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.
• Would need to reduce working capital by $260M • Would need to increase gross margins by 328bps • If growth is so important, then a price raise would likely slow that. The DPO change needed to self-finance is likely too aggressive. I would try to get half through DPO improvements and the other half through debt. This roughly doubles their debt. (But
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
that did not go well with efficient markets hypothesis. DFA believed value stocks outperformed because they were riskier companies. Value stocks could be infested with distressed companies. - 1993 paper - Three factor model: {Small - big, High - low, beta}. Variation in these 3 factors explained the bulk of variation in stock returns (regression analysis).
Since the hurdle rate is usually the cost of capital, WACC for the company is calculated as below: Cost of debt 5.88% After tax 3.53% D/E 28.21% Company Beta 1.15 Cost of equity 10.95% WACC 9.3% It means that any project that will not return 9.3% will be rejected and anything above 9.3% has a good chance of being accepted. Actually the required rate of return and the systematic risk of cash flows for each project were not equal. Actually the projects with low return has a lower beta and would have a lower hurdle rate and projects with higher return have a higher beta and higher hurdle rate. The application of single hurdle rate will result in rejection of projects which return is higher than the actual hurdle rate and accept projects which return is lower than the actual hurdle rate. In other words, it would lead to false rejects for Telecom services while signaling false accepts for the Product and Systems group.
1-11 (b) Net income $1,005.1. 1-12 (a) Net increase in cash $19,000. 1-13 (a) Net decrease in cash $(762). 1-14 Total assets $82,000. 1-15 (b) Total assets $7,891.6; total liabilities $3,109.9.
This allows me to state with 98% confidence that the population mean Cost will fall between $39.14 and $44.76. The management should not be concerned with the number of restaurants included in the sample. A larger sample would only lower the standard error and the t-value for the level of
The offer from Thomson has to be accepted. Q2. If the Transfer price however remains the same, ie $480, and as the divisions are at full liberty to chose their suppliers either from inside or outside based on the Market price, Kenton should not accept the offer of Thompson for obvious reasons as their quote is higher by $ 50.00 than the most competitive Market price. Due to decentralisation policy of the co. and each departments profits are calculated and judged individually, then it is very much acceptable that Northern div. Will not increase its purchase cost due to the hidden inefficiencies of Thomson & Southern div.
Another different objective a firm could have could be to revenue maximise. Revenue maximisation occurs when marginal revenue equals zero (MR=0). At this point revenue is being maximised as every unit produced until marginal revenue equal 0 is adding a certain amount of extra revenue to the total revenue. After the point MR=0 every extra unit produced has a negative value of marginal revenue therefore each unit produced after MR=0 will decrease total revenue and if a firms total revenue decrease their profits may
Depending in the result of this equation the good can be thought as a normal good when the result is > 0 (positive income elasticity), or an inferior good when the result is < 0 (negative income elasticity). Within the category of normal goods there is a distinction between necessities and luxuries. A luxury will have an Ey >1. To categorize income elasticity of demand we check to see if it is more, equal or less than 1. If it is more is elastic, if it is less is inelastic and if it is equal is unit elastic and quantity demanded changes by the same percentage as the price.