1948). This individual prefers uncertainty to certainty, he is risk loving. Any decision under risk can be represented by a choice among lotteries or prospects. For example, the possible options when purchasing a lottery ticket are; keep your £1 with certainty (probability of 1), or purchase a ticket costing £1 with, say a 1/14m chance of winning the jackpot of 10m, and a probability of 1-1/14m of losing your original £1. This can be represented in the general form of a lottery, [(x1,p1), (x2,p2), ... ,(xn,pn)] where xi are any objects, usually units of wealth that the individual will get if state i occurs, and pi the probabilities of these states occuring, summing to 1.
A. Current price transaction looks like an arms-length bargain but one party's promise appears illusory, courts often will look to the context of the agreement and identify an implied non-illusory promise such that the consideration requirement is satisfied. 1. Letter to Little Buyer offer? rejection by entering into a substitute transaction, he is excused from performance obligations B.
Problem 17-19 on Dividend Capture Strategy based on Chapter 17 Payout Policy Que Corporation pays a regular dividend of $1 per share. Typically, the stock price drops by $0.80 per share when the stock goes ex-dividend. Suppose the capital gains tax rate is 20%, but investors pay different tax rates on dividends. Absent transactions costs, what is the highest dividend tax rate of an investor who could gain from trading to capture the dividend? Problem 23-5 on Preferred Stock based on Chapter 23 Raising Equity Capital Three years ago,
Case Studies in Derivatives Securities Case#8: Cephalon,Inc Cohort 6 Group 2 Jin Yi Zhang Sisi Ma Yue Yu Haiyang Risk Management or Speculating Cephalon should take SBC’s offer to buy call options on its own stocks. However, this is not an appropriate risk management decision and Cephalon is simply speculating. To manage its stock price risk, Cephalon should at least take measures to avoid the loss brought by DFA disapproving the projection. Since the possibility that DFA will approve the projection is expected to be as high as 70%, Cephalon bets that its profit will be higher. Thus this measure, to buy call options by selling stocks to SBC, is simply speculating.
(Suppose the appropriate discount rate for risky cash flows is 12%. Risk-free rate, for discounting safer cash flows, is at 6%.) • When you do valuation of sequel rights, pay particular attention to the issue of when uncertainty is resolved. Some part of the dataset in Exhibits 6 to 9 will be used in your analysis, but interpret the information therein with care. • What are the primary advantages and disadvantages of the approach you took to valuing the rights?
What amount of unrealized inter-company profit must be deferred by Luffman? | | Your Answer: | | | $0 | | CORRECT | | | $8,400 | | | | | $28,000 | | | | | $52,000 | | | | | $80,000 | | | | | | Points Received: | 2 of 2 | | Comments: | | 2. | Question: | (TCO 1) Which of the following results in a decrease in the Equity in Investee Income account when applying the equity method? | | Your Answer: | | | Dividends paid by the investor | | | | | Net income of the investee | | INCORRECT | | | Unrealized gain on inter-company inventory transfers for the current year | | CORRECT ANSWER | | | Unrealized gain on inter-company inventory transfers for the prior year | | | | | Extraordinary gain of the investee | | | | | | Points Received: | 0 of 2 | | Comments: | | 3. | Question: | (TCO 1) In a situation where the investor exercises significant influence over the investee, which of the following entries is not actually posted to the books of the investor?
SEC believes that the removal of this item from Groupon results of operations creates a non-GAAP measure that is potentially misleading to readers. I agree with the SEC’s perspective of Groupon’s usage of ACSOI mislead the readers and its marketing cost should be considered as a recurring operating cash expenditure of the company. It is because according to CON6 characteristics of an expense is that actual or expected cash outflows or the equivalent that have occurred or will eventuate as a result
We got a cost of equity of 20%. Free cash flows are calculated using the formula EBIT x (1-TAX) + Depreciation – Capex – Change in NWC. The results are presented below: The NPV of the first generation phone project, ignoring both the possibility of investing in the second-generation project and the possibility of selling the equipment after two years is ($3,154). Since the NPV is negative, this would not be a good investment. 2.
Jones purchase the stock of Smithon outright leaving Smithon intact? The stock should not be purchase by Mr. Jones. Mr. Jones acquiring the assets, liabilities and also would inherit the contractual obligations of the selling corporation, would, be the results of the purchase. In lay terms, he has bought the existing Smithon Corporation and he is responsible of ensuring daily operations run efficiently but the tax aspect of acquisition he is responsible for existing and any future tax liabilities that the selling corporation had. It would be my advice for Mr. Jones to not buy the stock because of the liability of current and future tax obligations which Mr. Jones would incur from the purchase of the stock.
Factors for consideration a. law’s non-logical implications in interpretation what parties would’ve agreed to (ex. Haines: duration and scope of contract) - policy: at-will doctrine in employment: policy - would’ve agreed to terms had they anticipated situation - had in mind, but didn’t express it b. context - what is the objective of the contract? Is it ambiguous? Ex. Spaulding v. Morse (369): stop yearly payment to trust during time in armed services - enforce according to terms if unambiguous, consider context if terms are ambiguous - not only context at time of contract formation, but also what happened AFTER ⇨ changed circumstances - why look at context?