understanding of the structure of bank regulation?
b) Why does the safety net created by deposit insurance increase the adverse selection and moral hazard problems in banking?
Answers
a) What is the asymmetric information problem and how does it contribute to our understanding of the structure of bank regulation?The asymmetrical information problem is when one side of an economic transaction knows more about the product, service, or asset than the other.
The party with the most knowledge, typically the seller or the service provider, takes advantage of this informational asymmetry in the transaction, which leads to an unbalanced deal for the other party. In banking, there is a significant asymmetrical information problem between banks and depositors. The depositors and investors who give the bank their money for safekeeping and investment do not have enough information about the bank's real financial position and the quality of the loans and investments the bank has made with their money. Banks can engage in risky activities and take on bad loans without revealing these risks to the depositors and investors who trust them with their savings, contributing to the instability of the banking system. Bank regulation is crucial to preventing financial institutions from taking advantage of this informational asymmetry and to mitigate the resulting risk to depositors and investors. b) Why does the safety net created by deposit insurance increase the adverse selection and moral hazard problems in banking?The safety net provided by deposit insurance increases both the adverse selection and moral hazard problems in banking. The safety net increases the adverse selection problem because it can lead to riskier lending by banks. When deposit insurance is offered, depositors and investors are less likely to perform due diligence on their bank because they are insured for their deposits regardless of the bank's quality. Banks are aware of this and, as a result, have more of an incentive to take on risky loans or investments because they are less likely to be penalized by depositors. The safety net also exacerbates moral hazard by encouraging banks to take on more risk. Since they are guaranteed by the government, they are more likely to take risks in their lending practices than if they were not guaranteed. As a result, the safety net created by deposit insurance can contribute to financial instability, and bank regulation is essential to mitigate these problems.
To know more about asymmetric information visit:
https://brainly.com/question/31423649
#SPJ11
Related Questions
The Brewer Company manufactures and sells pens. Currently, 5,300,000 units are sold per year at $0.50 per unit. Fixed costs are $900,000 per year. Variable costs are $0.30 per unit Read the requirements. Requirements Requireme (a) Start by Operating income Consider each case separately: 1. a. What is the current annual operating income? b. What is the current breakeven point in revenues? Compute the new operating income for each of the following changes: 2. A $0.08 per unit increase in variable costs 3. A 10% increase in fixed costs and a 10% increase in units sold 4. A 40% decrease in fixed costs, a 40% decrease in selling price, a 30% decrease in variable cost per unit, and a 45% increase in units sold Compute the new breakeven point in units for each of the following changes: 5. A 10% increase in fixed costs 6. A 10% increase in selling price and a $20,000 increase in fixed costs Print Done Done Requirement 1. What is the current annual operating income? (a) Start by determining the formula to calculate operating income. [ Units sold X Selling price - Variable costs - Fixed costs - Operating income The current annual operating income is S (b) What is the current breakeven point in revenues? Determine the formula to calculate the breakeven point in revenues Breakeven units X Selling price = Breakeven revenues The current breakeven point in revenues equal Compute the new operating income for requirements 2 through 4. Requirement 2. A $0.06 per unit increase in variable costs results in a new operating of S Requirement 3. A 10% increase in fixed costs and a 10% increase in untis sold results in a new operating of Requirement 4. A 20% decrease in fixed costs, 20% decrease in selling price, a 30% decrease in variable cost per unit, and a 35% increase in units sold results in a new operating of s Compute the new breakeven point in units for requirements 5 and 6. Requirement 5. A 10% increase in fixed costs creates a new breakeven point at units. Requirement 6. A 10% increase in selling price and a $30,000 increase in fixed costs creates a new breakeven point at units.
Answers
Requirement 1 (a)Operating income is defined as gross revenue minus cost of goods sold (COGS) and operating expenses (OPEX), plus any other income sources. In this case, the current annual operating income formula would be.
New Operating Income = 5,830,000 x (0.50 - $0.30) - 990,000New Operating Income
= 1,203,500Requirement 4A 20% decrease in fixed costs would lead to a decrease in fixed costs from 900,000 to 720,000. A 20% decrease in selling price would lead to a new selling price of 0.40 per unit. A 30% decrease in variable cost per unit would lead to a new variable cost per unit of 0.21 per unit. A 35% increase in units sold would lead to a new units sold figure of 7,155,000 units.
New Operating Income = 7,155,000 x (0.40 - 0.21) - 720,000
New Operating Income = 3,183,750Requirement 5A 10% increase in fixed costs would lead to an increase in fixed costs from 900,000 to 990,000.New Breakeven point in units = 990,000 ÷ (0.50 - 0.30)New Breakeven point in units = 6,000,000 unitsRequirement 6A 10% increase in selling price would lead to a new selling price of $0.55 per unit. A 30,000 increase in fixed costs would lead to an increase in fixed costs from 900,000 to 930,000.New Breakeven point in units = 930,000 ÷ (0.55 - 0.30)New Breakeven point in units
= 2,325,000 units.
To know more about costs visit:
https://brainly.com/question/14566816
#SPJ11
Rahm's credit card issuer calculates interest based on the outstanding
balance at the end of the last billing period. What is this method of
calculating interest on a credit card called?
O
A. Adjusted balance method
B. Average daily balance method
O C. Previous balance method
O D. None of the above
Answers
Answer:
Adjusted balance method.
Explanation:
Adjusted balance method is defined a method of calculating financial interest based on the outstanding balance at the end of the last billing period after the payments after all necessary adjustment to the account has been made.
This method of interest calculating leads to a reduced finance charge with time as payments are being made to offset and reduce the balance on the card
Answer:previous balance method
Explanation:
Why do you think that agriculture and Forestry related occupation and important? Give reasons?
Answers
Answer:
These careers supply us with a multitude of food products and alternative energies, among many other important resources for sustaining our country and contribution to the world economy.
Suppose that the market portfolio is equally likely to increase by 24% or decrease by 8%. Security "x" goes up on average by 29% when the market goes up and goes down by 11% when the market goes down. Security "y" goes down on average by 16% when the market goes up and goes up by 16% when the market goes down. Security "z" goes up on average by 4% when the market goes up and goes up by 4% when the market goes down.
Answers
Suppose that the market portfolio is equally likely to increase by 24% or decrease by 8%.The beta for security "X" is closest to: 1.25.
How to find the beta for security "X"?First step is to find the change in market
Change in Market = 24% - (-8%)
Change in Market = 32%
Second step is to find the change in security
Change in security = 29% - (-11%)
Change in security = 40%
Third step is to find the beta for security "X" is closest to:
Beta for security "X" = 40%/32%
Beta for security "X"= 1.25
Therefore the beta for security "X" is 1.25.
Learn more about beta for security "X" here:https://brainly.com/question/14986133
#SPJ1
The complete question is:
Suppose that the market portfolio is equally likely to increase by 24% or decrease by 8%. Security "x" goes up on average by 29% when the market goes up and goes down by 11% when the market goes down. Security "y" goes down on average by 16% when the market goes up and goes up by 16% when the market goes down. Security "z" goes up on average by 4% when the market goes up and goes up by 4% when the market goes down.
The beta for security "X" is closest to:
This graph shows the marginal cost of producing each additional pair of running shoe inserts.
Based on the graph, which pair of shoes has a marginal cost of $3.00?
Pair 2
Pair 4
Pair 6
Pair 7
Answers
Answer:C
Explanation:
Answer:
Pair 6 or Answer: C
Explanation:
Why is it possible that I can pick up the Air1 business signal 92.7 in Oceanside and what is the frequency down south that I'd lose the station at If I can still pick it up in 92054 Oceanside CA?
Answers
It is possible that one can pick up the Air1 business signal 92.7 in Oceanside the frequency that has been present in that area would be much higher to catch.
Because Air1's FM broadcasting transmitters is close to 92054 Oceanside, California, and has an excellent radio frequency signal, it's feasible for you to may hear its business signal on 92.7 in Oceanside. Television and audio transmission, mobile phones, satellite messaging, microwave ovens, and radars that are industry heaters, or sealers are just a few of the devices and appliances that employ RF. The southern frequency where you could lose the station is probably in the coastline area close to San Diego.
Learn more about Oceanside, here:
https://brainly.com/question/31365057
#SPJ1
Accounts receivable has a starting balance of $10,500. After a customer pays $2,500, what is the balance of the account? A. $13,000 C. $8,000 B. $2,500 D. $10,500
Answers
The balance in the Accounts Receivable after the customer pays $ 2, 500 would be C. $8,000.
What is Accounts Receivable?Accounts Receivable, a phrase used in accounting, denotes the amount of money owed by customers or clients to businesses that provided them goods or services on credit. This creates an account receivable for the customer which reflects how much he/she owes the business for the purchased products or services.
The balance on the accounts would be:
= Starting balance - amount paid
= 10, 500 - 2, 500
= $ 8, 000
Find out more on Accounts Receivable at https://brainly.com/question/24871345
#SPJ1
A bank will not require security in the form of collateral as a guarantee the loan will be repaid.
True
False
Answers
T-Accounts have which of the following as their basis?:
A. Left-to-Right Method
B. Generally Accepted Accounting Principles
C. Fundamental Accounting Equation
D. Single Entry Method
Answers
The basis of T-Accounts is the Fundamental Accounting Equation. This equation represents the relationship between assets, liabilities, and equity, and is expressed as follows: Assets = Liabilities + Equity. The answer to your question is C.
T-Accounts are used to visually represent the transactions and changes in these three elements, with the left side representing the debits and the right side representing the credits. The use of T-Accounts is in accordance with Generally Accepted Accounting Principles, which outline the standard practices and procedures for financial reporting.
The correct answer is C. Fundamental Accounting Equation. T-Accounts are based on the Fundamental Accounting Equation, which is Assets = Liabilities + Owner's Equity. This equation forms the basis for recording and analyzing transactions in double-entry bookkeeping, where every transaction affects at least two accounts - one on the debit side (left) and one on the credit side (right).
To know more about T-Accounts,visit:-
https://brainly.com/question/28936670
#SPJ11
Jonelle selects a student loan repayment plan with a 20-year term. One downside is.
a. She won't receive any grace period with this plan.
b. Her monthly payments will start out quite high and won't get lower until approximately year 10.
c. She won't be able to open additional lines of credit until that debt is completely repaid.
d. She will pay more in interest than if she had used the Standard repayment plan
Answers
One downside is she will pay more in interest than if she had used the Standard repayment plan. The answer is OPTION D.
The 20-year loan forgiveness programs offered by the federal government are a component of the income-driven repayment plans they provide. Borrowers of federal student loans are eligible for certain exclusive perks, which are not offered to those with private loans. Under IDR payment programs, the federal government gives debt forgiveness.
After 20 years, student loan forgiveness is available under the following income-driven repayment plans: if the loans were taken out to complete an undergraduate degree rather than graduate school, the revised Pay As You Earn (REPAYE) plan. Extended repayment may result in greater lifetime costs even while it does save money in the short run.
To learn more about repayment, click here.
https://brainly.com/question/29539111
#SPJ4
A solution was made by dissolving 800. 0 g of NaOH in 25,200 g of water. Calculate the morality, molality, and mole fraction of NaOH
Answers
The morality, molality, and mole fraction of NaOH is mathematically given as
morality= 4 ppmmolality=0.7936mx1 = 0.152What are the morality, molality, and mole fraction of NaOH?
Question Parameters:
A solution was made by dissolving 800. 0 g of NaOH in 25,200 g of water.
Generally, the equation for the Molality is mathematically given as
molality = (mass / molar mass) x (1/ weight of solvent kg)
Therefore
M= (800 /40) x (1 /25.2)
M=0.7936m
Therefore
m= 10 x 18 / 1000
m= 0.18
Hence
x1 = 0.18 - 0.18 x1
1.18 x1 = 0.18
x1 = 0.152
Where the mole fraction is x1 = 0.152 The mass is
m= (800 / 800 + 2000) x 1000
m= 28.57 %
Hence the morality
molality = mg /L
molality= 8000 x 10^-3 / 2 L
morality= 4 ppm
In conclusion, the morality, molality, and mole fraction of NaOH are given respectively as
morality= 4 ppm
molality=0.7936m
x1 = 0.152
Read more about Molarity
https://brainly.com/question/9149034
which of the following events would cause the price of oranges to fall? question 16 options: there is a shortage of oranges. the fda announces that bananas cause strokes, and oranges and bananas are substitutes. the price of land throughout florida decreases, and florida produces a significant proportion of the nation's oranges. at the current price, quantity demanded is greater than quantity supplied.
Answers
Option D is correct. The following events would cause the price of oranges to fall - The price of land throughout Florida decreases, and Florida produces a significant proportion of the nation's oranges.
The mix of outrageous climate and a sickness influencing citrus organic product is supposed to drive down Florida's orange harvest to its most minimal level since before The Second Great War, contracting the state's now lessening supply and promising to send squeezed orange costs significantly higher.
In the 2022-2023 season, Florida is supposed to create 20 million boxes of oranges, the Branch of Horticulture said Friday. That would be a 51% decay from the earlier year, and the littlest sum delivered since the 1936-1937 season.
The insignificant harvest is a consequence of the continuous issue of citrus greening, an infection that has tormented Florida orange trees and crushed supply for a really long time, joined with a January freeze and the double blows of Tropical storms Ian and Nicole, made sense of Shannon Shepp, chief overseer of the Florida Division of Citrus, a state organization.
Know more about shortage of oranges in Florida - https://brainly.com/question/14815334
#SPJ4
Complete Question -
Which of the following events would cause the price of oranges to fall?
a. the FDA announces that bananas cause strokes, and oranges and bananas are substitutes.
b. all of these are correct.
c. there is a shortage of oranges.
d. the price of land throughout Florida decreases, and Florida produces a significant proportion of the nation's oranges.
What is down payment with regarding to buying a house?
Answers
What type of business sells to the end consumer
Answers
Answer:
business-to- consumer (B2C)
Explanation:
Commerce is a business model which typically involves the buying and selling of goods or products at a given price.
Generally, commerce comprises of four (4) business models and these are;
1. Business to Business (B2B).
2. Consumer to Consumer (C2C).
3. Business to Government (B2G).
4. Business to Consumer (B2C).
A Business to Consumer (B2C) can be defined as a market which typically involves businesses selling their goods and services directly to the end consumers for their personal use.
Hence, the type of business that sells to the end consumer is known as business-to- consumer (B2C).
Some examples of companies that engage in the Business to Consumer (B2C) business model are; Amazon, Goo-gle, Walmart, Alibaba, Uber, LinkedIn, etc.
suppose a perfectly competitive firm can increase its profits by increasing its output. then it must be the case that the firm's: group of answer choices marginal revenue exceeds its marginal cost. marginal revenue equals its marginal cost. price exceeds its marginal revenue. marginal cost exceedsits marginal revenue.
Answers
price exceeds its marginal revenue, Let's say a firm with perfect competition may boost its earnings by raising its production. Consequently, if the firm's pricing is higher than its marginal revenue, this must be the case.
A firm is a for-profit business entity that offers professional services, such as a corporation, limited liability company (LLC), or partnership. Most businesses only have one location. On the other hand, a business company is made up of one or more physical locations that are all owned by the same person and have the same EIN (EIN). The term "firm," when used in a title, is frequently connected to companies that offer expert legal and accounting services, but it may also refer to a wide range of companies, including consulting, marketing, and graphic design firms, among others. A company has one or more locations, all of which are owned by the same person and file their financial reports using the same EIN.
learn more about firm here:
https://brainly.com/question/29482295
#SPJ4
the reasons why socio economic issues pose a challenge to businesses
Answers
Answer:
Socio-economic issues affect consumer spending due to poverty and unemployment. These issues place extra burdens and expenditure on businesses as they have to develop policies/support systems/ informative programs to address them.
Explanation:
why is it necessary to keep account or financial records while doing vegetable farming
Answers
Answer:
record keeping is a necessary element of good livestock business management.. if farmers have farm record they can tell how well they are managing their farm in comparison to other farmers. they can also see the strength and weakness in their farm operation...
when considering gpo precedence between local gpo, default domain gpo, domain controller gpo, site gpo and ou gpos, what gpos are applied first?
Answers
The Local GPO has the lowest priority and is processed first.
When considering the Group Policy Object (GPO) precedence between the local GPO, default domain GPO, domain controller GPO, site GPO, and OU GPOs,
the GPOs applied first is determined by the order of the following steps:
The Local GPO has the lowest priority and is processed first.
The Default Domain GPO, which is created automatically when a domain is created, is processed next.
This GPO has a higher priority than the Local GPO but a lower priority than any other GPOs.
The GPO linked to the Domain Controllers OU is processed after the Default Domain GPO.
This GPO has a higher priority than the Local GPO and the Default Domain GPO but a lower priority than the GPOs linked to sites and OUs.
The Site GPO is processed after the Domain Controller GPO. This GPO has a higher priority than the Local GPO, the Default Domain GPO, and the Domain Controller GPO but a lower priority than any other GPOs.
The OUs GPOs are applied last in the Group Policy processing order.
It has a higher priority than the Local GPO, the Default Domain GPO, the Domain Controller GPO, and the Site GPO but a lower priority than any other GPOs.
How GPOs are applied on a computer or user's Group Policy processing order is controlled by two GPOs, the Local GPO and the Active Directory-based GPO.
This is called the Group Policy application order, and it is used to define the order in which GPOs are applied to a computer or user.
to know more about Group Policy application order visit:
https://brainly.com/question/14833669
#SPJ11
Production management has, historically, meant the activities managers do to help their firms produce , whereas operations management has evolved into a specialized management area that converts resources, including human resources, to produce goods and.
Answers
The complete statement is "Production management has, historically, meant the activities managers do to help their firms produce goods, whereas operations management has evolved into a specialized management area that converts resources, including human resources, to produce goods and services"
What is operations management?Generally, Production management, often known as operations management, is the act of planning and controlling the industrial processes to ensure that they run smoothly at the desired level. Techniques of production management are used not just in manufacturing but also in service-based businesses nowadays.
The full statement reads as follows: "Production management has traditionally referred to the actions that managers take to assist their companies in producing, whereas operations management has developed into a specialized management field that converts resources, including human resources, to produce goods."
To put it more simply, production management is the process of planning, coordinating, supervising, and regulating all of the operations associated with production. It integrates the six primary components, which are money, personnel, materials, machines, markets, and procedures, in order to satisfy a variety of people's requirements and requirements.
Read more about operations management
at https://brainly.com/question/16289727
#SPJ1
Production management has, historically, meant the activities managers do to help their firms produce _______, whereas operations management has evolved into a specialized management area that converts resources, including human resources, to produce goods and____
The following are methods of delivering a presentation except:____. group of answer choices
a. manuscript.
b. impromptu.
c. extemporaneous.
d. informal.
Answers
Answer: informal
Explanation: memorized replaces informal
Ryan invested in company stock in the year 1996 . The annual yield for his investment was 6.5%; however, the inflation rate was 7.6%. (a) What was the real growth rate of this investment? Answer: % (b) Suppose Ryan wants to make a better investment that will have a real growth rate of 9.6%. What annual interest rate will he need to earn on his investment to accomplish his goal? Answer: %
Answers
Ryan would need to earn an annual interest rate of 17.2% on his investment to accomplish his goal of a real growth rate of 9.6%.
(a) To calculate the real growth rate of Ryan's investment, we need to subtract the inflation rate from the annual yield rate. In this case, the annual yield rate is 6.5% and the inflation rate is 7.6%.
Real Growth Rate = Annual Yield Rate - Inflation Rate
Real Growth Rate = 6.5% - 7.6%
Real Growth Rate = -1.1%
Therefore, the real growth rate of Ryan's investment is -1.1%.
(b) To determine the annual interest rate Ryan would need to earn on his investment to achieve a real growth rate of 9.6%, we need to add the inflation rate to the desired real growth rate.
Annual Interest Rate = Real Growth Rate + Inflation Rate
Annual Interest Rate = 9.6% + 7.6%
Annual Interest Rate = 17.2%
Therefore, Ryan would need to earn an annual interest rate of 17.2% on his investment to accomplish his goal of a real growth rate of 9.6%.
Learn more about investment here: brainly.com/question/15105766
#SPJ11
You plan to number each account in your chart of accounts you want to have major categories and two levels of sub categories each level of category will be represented by a digit you want to have a room in your numbering for at least 10 accounts within the lowest level of subcategories how many digits do you need in your account numbers
Answers
Answer:
umm then u will have 5 account left
Community colleges and vocational schools offer programs in maintenance and repair.
Answers
Answer:
yes, yes they do
Explanation:
Post-Assessment
Question 2 of 5
Why is buying a car considered "bad debt"?
It decreases in value over time
It increases your net worth as it build equity
It gives you transportation to and from your job
It is worth more than any other investment
Submit
Continue
E
Answers
The reason why buying a car considered "bad debt"is that It decreases in value over time. option A
What is bad debt?The term bad debt can be described as the amount of money that a creditor must write off as a result of a default on the part of the debtor in a case whereby the creditor has a bad debt on the books, then things turn to uncollectible and is recorded as a charge-off.
It should be noted that a case can be regarded as bad debt because the value of the asset you receive from the loan depreciates quickly however in some cases interest charges increase how the amount that is been paid for the vehicle. and in thius case cost is higher compare to what it would be if you'd purchased the car outright with cash.
Hence, option A is correct.
Learn more about bad debt at:
https://brainly.com/question/24871617
#SPJ1
Click this link to view O*NET's Tasks section for Postal Service Mail Carriers. Note that common tasks are listed
toward the top, and less common tasks are listed toward the bottom. According to O*NET, what are some common
tasks performed by Postal Service Mail Carriers? Check all that apply.
installing mailboxes
O obtaining signed receipts for mail
sorting mail
delivering mail
O supervising other mail workers
reviewing job applicants
Done
Answers
Answer:
1. obtaining signed receipts for mail
2. sorting mail
3. delivering mail
Explanation:
Postal Service Mail Carrier's main responsibility is to deliver mail to their intended receipts. The Postal Service mail carriers are the last people in the mail distribution channel. They are the people who get mail to the receipts and have them sign for it.
The Postal service mail carriers will be issued with mail, usually for a particular route. They will sort to identify the address where each mail is to be delivered. Upon arriving at the correct address, the postal service mail carrier will hand over the mail to the recipient and have them sign as an acknowledgment of receipt.
Answer:
AEF
Explanation:
Where can water in the atmosphere come from? Select all possible answers.
A. oceans. B. plants. C. ice. D. puddles
Answers
Answer: A. It comes from oceans
Suppose Wacken, Limited, just issued a dividend of $2.59 per share on its common stock. The company paid dividends of $2.25, $2.34, $2.41, and $2.52 per share in the last four years. a. If the stock currently sells for $70, what is your best estimate of the company's cost of equity capital using the arithmetic average growth rate in dividends? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. What if you use the geometric average growth rate? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Cost of equity % b. Cost of equity %
Answers
To estimate the company's cost of equity capital using the arithmetic and geometric average growth rates in dividends, we'll need to calculate the growth rates first. Here's how you can proceed:
Arithmetic Average Growth Rate:
Calculate the annual dividend growth rate for each year: (Dividend in current year - Dividend in previous year) / Dividend in previous year
Year 1: (2.25 - 2.34) / 2.34 = -0.0385 (or -3.85%)
Year 2: (2.34 - 2.41) / 2.41 = -0.0291 (or -2.91%)
Year 3: (2.41 - 2.52) / 2.52 = -0.0437 (or -4.37%)
Calculate the arithmetic average growth rate by summing the growth rates and dividing by the number of years: (-0.0385 + -0.0291 + -0.0437) / 3 = -0.0371 (or -3.71%)
Geometric Average Growth Rate:
Convert the dividend values into growth factors by dividing each year's dividend by the previous year's dividend.
Year 1: 2.25 / 2.34 = 0.9615
Year 2: 2.34 / 2.41 = 0.9718
Year 3: 2.41 / 2.52 = 0.9563
Calculate the geometric average growth rate by taking the nth root of the product of the growth factors, where n is the number of years: (0.9615 * 0.9718 * 0.9563) ^ (1/3) - 1 = -0.0347 (or -3.47%)
Now that we have the growth rates, we can estimate the company's cost of equity capital:
a. Using the arithmetic average growth rate: Cost of Equity = Dividend / Stock Price + Growth Rate
Cost of Equity = 2.59 / 70 + (-0.0371) ≈ 0.0370 or 3.70%
b. Using the geometric average growth rate: Cost of Equity = Dividend / Stock Price + Growth Rate
Cost of Equity = 2.59 / 70 + (-0.0347) ≈ 0.0372 or 3.72%
Therefore:
a. The best estimate of the company's cost of equity capital using the arithmetic average growth rate in dividends is approximately 3.70%.
b. The best estimate of the company's cost of equity capital using the geometric average growth rate in dividends is approximately 3.72%.
https://brainly.com/question/3927222?
The best estimate of the company's cost of equity capital using the geometric average growth rate in dividends is 7.56%.
To calculate the cost of equity using the arithmetic average growth rate in dividends, we first need to calculate the average growth rate:
Average growth rate = (Dividend in year 4 - Dividend in year 1) / (Dividend in year 1 x 3)
Average growth rate = ($2.52 - $2.25) / ($2.25 x 3)
Average growth rate = 0.0444 or 4.44%
Next, we can use the dividend discount model (DDM) to calculate the cost of equity:
Cost of equity = (Dividend / Stock price) + Expected growth rate of dividends
Cost of equity = ($2.59 / $70) + 4.44%
Cost of equity = 7.87%
Therefore, the best estimate of the company's cost of equity capital using the arithmetic average growth rate in dividends is 7.87%.
b. To calculate the cost of equity using the geometric average growth rate in dividends, we can use the following formula:
Geometric average growth rate = (Dividend in year 4 / Dividend in year 1)^(1/3) - 1
Geometric average growth rate = ($2.52 / $2.25)^(1/3) - 1
Geometric average growth rate = 0.0395 or 3.95%
Using the DDM, the cost of equity would be:
Cost of equity = ($2.59 / $70) + 3.95%
Cost of equity = 7.56%
Learn more about dividend discount model (DDM) here:
https://brainly.com/question/32132762
#SPJ11
What state in the country has the highest percent of their credit economy with subprime credit scores?
Answers
The state in the country has the highest percent of their credit economy with subprime credit scores is: Wisconsin.
What is credit economy?Credit economy can be defined as the way in the money is the means of exchange in an economy as people sell goods in exchange for money.
Based on this Wisconsin has the highest percentage of their credit economy with subprime credit score followed by Vermont and then Washington.
Learn more about credit economy here:https://brainly.com/question/25939415
#SPJ1
One of Coppertone's marketing tactics is the sponsorship of the men's and women's Olympic soccer teams. To many of the over 3 million boys and girls playing youth soccer in the United States, the U.S. Olympic soccer teams are a(n) ________ group.
Answers
One of Coppertone's marketing tactics is the sponsorship of the men's and women's Olympic soccer teams. To many of the over 3 million boys and girls playing youth soccer in the United States, the U.S. Olympic soccer teams are a(n) aspirational group.
To many of the over 3 million boys and girls playing youth soccer in the United States, the U.S. Olympic soccer teams are an aspirational group. These young players may look up to the Olympic teams as role models and aspire to one day play at that level themselves. The sponsorship of the Olympic soccer teams by Coppertone could potentially inspire these young players to use Coppertone products to protect their skin while playing soccer, as they see their favorite players using them.
Read more about Coppertone here:https://brainly.com/question/3523204
#SPJ11
25 point multiple choice
Ava works in a college admissions office. She is involved in reading applications and matching students to the criteria set out by the school for acceptance. If Ava decides that the student qualifies to attend the college, she notifies them. Which pathway in the Education and Training Cluster does Ava’s career fall into?
A. Teaching and Training B. Administration and Administrative C. Professional Support Services D. Science & Mathematics
Answers
It will be Option C, " Professional support and Services ".
Proof:-
• She is only reading applications that might be related to complaints or admissions, So , Option A and D is incorrect.
• She is not in the field of anything related to teaching, therefore, Option B is also incorrect.
Now Option C is only remaining. Therefore, Option C is your answer.
Hope it helps you...
(Answered by Benjemin)