Answer: C For a nondiscriminating imperfectly competitive firm: A) the marginal revenue curve lies above the demand curve. B) the demand and marginal revenue curves coincide. C) the demand curve intersects the horizontal axis where total revenue is at a maximum. D) marginal revenue will become zero at that output where total revenue is at a maximum. Answer: D When a
The bid-ask spread is also a cost to the dealer. Reducing the bid-ask spread would make prices more competitive and also lower costs. Section 2 Strategy # Description 15 Better .02 Match Depth All Full No Inv MgmtBid price is 0.02 more than the other dealers bid price. Ask price is 0.02 less than the other dealers ask price. 16 Inventory Management in Depth Cutoffs = 30 When the cum.
The firm has a ( of 0.75 but this project is twice as risky as the firm’s normal operations. The expected return on the market is 10% and the risk free rate is 6%. Should the firm undertake this project? The first stage of deciding whether the firm should undertake the project is to calculate the required rate of return for the project using CAPM. As the project is twice as risky as the firm’s normal operations, it beta will be equal to 2 x 0.75 = 1.5: [pic] We will now use this required rate of return to calculate the NPV of the project: [pic] As the project has a positive NPV, it should be accepted.
Can you explain the differences and what they might be due to? The average performance of DFA 9-10 fund excess crsp 9-10 index, but slightly lower than s&p500 index. It means the portfolio is diversified to eliminate unsystematic risk, but tracking error is also exist.The reason of the tiny difference may be timing or security selection. Can you explain the differences and what they might be due to? The average performance of DFA large company value fund has very small difference with crsp cap decile #1.
It can be measured and presented graphically. A gini coefficient can be derived from and the higher the gini index of an economy, the less equal income/wealth is distributed within it. Gini index is another measurement of distribution of income and can be shown in a Lorenz Curve. Again, a low gini-coefficient indicates an equal income/wealth distribution within an economy and vice versa. An equal distribution of income/wealth in an economy can mean everyone’s better off or worse off.
| | | | | | | | TRUE | | | | | | | | | All the unique risk of stocks in a diversified portfolio have been diversified away | | | | | | | | | | | | | | | | | | | | | c. If a stock's expected rate of return plots below the security market line, it is underprices. | FALSE | | | | | | | | | It is overpriced. The expected return is less which means that return is over a higher price | | | | | | | | | | | d. A diversified portfolio with a beta of 2 is twice as volatile as the market portfolio. | | TRUE | | | | | | |
Also, Inditex has less operation expenses than H&M’s. All of these imply that Inditex is able to operate with high net profit margins. When the capital efficiency is considered, Inditex is less efficient in terms of capital than H&M due to some indicators. First is that working capital of H&M is higher than Inditex’s which can calculated by extracting other non-current assets from total assets and found as 2129 for H&M and 2082 for Inditex. Other indicator is ROA which can be calculated by dividing net income to total assets.
Bonuses were based 100% on corporate EVA while the information reports were rewarded on a mixture of corporate EVA, business unit EVA and team EVA goals. Why the introduction of EVA system at Vyaderm? To maximize firm value, a firm must earn more than its cost of capital. The third performance metric is in %, but captures the spirit of two important (and essentially similar) metrics: Residual income, and Economic Value Added (EVA). These differ only in certain details.
The knowledge of a firm finding out where marginal costs equal marginal revenue is very difficult so some firms may not be able to profit maximise as they do not have the correct knowledge required to do so. Instead firms may decide to do cost plus pricing, this occurs when a firm sets its price equal to the average costs at a normal capacity output and then they add a certain percentage mark up. So the level of the price is the level of average cost plus a certain percentage which will be the profit gained. They may decide to do this as it may stop attracting other firms into the market as they are not producing large amounts of profits. Another different objective a firm could have could be to revenue maximise.
Precedents usually yield higher valuations than trading comps because a buyer must pay shareholders more than the current trading price to acquire a company. This is referred to as the control premium (use 20 percent as a 31 Customized for: JJ (jchen59@wisc.edu) Vault Guide to Private Equity and Hedge Fund Interviews Finance benchmark). If the buyer believes it can achieve synergies with the merger, then the buyer may pay more. This is known as the synergy premium. Between LBOs and DCFs, the DCF should have a higher value because the required IRR (cost of equity) of an LBO should be higher than