QUESTION How can the existence of asymmetric information provide a rationale for government regulation of financial markets? ancial markets by the government would ensure that equal information is available to all the parties. The government will try to ensure that no party incurs loss on account of less information. The equal information will be facilitated […]
QUESTION How can a currency crisis lead to higher interest rates? Large federal deficit will push the interest rates upward, whenever the earnings of federal government exceeds its earnings it runs out of the funds to finance the expenditures and in such case it needs funds to finance these expenditures. To finance these excess expenditure […]
QUESTION Explain how the separation of ownership and control in American corporations might lead to poor management. conflict of interest between the principal and agent which can be caused due to different reasons in different situations. So, if conflict arises between principal and agent then it is known as agency problem. As management acts as […]
QUESTION Can a person with rational expectations expect the price of a share of Google to rise by 10% in the next month? it implies that the person is expecting the return of more than 100% in a year. This will mean that there is some information about Google which can provide a profit opportunity […]
QUESTION 1. Snyder Software Inc. has successfully developed a new spreadsheet program. To produce and market the program, the company needed $2 million of additional financing. On January 1, 2012, Snyder borrowed money as follows. 1. Snyder issued $500,000, 11%, 10-year convertible bonds. The bonds sold at face value and pay semiannual interest on January […]
QUESTION Classify each of the following transactions as an operating activity, an investing activity, or a financing activity. Also indicate whether the activity is a source of cash or a use of cash. (a) A plant was sold for $550,000. (b) A profit of $75,000 was reported. (c) Long-term bonds were retired. ANSWER: CLICK […]
QUESTION The John-in-the-Box Store is a fast-food restaurant chain. Potential franchisees are given the following revenue and cost information: Building and equipment $490,000 Annual revenue 520,000 ANSWER: CLICK REQUEST FOR AN EXPERT SOLUTION
QUESTION Rearrange the following list of accounts and produce a trial balance. Accounts Payable $9,000 General expense 1,000 ANSWER: CLICK REQUEST FOR AN EXPERT SOLUTION
QUESTION 1. When computing earnings per share on common stock, dividends on cumulative, nonconvertible preferred stock should be:A. deducted from net income only if the dividends were declared or paid in the current period.B. deducted from net income regardless of the whether the dividends were not paid or declared in the period.C. deducted from net […]
QUESTION The variance and standard deviation of an investment:a. increase as the riskiness of the investment increase.b. increase as the expected return of the investment decreases.c. when they are negatively correlated, reduce the risk of the investment portfolio.d. if they are small, will result in a large covariation between it and other portfolio assets.e. Both […]
