The efficient markets hypothesis holds only if all investors are rational. True or false?

Answers

Answer 1

Answer:

Answer:

This is true, the efficient market hypothesis only holds if all the investors are rational, for example if an investor is not rational and wants to make a loss instead of profit, then the efficient market hypothesis wont hold as the investor will be acting in a way that wont benefit him. When the investor acts irrationally, then he wont react correctly to the information he has and buy or sell stocks which he isn't supposed to buy or sell and this will change the price of the stock from what the price of the stock should be.

Explanation:

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You decided to buy apples at a grocery store somewhere in the mountains. You buy 5 pounds of apples, which are sold for $1.99/lb. (One pound is the unit of force equal to 0.454 kgx9.80 m/s where g = 9.80 m/s2 is the standard value of the acceleration due to the gravity). You overpaid for the apples, since the value of the acceleration due to the gravity at this mountain location is only gmountain 9.79 mis. Determine how much you overpaid for your 5 pounds of apples.

Answers

Answer:

Amount overpaid = $0.0104 (Approx)

Explanation:

Given:

Quantity of apple = 5 lb

Amount paid = $ 1.99 / lb

Gravity on mountain = 9.79 m/s²

Find:

Amount overpaid

Computation:

Actual mass of apple = 5 (9.79/9.80)

Actual mass of apple = 4.9948

Actual amount = 4.9948 × 1.99

Actual amount = $9.9396

Amount overpaid = Amount paid -Actual amount

Amount overpaid = [5 x 1.99] - $9.9396

Amount overpaid = $0.0104 (Approx)

John's lifelong dream is to own his own fishing boat to use in his retirement. John has recently come into an inheritance of $500,000. He estimates that the boat he wants will cost $400,000 when he retires in 5 years. How much of his inheritance must he invest at an annual rate of 10% (compounded annually) to buy the boat at retirement?

Answers

Answer:

PV= $248,368.53

Explanation:

Giving the following information:

Future Value (FV)= $400,000

Number of periods (n)= 5

Interest rate (i)= 10% = 0.1

To calculate the present value (PV), we need to use the following formula:

FV= PV*(1í)^n

Isolating PV:

PV= FV/(1+i)^n

PV= 400,000 / (1.1^5)

PV= $248,368.53

The composition of the Fingroup Fund portfolio is as follows: Stock Shares Price A 320,000 $ 40 B 420,000 45 C 520,000 10 D 720,000 15 The fund has not borrowed any funds, but its accrued management fee with the portfolio manager currently totals $40,000. There are 6 million shares outstanding. What is the net asset value of the fund

Answers

Answer:

The correct answer is $7.94.

Explanation:

According to the scenario, the computation of the given data are as follows:

Total value of shares = ( 320,000 × $40 ) + ( 420,000 × $45) + (520,000 × $10) + 720,000 × $15)

= $12,800,000 + $18,900,000 + $5,200,000 + $10,800,000

= $47,700,000

So we can calculate the net asset value by using following method:

Net asset value = (Total value - Expenses ) ÷ Shares Outstanding

By putting the value, we get

= ( $ 47,700,000 - $ 40,000) ÷ $6,000,000

= $7.94

The domestic demand and supply for sugar are Qd = 40,000 − 200P and QSD = 10,000 + 300P. The foreign supply is QSF = 20,000 + 100P. What is the total supply of sugar in the domestic market?

Answers

Answer: Total supply of sugar = 30,000 + 400P

Explanation:

Given that,

Domestic demand for sugar: Qd = 40,000 − 200P

Domestic supply for sugar: QSD = 10,000 + 300P

Foreign supply: QSF = 20,000 + 100P

Total supply of sugar = Domestic supply + Foreign supply

= QSD + QSF

= 10,000 + 300P + 20,000 + 100P

= 30,000 + 400P

Therefore,

Total supply of sugar = 30,000 + 400P

Paid $78,000 cash to replace a motor on equipment that extends its useful life by four years. Paid $390 cash per truck for the cost of their annual tune-ups. Paid $312 for the monthly cost of replacement filters on an air-conditioning system. Completed an addition to a building for $438,750 cash. 1. Classify the above transactions as either a revenue expenditure or a capital expenditure. 2. Prepare the journal entries to record transactions a and d.

Answers

Answer: a. Capital expenditure

b. Revenue expenditure

c. Revenue expenditure

d. Capital expenditure

Explanation:

Capital expenditures are usually huge expenditure on fixed assets such as land or building and they re usually incurred to generate revenue for the business.

Revenue expenditures are usually for short term basis and are operating expenses, that us required to run the business daily.

Based on the above explanation, the answers to the following will be:

a. Paid $78,000 cash to replace a motor on equipment that extends its useful life by four years. - Capital expenditure

b. Paid $390 cash per truck for the cost of their annual tune-ups. - Revenue expenditure

c. Paid $312 for the monthly cost of replacement filters on an air-conditioning system. - Revenue expenditure.

d. Completed an addition to a building for $438,750 cash. - Capital expenditure

Check the attachment for the journal entry

Final answer:

The $78,000 equipment motor replacement and the $438,750 building addition are capital expenditures. The $390 truck tune-ups and the $312 for air-filter replacements are revenue expenditures. Relevant journal entries: 'Equipment' debited and 'cash' credited $78,000, then 'Building' debited and 'cash' credited $438,750.

Explanation:

The transactions can be classified as either a revenue expenditure or a capital expenditure. 1. Paying $78,000 cash to replace a motor on equipment that extends its useful life by four years and completing an addition to a building for $438,750 cash are considered capital expenditures because they are significant investments that will benefit the company for more than one accounting period. 2. Paying $390 cash per truck for the cost of their annual tune-ups and paying $312 for the monthly cost of replacement filters on an air-conditioning system are both classified as revenue expenditures because they only benefit the current accounting period. The journal entries to record transactions A and D would be: Equipment (Debit $78,000), Cash (Credit $78,000) and Building (Debit $438,750), Cash (Credit $438,750).

Learn more about Capital Expenditures here:

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The following data (in millions) are taken from the financial statements of Tarrow Corporation: Recent Year Prior Year Revenue $386,972 $356,000 Operating expenses 326,634 303,000 Operating income $60,338 $53,000 a. For Tarrow Corporation, determine the amount of change in millions and the percent of change (round to one decimal place) from the prior year to the recent year for: Revenue Operating expenses Operating income Amount of Change (in millions) Percent of Change (round to 1 decimal place) Increase or Decrease 1. Revenue $fill in the blank 1 30,976 fill in the blank 2 % 2. Operating expenses fill in the blank 4 fill in the blank 5 3. Operating income fill in the blank 7 fill in the blank 8 b. During the recent year, revenue and operating expenses . As a result, operating income , from the prior year.

Answers

Answer:

Tarrow Corporation

a) Amount of change in millions and the percent of change:

Amount Percentage Direction

of Change of Change of Change

Revenue $30,972 8.7% Increase

Operating expenses 23,634 7.8% Increase

Operating income $7,338 13.8% Increase

b) During the recent year, revenue and operating expenses increased by 8.7% and 7.8% respectively. As a result, the operating income increased by 13.8%, from the prior year.

Explanation:

a) Data and Calculations:

Tarrow Corporation:

Recent Year Prior Year Change Percentage

Revenue $386,972 $356,000 $30,972 8.7% Increase

Operating expenses 326,634 303,000 23,634 7.8% Increase

Operating income $60,338 $53,000 $7,338 13.8% Increase

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