Though another way of looking at it is that Apple is only waiting for the really good investments, and that opportunity offset the lost revenue of hoarding cash at a low interest rate. Stockpiling cash increases grumbles from stakeholders for dividend or share buy backs. Apple’s war chest has grown faster than even the loftiest projections, and for Apple’s CEO Tim Cock more money brings more problems. Approximately 64% of Apple’s cash is overseas, which induce the issue of hefty tax to bring in into the United States [5]. An Apple share of stock is merely a claim on a portion of their future cash flow.
High quality manufacturers produce very good calculators that consumers value at 14 Euros. Low quality manufacturers produce less good ones that are valued at 8 Euros. At the time of purchase, customers cannot distinguish between a high quality product and a low quality product; nor can they identify the manufacturer. However, they can determine the quality of the product after the purchase. The consumers are risk-neutral: if they have probability p of getting a high quality product, they value this prospect 14p + 8(1 - p) Each type of manufacturer can produce the product at a constant unit cost of 11. a) Suppose that the sale of low quality calculators is illegal, so that the only items allowed to appear on the market are of high quality.
At its current level of production, a profit-maximizing firm in a competitive market receives $12.50 for each unit it produces and faces an average total cost of $10. At the market price of $12.50 per unit, the firm's marginal cost curve crosses the marginal revenue curve at an output level of 1000 units. What is the firm's current profit? What is likely to occur in this market, and why? A) Profit = (12.50 – 10) X 1000 = $2500.
Pure Monopoly 333 ANSWERS TO END-OF-CHAPTER QUESTIONS 22-1 “No firm is completely sheltered from rivals; all firms compete for the consumer dollars. If that is so, then pure monopoly does not exist.” Do you agree? Explain. How might you use Chapter 18’s concept of cross elasticity of demand to judge whether monopoly exists? Though it is true that “all firms compete for the dollars of consumers,” it is playing on words to hold that pure monopoly does not exist.
Answer: C A nondiscriminating pure monopolist's demand curve: A) is perfectly inelastic. C) lies above its marginal revenue curve. B) coincides with its marginal revenue curve. D) lies below its marginal revenue curve. Answer: C For an imperfectly competitive firm: A) total revenue is a straight, upsloping line because a firm's sales are independent of product price.
Vickrey Auction and Core Allocation In this section we will explore the Vickrey auction mechanism design and investigate whether the Vickrey outcome allocation is always in the core. Our attention to the Vickrey auction is explained by the fact that it is considered to be the only incentive-compatible mechanism always leading to efficient outcomes for auctions with transferrable utilities (Goeree and Lien, 2011). However, being widely used for single item auctions, this mechanism is never used for package auctions (Milgrom, 2007). This result is extremely surprising as it means that a design which makes the bidders to reveal their values truthfully and maximizes the total value is not implemented in practice at all. We will try to discover the origins of this paradox.
Introduction Managing the risk of changing prices of gold is central to the business strategy of American Barrick Resources Corp., one of North America's largest and most successful gold-mining firms. The case contrasts this firm's hedging policies with those of its rivals that do not hedge and details the wide range of hedging products (gold loans, forwards, options, and spot deferred contracts) used to manage price risk. In 1992 the management of American Barrick is pleasantly surprised by unexpected new gold finds, but this new production places demands on the firm's hedging program and tests the firm's commitment to hedging when prices of gold and of many hedging vehicles are unattractive. The gold mining industry has been heavily impacted by the fluctuating gold prices and continuously rising operating costs. Hedging gold prices has become important to ensure financial stability in a sector where mines are unprofitable due to high volatility.
Eugene Fama and Robert Shiller of Asset Bubbles Analysis Eugene Fama is known for his development of the famous efficient-market hypothesis. According to the EMH, investors are rational and prices would reflect information investors receive. Fama himself even denied the existence of economic bubbles. Robert Shiller on the other hand has been known for his study of behavioral finance and the prediction of the dot-com bubble. There seems to be no agreements Shiller and Fama can have the subject of asset bubbles since the two have different opinions on how the market behaves.
1. What is the most compelling justification for attempting to calculate a return on marketing investment? a. The most compelling justification for attempting to calculate a Return on Marketing Investment (ROMI) is the discontent with traditional metrics, which does not allow managers to assess the future performance of their firm at any moment. While the traditional accounting methods are good to measure past performance and financial stature, it does not allow for managers to see the impact or value that marketing has on the bottom line.
DFA roughly believed in efficient market theory. They believed that the high return of small stocks and value stocks come from high risk which matched the efficient market theory. Moreover, they would not do any fundamental analysis of the firm in question. (p6) At the same time, however, they did some adjustments based on other two principles, sound academic researches and skilled traders, to get rid of those not matching the theory. For example, they did not purchase those stocks with inside trade information.