A collar is established by buying a share of stock for $50, buying a 6-month put option with exercise price $45, and writing a 6-month call option with exercise price $55. On the basis of the volatility of the stock, you calculate that for a strike price of $45 and expiration of 6 months, id) - 8.7526, whereas for the exercise price of $55. (d) - 0.6852. a. What will be the gain or loss on the collar if the stock price increases by $17 (Round your answer to 2 decimal places.) Collar ol b. What happens to the delta of the portfolio of the stock price becomes very large Des of the portfolio agione c. What happens to the delta of the portfolio If the stock price becomes very small? Delta ot the portfolio approaches
Answers
If the stock price increases by $1, the gain on the stock is $1, but the loss on the short put option is $0.40, resulting in a net gain of $0.60. If the stock price becomes very large or very small, the delta of the collar approaches zero. Thus, option B is correct.
A collar is a financial strategy that limits an investor's potential loss while also limiting their potential gain. In this case, a collar is established by purchasing a stock for $50, buying a put option with an exercise price of $45, and writing a call option with an exercise price of $55. The investor has calculated that N(d1) for the put option is 0.60, while N(d1) for the call option is 0.35.
If the stock price increases by $1, the gain on the stock is $1, but the loss on the short put option is $0.40, resulting in a net gain of $0.60. This is because the short call option caps the potential gain on the stock at $5.
The delta of a portfolio represents the rate of change in the value of the portfolio compared to the rate of change in the underlying asset. If the stock price becomes very large or very small, the delta of the collar approaches zero. Thus, option B is correct.
This means that the collar becomes less effective as a hedge because it is less sensitive to changes in the underlying asset. This is because the potential gain on the stock is capped by the short call option, while the potential loss is limited by the long put option.
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Complete Question:
A collar is established by buying a share of stock for $50, buying a six-month put option with exercise price $45, and writing a six-month call option with exercise price $55. Based on the volatility of the stock, you calculate that for an exercise price of $45 and maturity of six months, N (d1) = .60, whereas for the exercise price of $55, N (d1) = .35. Explain in 250 words with the summary.
A. What will be the gain or loss on the collar if the stock price increases by $1?
B. What happens to the delta of the portfolio if the stock price becomes very large? Very small?
a. loss on the short put is $.40
b. delta of the collar approaches zero; delta of the collar approaches zero
Related Questions
Suppose that a business incurred implicit costs of $380.000 and explicit costs of $2 million in a specific year. If the firm sold 100,000 units of its output at $27 per unit, its accounting profits were $700,000 and its economic profits were $320,000. losses were $0 and its economic losses were $320,000. profits were $380,000 and its economic profits were $0. profits were $320,000 and its economic profits were $700,000
Answers
The accounting profit and economic profit of a business are related concepts, but they are not the same thing. The accounting profit is calculated by subtracting explicit costs from total revenue, while the economic profit is calculated by subtracting both explicit and implicit costs from total revenue.
Profits were $320,000, and its economic profits were $0. First, let's calculate the total revenue that the firm earned in the given year. Total Revenue = 100,000 units x $27 per unit = $2,700,000 Next, we can calculate the accounting profit by subtracting explicit costs from total revenue. Accounting Profit = Total Revenue - Explicit Costs = $2,700,000 - $2,000,000 = $700,000Now we need to calculate the implicit costs to find the economic profit.
Implicit Costs = Economic Profit - Accounting Profit - $320,000 - $700,000 = -$380,000The negative sign indicates that implicit costs are greater than zero. This means that the firm is not covering all of its opportunity costs and is not earning a positive economic profit. Finally, we can calculate the total costs as the sum of explicit and implicit costs. Total Costs = Explicit Costs + Implicit Costs = $2,000,000 + $380,000 = $2,380,000.
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PLEASE HELP YOU DONT HAVE TO ASNWER ALL OF IT IF YOU CANT
1. Describe the nature and types of business.
2. What are the economic factors influencing the communication industry as a whole, and how does this impact the economic base?
3. Explain ethical conduct and describe one way you exhibit ethical conduct.
4. Describe copyright laws in relation to fair use of materials and duplication materials.
Answers
Answer:
All answer is nou XDDDDDDDDDDDDDD
based on the reading, which of the following are questions that can be put to regression analysis? 1 point what is the impact of lot size on housing price? do homes with brick exterior sell in rural areas? what are typical land taxes in a house sale? do homes with brick exterior sell for less than homes with stone exterior?
Answers
The first two questions are appropriate for regression analysis, while the third and fourth questions about land taxes and brick houses are not suitable for regression analysis.
What is the reasoning for the above answer?"What is the impact of lot size on housing price?" - This is an appropriate inquiry for regression analysis because we can use a regression model to analyze the relationship between the lot size of a place and its selling price."Do homes with brick exterior sell in rural areas?" - This is also a suited query for regression analysis because we can use a regression model to investigate the relationship between the type of exterior (brick or non-brick) and the placement (rural or non-rural) on the probability of a home being sold."What are typical land taxes in a house sale?" - This is not an eligible topic for regression analysis because it is asking for data about a specific variable (land taxes) rather than analyzing the relationship between variables."Do homes with brick exterior sell for less than homes with stone exterior?" - This is not a desirable topic for regression analysis because it is asking for a relation between two classes (brick and stone exterior) rather than investigating the relationship between variable quantities.To find out more about regression, visit:
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Turner Company owns 40% of the outstanding stock of ICA Company. During the current year, ICA paid a $5 million cash dividend on its common shares. What effect did this dividend have on Turner's 2021 financial statements
Answers
The dividend had the effect of increasing Turner Company's dividend income by $2 million in its 2021 financial statements.
Since Turner Company owns 40% of ICA Company's outstanding stock, it is entitled to 40% of the dividends declared by ICA. As ICA paid a $5 million cash dividend on its common shares, Turner Company would receive 40% of this amount, which is $2 million (0.40 x $5 million).
This dividend income would be reported on Turner's 2021 financial statements as an increase in dividend income, thus impacting the company's net income and retained earnings. It would also increase the cash inflow from investing activities in the statement of cash flows.
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The nominal interest rate could best be described as the___rate.
Answers
Answer:
stated
Explanation:
The nominal interest rate could best be described as the stated rate.
The nominal interest rate could best be described as the stated rate. Thus, 'stated rate' is the correct answer.
What is the nominal interest rate?The nominal interest rate, also known as the nominal rate of interest, is the interest rate that is quoted on a loan or investment without any changes or expenses. Real interest rates can be used to account for the effects of inflation. This real interest is what the lender really receives in the case of a loan.
The (effective) real rate of interest, for instance, is zero if the lender receives an interest rate of 8% from a loan and inflation is also 8%. Despite the increased nominal amount of currency received, the lender would not benefit financially from such a loan because each unit of currency would be devalued because of inflation by the same factor as 8%.
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Is the accounting profession responded in a timely, comprehensive, and effective manner to stakeholders and business current challenges? Explain
Answers
Yes the accounting profession is responded in the way that it wwould take care of current business challenges.
What is the accounting profession?This is the profession where financial analysis and other functions such as auditing are carried out.
The institution today is being structured in a way that it would still be able to meet the goals of the times that we are in.
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selling distribution and account management is very important for flower cultivation justify it ...! help meeeeee
Answers
All of the above are very important to flower cultivation as they either provide an incentive for it or make the cultivation more effective.
Importance of Selling, Distribution, and Account ManagementSelling - selling flowers provides an incentive to flower farmers to cultivate more flowers. It also provides them with funds to do so. Distribution - this aids in the selling of the flowers as it links farmers to buyers thereby providing them with funds. Account management - this allows farmers and those on the sell side of the business to properly manage the entire process of flower cultivation thereby making it more effective.In conclusion, selling, distribution, and account management are all important to flower cultivation.
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You will need to pay a 15.3% self-employment tax if you earn $1,100 in a year... *
1 point
Babysitting your cousin’s kids
Screen printing and selling custom made t-shirts
Working at the local ice cream store
Interning at a local design company
Answers
Answer:
D interning at a local design company
What does the law of diminishing marginal utility explain?
Answers
The law of declining marginal utility asserts that if a person consumes increasingly more units of a certain product, the additional satisfaction they receive from each new unit will eventually decline, maybe even to the point where their marginal utility is negative.
What is marginal utility?A person's change in pleasure (or utility) when they consume one more unit of an item or service is known as marginal utility, according to the economics discipline. It is the actual advantage or satisfaction a person receives from consuming one more unit of an item or service, and it aids in determining the demand for that good or service. The marginal utility of a good is greatest at the point of consumption of the initial unit. The marginal utility falls down as individuals consume more units, finally reaching a point of declining marginal utility where each extra unit provides them with progressively less satisfaction. Understanding consumer behavior and the need for products and services depends on having a solid grasp of marginal utility.
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salespeople can be particularly helpful when purchasing a(n) _______ product.
Answers
Salespeople can be particularly helpful when purchasing a complex product.
When it comes to purchasing a complex product, such as a software system, industrial equipment, or a car, the assistance of a salesperson can be invaluable. Complex products typically have many features and specifications, which can be difficult for a consumer to understand without assistance. A knowledgeable salesperson can help explain the features, benefits, and tradeoffs of different options, and provide guidance on which product may be the best fit for the consumer's specific needs.
Additionally, salespeople can often provide demonstrations or trials of complex products, allowing the consumer to see the product in action before making a purchase decision. Overall, a salesperson's expertise and guidance can help consumers make informed purchasing decisions when it comes to complex products.
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Items that are purchased by individuals for their own enjoyment are called.
Answers
It should be noted that Items that is been purchased by individuals for their own enjoyment is been referred to as consumption goods and services.
What is consumption goods ?Consumer goods can be explained as products that is been purchased for consumption by the average consumer.
This can as well be referred to as "final goods" because production cannot be completed until it gets to final consumer.
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Learner-learner interaction is most appropriate when learners have to _____.
Select one:
a. master a task that is completed alone
b. maximize their critical thinking and analysis skills
c. acquire personal knowledge based on experience
d. enhance their self-awareness and self-assessment
Answers
b. maximize their critical thinking and analysis skills. Learner-learner interaction is most appropriate when learners need to actively engage with one another to exchange ideas, perspectives, and feedback.
This type of interaction is particularly valuable when learners are working on complex tasks that require critical thinking and analysis, such as problem-solving, decision-making, or project-based assignments. By collaborating with peers, learners can leverage their collective knowledge and skills, challenge assumptions, and explore new ways of thinking.
While learners can certainly acquire personal knowledge based on experience and enhance their self-awareness and self-assessment through learner-learner interaction, these goals are more likely to be achieved through other types of interactions, such as learner-content or learner-instructor interactions. For example, learners can reflect on their experiences and receive feedback from instructors through individual assignments or assessments.
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: Which method is used to determine whether an applicant meets the minimum requirements for the job? employment testing job advertisement employment interview application form
Answers
The method used to determine whether an applicant meets the minimum requirements for the job is employment testing.
Employment testing is a method commonly used in the selection process to assess an applicant's knowledge, skills, abilities, and other relevant qualifications. These tests can be administered in various formats, including written tests, performance-based assessments, or situational judgment tests. The purpose of employment testing is to evaluate an applicant's suitability for a specific job by measuring their competence in areas directly related to the job requirements. These tests provide objective and standardized criteria for comparing candidates and determining whether they meet the minimum qualifications necessary to perform the job successfully. The results of employment testing help employers make informed decisions during the selection process.
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The petty cash fund has a current balance of $ 350, which is the established fund balance. Based on activity in the fund, it is determined that the balance needs to be changed to $ 450. Which journal entry is needed to make this change?
Answers
Answer:
Debit the petty cash account and credit the cash account with $100
Explanation:
Businesses sets aside small amount of money(cash) to cover recurring expenses such as postage stamp, delivery charges, fares etc. This is usually done through the setting up of petty cash fund. The purpose of petty cash fund is to make provision for re-imbursement of minor expenses where there are no alternatives.
With regards to the above, the journal entries would be Debit petty cash account and Credit cash account with $100.
Answer:
Debit Petty Cash, credit cash for $100
Explanation:
To increase the petty cash fund, you must increase its normal balance which is a debit.
you are actually cashing a check for $100 (hence, credit to cash account) and actually putting more cash into your petty cash account.
rollo has a credit card from shopping cards, inc. to change the terms, shoppingA. Must send monthly bills twenty-one days before the change B. Must gove Rollo advance noticeC. Can increase the interest rate only retroactivelyD. Must impose double-cycle billing.
Answers
Rollo has a credit card from shopping cards, inc. to change the terms, shopping: D. Must impose double-cycle billing.
Rollo has a credit card from Shopping Cards, Inc. If the terms of the card are to be changed, the company must adhere to certain rules.
Firstly, they must send Rollo monthly bills at least twenty-one days before the change. This gives Rollo enough time to review the changes and decide if he wants to continue using the card or not.
Secondly, the company must give Rollo advance notice before making any changes. This means that they cannot change the terms of the card without informing Rollo beforehand. This gives Rollo time to prepare for any changes and plan his finances accordingly.
Thirdly, the company can only increase the interest rate retroactively. This means that they cannot charge Rollo a higher interest rate on his outstanding leverage . They can only apply the higher interest rate to any new purchases that Rollo makes after the change.
Finally, the company must impose double-cycle billing. This means that they must calculate the interest on Rollo's outstanding balance over two billing cycles instead of one. This can result in Rollo paying more interest than he would have otherwise.
In conclusion, if Shopping Cards, Inc. wants to change the terms of Rollo's credit card, they must follow certain rules. They must send monthly bills twenty-one days before the change, give Rollo advance notice, increase the interest rate only retroactively, and impose double-cycle billing. These rules are in place to protect Rollo's rights as a credit card holder and ensure that he is not taken advantage of by the company, therefore option D) is the correct answer
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The main answer is: Shopping Cards, Inc. must provide Rollo with advance notice before changing the terms of his credit card. The Option B is correct.
What obligation does the firm have on changing credit card terms?Shopping Cards, Inc. has a legal obligation to give Rollo advance notice before making any changes to the terms of his credit card. This means that Rollo should receive notification in advance which will allow him sufficient time to review and understand the changes before they come into effect.
By providing advance notice, Shopping Cards, Inc. ensures transparency and allows Rollo to make informed decisions about his credit card usage. It is an important consumer protection measure that ensures customers are aware of any modifications to their credit card agreements.
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Luna company accepted credit cards in payment for $6,000 of services performed during july. The credit card company charged luna a 4 percent service fee; it paid luna as soon as it received the invoices. Required based on this information alone, what is the amount of net income earned during the month of july?.
Answers
The net income earned is $240
The term net income refers to a company's net earnings. It is determined by subtracting total expenses from total receipts. The term total expenditure can refer to a variety of things, such as taxes, business expenditures, interest payments, fees, and depreciation. The calculation of shareholders' earnings per share is aided by net income.
1.
Dr. Account Receivable $5,760
Dr. Service charges $240
Cr. Service revenue $6,000
2.
Dr. Cash $5,760
Cr. Accounts receivable $5,760
Working Notes
Assuming all the sales are performed on the account first Then cash is received after the issuance of the invoice.
Service revenue $6,000
Less: Credit card expenses $ (240)
Net income $5,760
Service charges = $6,000 x 4% = $240
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When a manager gives people the opportunity to use their skills and abilities to the fullest extent possible, the ________ needs of people at work are satisfied.
Answers
When a manager gives people the opportunity to use their skills and abilities to the fullest extent possible, the self-actualization needs of people at work are satisfied.
What is self-actualization?Self-actualization according to Maslow's hierarchy of needs, serves as the stage where personal potential is fully attained.
This can be prove When a manager gives people the opportunity to use their skills and abilities to the fullest extent .
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List qualities a good manager should have. What are the advantages and drawbacks of being in a position of authority?The qualities of a good manager are:The advantages of being a manager are:The drawbacks of being a manager are:
Answers
It is a good idea to get and use an many credit cards as possible to build credit history. True False
Answers
moves the fabric while sewing.
2.
is a movable plate that covers the shuttle and bobbin
3. The
is the cloth used in making garments.
4. Embroidery scissors has
blades.
inches finely tapered
5. Thimble is a small hard pitted cup worn for
finger.
on the
Answers
The following are the answers based on the provided terms:
1. Feed dog moves the fabric while sewing.
2. Needle plate is a movable plate that covers the shuttle and bobbin.
3. The fabric is the cloth used in making garments.
4. Embroidery scissors has finely tapered blades of 3 to 4 inches.
5. Thimble is a small hard pitted cup worn for protecting the finger.
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Products in the Blank______ stage of the product life cycle tend to consume a disproportionate share of management and financial resources relative to their future worth.
Answers
Answer:decline
Explanation:
products in the DECLINE stage of the product lifestyle tend to consume
on january 1, 2024, the allegheny corporation purchased equipment for $175,000. the estimated service life of the equipment is 10 years and the estimated residual value is $10,000. the equipment is expected to produce 240,000 units during its life. required: calculate depreciation for 2024 and 2025 using each of the following methods. 2. 150% declining balance.
Answers
Depreciation is the deterioration of a certain asset over time.2) 150% declining method = cost - salvage value × 150%/No. of useful life= 1,65,000 × 150%/10 = 1,65,000 × 15% = $24,750
A tangible product's cost can be spread out over the period of its expected lifetime using the accounting approach of depreciation. Depreciation indicates the extent to which an asset's worth has been expended. It enables companies to invest in commodities over a predetermined time period and profit from such assets.
Depreciation is sometimes misunderstood to signify a tax calculation or that something is just losing value. Depreciation, despite being a difficult topic, is crucial to your industry's tax returns.
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some life insurance policies have cash value and loan value benefits. true false
Answers
Some life insurance policies have cash value and loan value benefits. The statement is True.
Life insurance policies that have a cash value component, such as whole life or universal life insurance, accumulate cash value over time. This cash value grows based on the premiums paid and any investment gains. The policyholder can access this cash value during the policy's lifetime through withdrawals or loans.
These policies offer a death benefit as well as a savings component, allowing policyholders to build up funds over time that can be used for various purposes, such as supplementing retirement income or covering unexpected expenses. The loan value benefit allows policyholders to borrow against the cash value of the policy, typically at a relatively low interest rate.
The loan must be repaid, either with ongoing premium payments or from the death benefit if not repaid during the policyholder's lifetime.
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The marketing mix is often regarded as the least important ingredient of marketing
False
True
Answers
False. The marketing mix is often regarded as one of the most important concepts in marketing.
it involves the tactical decisions that a company must make in order to promote its product or service effectively. The marketing mix consists of the four Ps: product, price, promotion, and place.e marketing mix is a fundamental concept in marketing that refers to the set of tools or tactics used by a company to promote its products or services in the market. It includes four main components known as the "Four Ps":
Product: refers to the goods or services a company offers to satisfy the needs and wants of its target customers.
Price: refers to the amount of money a customer pays to purchase a product or service.
Promotion: refers to the activities a company uses to communicate the benefits of its products or services to customers and to persuade them to make a purchase.
Place: refers to the location where customers can purchase a product or service and the methods used to distribute it.
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the ceo at green inc. has established that employees should adhere to a vertical communication process and a fixed work flow system, and she strictly monitors these processes. the steps taken by the ceo at green inc. reflect the behavior of leaders suggested by the ohio state studies. group of answer choices employee-centered consideration initiating structure job-centered authoritative
Answers
The Ohio State Studies were a series of research studies conducted in the late 1940s and early 1950s by a team of researchers from Ohio State University. The studies aimed to identify the key behaviors exhibited by effective leaders in order to provide a framework for leadership development.
One of the key findings of the Ohio State Studies was that effective leaders exhibited two types of behavior: consideration and initiating structure. Consideration refers to the extent to which a leader is supportive, friendly, and approachable toward their employees. Initiating structure, on the other hand, refers to the extent to which a leader is task-oriented, organized, and focused on achieving goals.
Now, to connect this to the behavior of the CEO at Green Inc., it appears that the CEO is exhibiting a high degree of initiating structure. By establishing a fixed workflow system and monitoring it closely, she is demonstrating a focus on achieving goals and ensuring that tasks are completed efficiently. This is in line with the behavior of job-centered leaders identified in Ohio State Studies.
However, it is unclear from the information provided whether the CEO is also exhibiting consideration toward her employees. The fact that she is strictly monitoring the communication process could suggest that she is not particularly approachable or supportive towards her employees, which would be at odds with the behavior of employee-centered leaders identified in Ohio State Studies.
In conclusion, the steps taken by the CEO at Green Inc. reflect the behavior of job-centered leaders suggested by Ohio State Studies. However, without more information about her behavior towards her employees, it is difficult to determine whether she is also exhibiting consideration toward them.
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Which situations offer examples of Banking and Related Services workers? Check all that apply.
Anna analyzes loan applicants to decide whether to give them loans.
Aaron helps customers put money into and remove money from their accounts.
Jared researches the credit history of people applying for credit.
Tamara reviews the finances of a business to determine whether it is profitable.
Raquel helps individuals and companies prepare their tax forms.
Troy helps a family create a budget to save more money.
Answers
Anna provides loan applicants to decide to give them loans, put money into and remove money from their accounts and Jared researches the credit history, hence options A, B and C are correct.
What are Banking and Related Services workers?The five most significant banking services include checking and savings accounts, loan and mortgage services, wealth management, issuing credit and debit cards, and overdraft services.
An individual who works for a bank and assists customers with standard financial transactions is known as a bank teller or bank clerk.
They do daily tasks that include processing withdrawals, making deposits, and giving customers of bank money orders or cashier's checks.
Therefore, these services also comprise analysis loan applicants with basic features and a device for utilizing the account (such as a debit card and online banking ID), hence options A, B, and C are correct.
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Answer:here the answer for this question
Explanation:edge2023
The rate at which a business increases revenue from sales is
Answers
Answer:
There are only four ways to increase revenue in your business: increase the number of consumers, increase the average transaction size, increase the frequency of transactions per client, and raise your rates.
Explanation:
Several years ago, Jeff purchased stock for $5,125. Last month he sold the stock for
$7,411. What was his gross capital gain?
Answers
If Several years ago, Jeff purchased stock for $5,125. Last month he sold the stock for $7,411. His gross capital gain is: $2,286.
Gross capital gainIn order to determine the gross capital gain since we were told that he purchased stock for the amount of $5,125 in which last month he sold the stock for the amount of $7,411 we have to deduct the current stock selling price form the stock purchase price by making use of this formula to determine the gross capital gain.
Gross capital gain = Current stock selling price - Stock purchase price
Where:
Current stock selling price = $7,411
Stock purchase price = $5,125
Let plug in the formula so as to find the gross capital gain
Gross capital gain = $7,411 - $5,125
Gross capital gain =$2,286
Therefore If Several years ago, Jeff purchased stock for $5,125. Last month he sold the stock for $7,411. His gross capital gain is: $2,286.
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Which of the following is not a reason that the subject line should never be
left blank?
• A. The receiver may be
confused and decide to delay opening it.
•
B. The receiver may think the message iS spam.
C. The email will not be transmitted without that information.
D. The receiver may not consider the message important.
Answers
Answer: C. The email will not be transmitted without that information is not a reason that the subject line should never be left blank. The email can be transmitted without a subject line, it just may be less likely to be opened or considered important by the receiver.
Explanation:
Answer:
C. The email will not be transmitted without that information.
A subject line is important in an email because it gives the receiver an idea of what the email is about and whether or not it is important or relevant to them. Leaving the subject line blank can cause confusion, delay the receiver opening the email or even mark it as spam, and make the receiver not consider the message important. But an email will be transmitted without a subject line, it's just that the receiver may not understand the content of the email.
total current assets reported for an operation were $87,200 and total cur- rent liabilities were $64,400. determine working capital for the period and define its structure and purpose.
Answers
. A positive working capital indicates that a company can pay off its current liabilities with its current assets, which is essential for maintaining liquidity and financial stability.
To determine the working capital for the period, we need to subtract the total current liabilities from the total current assets. Therefore, working capital for the operation would be:
Working capital = Total current assets - Total current liabilities
Working capital = $87,200 - $64,400
Working capital = $22,800
Working capital is the difference between a company's current assets and its current liabilities. It is an essential measure of a company's ability to meet its short-term financial obligations. Positive working capital indicates that a company has enough liquid assets to cover its short-term liabilities, while negative working capital suggests that a company may struggle to meet its short-term obligations.
The structure of working capital refers to the composition of a company's current assets and liabilities. It includes cash, accounts receivable, inventory, accounts payable, and other short-term financial obligations. The purpose of working capital is to ensure that a company can cover its short-term expenses and obligations, such as paying salaries, purchasing inventory, and paying suppliers. Adequate working capital also allows a company to take advantage of business opportunities and invest in future growth.
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