However, it is important to note that starting a business requires careful planning, capital investment, and the ability to navigate various legal and regulatory requirements.
a. The statement that no major entrepreneurial successes have been realized in the last three decades is not accurate. Over the past three decades, there have been numerous examples of successful entrepreneurs who have built highly successful companies and achieved significant financial success.
b. The statement that the upper limit for entrepreneurial profits is somewhere between $750,000 and $1 million is subjective and cannot be universally generalized. The potential for entrepreneurial profits varies greatly depending on factors such as the industry, market conditions, business model, and the entrepreneur's skills and efforts.
c. The statement that an entrepreneur can never earn as much as a major corporate executive is not accurate. While it is true that some corporate executives may earn substantial salaries and bonuses, successful entrepreneurs have the potential to build highly profitable businesses and accumulate significant wealth.
d. The statement that any individual is free to enter into business for themselves is generally true. In many countries, individuals have the freedom to start their own businesses and become entrepreneurs.
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Your general manager has heard that ecommerce giant (let’s pretend Amazon.com) is about to enter the online hotel distribution game. As he knows little about distribution issues, he has asked you to assess the positives and negatives of adding this new channel to your existing extensive portfolio of electronic distribution channels once the service comes to your city.
(1) Make (and justify) a recommendation on whether you think it would be beneficial for a hotel to distribute itself through Amazon’s new service?
(2) Highlight and explain to an unknowledgeable reader three major advantages of adding Amazon as a distribution partner.
(3) Highlight and explain to an unknowledgeable reader three challenges with using Amazon as a distribution partner.
(1) Recommendation: It would be beneficial for a hotel to distribute itself through Amazon's new service.
By partnering with Amazon, hotels can potentially reach a wider customer base and benefit from Amazon's strong brand recognition and customer trust. This could lead to increased bookings and revenue for the hotel. Additionally, using Amazon's distribution platform may offer hotels access to advanced technology and tools, simplifying the booking process for both the hotel and the customers.
(2) Three major advantages of adding Amazon as a distribution partner:
a) Increased Visibility: By leveraging Amazon's vast customer base and online presence, hotels can increase their visibility and attract more potential guests. This can result in higher occupancy rates and revenue.
b) Seamless Integration: Amazon's distribution platform is designed to provide a seamless booking experience for customers. Hotels can benefit from Amazon's user-friendly interface and efficient booking process, making it easier for customers to find and book their accommodations.
c) Customer Trust: Amazon is a trusted and well-known brand in the e-commerce industry. Partnering with Amazon can help hotels establish credibility and gain the trust of potential customers who may be hesitant to book with lesser-known online platforms.
(3) Three challenges with using Amazon as a distribution partner:
a) Increased Competition: By distributing through Amazon's service, hotels may face increased competition from other properties listed on the platform. This could lead to potential price wars or difficulty in differentiating their offerings.
b) Commission Fees: Amazon charges commission fees for each booking made through their platform. Hotels need to carefully consider these fees and assess their impact on overall profitability.
c) Limited Control: When partnering with Amazon, hotels may have limited control over their branding and customer experience. They need to ensure that their unique identity is maintained and that customer service standards align with their own brand values.
It's important to note that while the advantages and challenges mentioned above are common, each hotel's specific circumstances and goals should be taken into account when deciding whether to use Amazon as a distribution partner.
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Corporations are referred to as public companies when their: O shareholders have no tax liability. O shares are held by the federal or state government. O stock is publicly traded. O products or services are available to the public.
Corporations are referred to as public companies when their stock is publicly traded.
Public companies, also known as publicly traded companies, are corporations that offer their stocks or shares for sale to the general public. This means that anyone can buy or sell shares of the company on a stock exchange, such as the New York Stock Exchange or NASDAQ.
Public companies are subject to more regulation and oversight than private companies, as they must comply with the rules and regulations of the Securities and Exchange Commission (SEC). This includes disclosing financial information and other important details about the company to the public.
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what are some corrective actions (or recommendations) to strengthen Louis Vuitton’s business? provide a brief justification (or an evidence) to support your explanation (long answer)
Answer:
Louis Vuitton (LV) had the prolific year 2014 because it continued to grow, despite changes in its market environment. The company has been responsive in its strategies and has maintained a long-term future (LVMH 4). Nevertheless, the company continues to face competitive challenges in the luxury product market. It faces the challenge of sustaining its performance amid the growing difficulties in penetrating new markets and the improvement in the activities by rivals to target its dominant market segment. The company follows a differentiation strategy.
The overall strategies are taken by LV also lead to changes in the parent company, as LV is the main revenue contributor to the LVMH group. The company has to sell to three main customer segments without jeopardizing its reputation in any of them. The segments are absolute, aspirational, and accessible. The absolute segment is very critical of customer care, product quality, and overall brand reputation. It also has the widest variation in preferences in the main global markets of LV. Besides, it has a substantial demand that has forced LV to reconsider many of its decisions that could have affected its performance in this segment. The aspirational segment has mixed characteristics while the accessible segment is less critical to brands and, therefore, most prone to sway to the competition. All the customer segments are collectively influenced by a great brand and product innovation strategy that LV has been exploring in the past few years (LVMH 34-56). The European monetary problems are easing, which should present a good environment for growth in the market (LVMH 5).
Social
The company has relied on leaders brought in by its parent company LVMH. It has also relaxed its use of in-house production resources in the past to focus on outsourcing (LVMH 54-55). However, the decision was reversed to save the company’s brand. Another problem is that the personal luxury business is growing in different directions in separate markets that LV serves. Its biggest market continues to be China, Europe, Japan, and the United States. Its Chinese market characteristics are different from those of Europe and Japan. However, the company has to meet the challenges of these markets without seeming to abandon any of its quality standards for customer service and product development. For example, it cannot discount products or follow noncompany-owned distribution models even when such strategies would significantly lead to a rise in revenues in the respective markets. These issues include a balance of the values and heritage of Louis Vuitton. The company has a 150-year reputation that it has to uphold while responding to the modern challenges of the business (Mahbubani 4).
Technological
The company has a limited product range, and the main products are more than a century old. The leather bag collection and the trunks with a five number combination lock have been in production since the late nineteenth century. They can rely on this technological reputation to defend their market share and appeal to the absolute and aspirational customer segments that are fixated on getting true luxury regarding uniqueness, heritage, quality, and visibility. The product line allows LV to claim that it is offering the most beautiful specimens of French manufacturing (Mahbubani 2). The exclusivity of the designs and their ruggedness are reputations that help the LV brand to sell to existing and new luxury customers. Customers get information and look up things or exchange views online, which is the way they shop. The behavior shapes the direction that LV is taking when differentiating its experience online. The company is building a following in social media channels to improve interaction with its brand. The digital platforms also use new forms of advertising to different niches like soccer fans (LVMH 11).
please help me i cant solve this :(
Answer: 25% is your answer
Explanation: (Simplify) 150/600 = 0.25 = 25%
I hope this helps! :)
a project with an initial cost of $58,100 is expected to generate annual cash flows of $16,140 for the next 6 years. what is the project's internal rate of return?
The project's internal rate of return when the initial cost is of $58,100 is around 16.2%
Initial Cost = $58,100
CF1 to CF6 = $16,140
Time period = 6 years
As per the question, it is required to determine the discount rate that causes the net present value (NPV) of the project's financial payments to equal zero in order to calculate the internal rate of return (IRR) of a project.
Calculating the NPV at a specific discount rate
NPV = \(-Initial Cost + CF1 / (1+r) + CF2 / (1+r)^2 + ... + CFn / (1+r)^n\)
where r is the discount rat and DF represents the total cash flows.
Therefore,
Substituting the values -
\(0 = -58,100 + 16,140 / (1+r) + 16,140 / (1+r)^2 + ... + 16,140 / (1+r)^6\)
= 16.2%
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You are getting ready to buy a car. After looking at your budget, you can afford monthly car payments of $410 per month. The current 5 year auto loan has an APR of 4%. If you have no money for a down payment, what is the maximum price of a car that can you afford?
Given that you can afford a monthly car payment of $410 and no down payment,the maximum price of a car that you can afford is $27,260.18.
Formula: Maximum price of car = monthly payment × (1 - 1/(1 + r)^(n × 12)) ÷ rWhere r = interest rate/12 and n = number of years.
So, the interest rate is 4% per annum and n = 5 years. r = 4%/12 = 0.00333 per monthn = 5 years × 12 months/year = 60 months.
Putting the values in the formula, Maximum price of car = $410 × (1 - 1/(1 + 0.00333)^(60)) ÷ 0.00333= $410 × (1 - 0.7784) ÷ 0.00333= $410 × 0.2216 ÷ 0.00333= $27,260.18. Therefore, the maximum price of a car that you can afford is $27,260.18.
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tom leases store space to kim for a restaurant, and kim installs her ovens, booths, counters, and other equipment. when do these items become real property?
Kim is free to transfer these fixtures at the conclusion of her lease, thus the right response is "D - after the lease expires, assuming the items are not taken by the renter."
The conditions under which one party agrees to rent an asset—in this example, property—owned by another party are outlined in a lease. It ensures that the tenant, also known as the lessee, will have access to the property and, in return, will make monthly payments to the lessor (the landlord or owner of the property). If either party violates the contract's conditions, there will be repercussions for both the lessee and the lessor. A type of incorporeal right is a lease. The details of rental agreements for real estate, as well as for real and personal property, are outlined in leases, which are legally enforceable contracts. These contracts are binding by both parties and contain obligations for each party to carry out and uphold the agreement.
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donald, a 40-year-old married taxpayer, has a salary of $55,000 and interest income of $6,000. he is an active participant in his employer's pension plan. what is the maximum amount donald can contribute to a roth ira in 2018
The maximum amount Donald can contribute to a Roth IRA in 2018 will depend on his MAGI, his filing status, and the amount he contributed to his employer's pension plan. He may need to refer to the IRS's contribution limits worksheet to calculate his reduced contribution limit.
Donald's eligibility to contribute to a Roth IRA in 2018 will be determined by his modified adjusted gross income (MAGI) and his tax filing status. Since Donald is a married taxpayer, his MAGI must be less than $199,000 in order for him to be able to make a full contribution to a Roth IRA.
The maximum contribution that Donald can make to a Roth IRA in 2018 is $5,500 ($6,500 if he is over 50 years old) or his taxable compensation for the year, whichever is less.
In this case, Donald's taxable compensation is $55,000, so he could contribute up to that amount. However, since he is an active participant in his employer's pension plan, the maximum amount he can contribute to a Roth IRA may be reduced based on his income.
To calculate this reduction, Donald must refer to the IRS's contribution limits worksheet for Roth IRAs.
This worksheet takes into account Donald's filing status, MAGI, and the amount he contributed to his employer's pension plan. Based on his income and filing status, he will need to calculate the amount of his reduced contribution limit.
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2a)
Using sample average returns and standard deviations of the two investment strategies provided in class slides (S&P 500 and Volatility Strategy), calculate the certainty equivalent risk-free rate for the S&P500.
Assume mean-variance utility with risk aversion coefficient equal to 2.
Enter your answer in percentage points with two decimal spaces.
2b)
Using sample average returns and standard deviations of the two investment strategies provided in class slides (S&P 500 and Volatility Strategy), calculate the certainty equivalent risk-free rate for the Volatility Strategy.
Assume mean-variance utility with risk aversion coefficient equal to 2.
Enter your answer in percentage points with two decimal spaces.
2c)
Compare the answers to the two preceding quesions. If you find that for a given risk aversion level the certainty equivalent risk-free rate of the two strategies is almost the same, explain why this is so given that the two strategies behaved quite differently (based on the graph provided in the book/slides) over the sample period.
2a) Certainty equivalent risk-free rate for the S&P500: Calculating the certainty equivalent risk-free rate for the S&P500 is done with the formula. Let X be the return of S&P500. Then the certainty equivalent risk-free rate (Rf) is the value that satisfies the following equation (EX - Rf) = E(U(X - Rf)) where U(.) is the utility function. Assume mean-variance utility with a risk aversion coefficient equal to 2.
2b) Certainty equivalent risk-free rate for the Volatility Strategy: Assume mean-variance utility with risk aversion coefficient equal to 2. The formula for calculating the certainty equivalent risk-free rate for the Volatility Strategy is as follows: Let X be the return of the Volatility Strategy. Then the certainty equivalent risk-free rate (Rf) is the value that satisfies the following equation: U(EX - Rf) = E(U(X - Rf)) where U(.) is the utility function.
2c) Comparison of the two preceding questions: The certainty equivalent risk-free rate of the S&P500 is 8.95%, while that of the Volatility Strategy is 6.92%. If the certainty equivalent risk-free rate of the two strategies is almost the same for a given risk aversion level, it is because the risk aversion coefficient is small. It makes the utility functions of the two strategies close to each other.
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If a stock you buy is $50 per share and pays $2 per year in total dividends;
what is the dividend yield of the stock?*
Answer:
4%
Explanation:
Dividend yield shows the dividends paid out annually as a percentage of the share market price.
The formula for calculating dividend yield is the annual dividend per share/market value per share.
Dividend yield = dividend/ market share price x 100
Dividend yield = 2/50 x 100
Dividend yield = 0.04 x 100
Dividend yield = 4%
A tax increase has a. both a crowding out and multiplier effect b. a crowding out effect but not a multiplier effect c. a multiplier effect but not a crowding out effect d. neither a multiplier or crowding out effect
A tax increase has a crowding out effect but not a multiplier effect. A tax increase typically leads to a reduction in disposable income, which in turn reduces consumption spending. This reduction in consumption spending may lead to a reduction in aggregate demand, causing a crowding out effect. The correct option is b.
This effect is caused by the reduction in consumption spending, which can cause firms to cut back on investment spending as well. The reduction in investment spending can lead to a decrease in employment levels and a decrease in the level of economic activity. However, a tax increase does not have a multiplier effect. The multiplier effect is the idea that a change in one variable can lead to a greater change in another variable. For example, an increase in government spending can lead to a larger increase in GDP through the multiplier effect.
A tax increase, on the other hand, does not have this effect. In fact, it has the opposite effect as it reduces the level of economic activity and can lead to a decrease in GDP. In summary, a tax increase has a crowding out effect but not a multiplier effect. It can lead to a reduction in consumption spending, which can cause a reduction in aggregate demand and investment spending. However, it does not have a multiplier effect as it does not lead to a greater change in another variable. The correct option is b.
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the next-best thing that must be forgone in order to produce one more unit of a given product
Opportunity cost is the price paid for forgoing the next best option.
What is the price of a missed opportunity called?Opportunity cost is the advantage that was lost because a particular option was not selected. To accurately calculate opportunity costs, it is vital to balance the benefits and drawbacks of each option. Chance cost, often known as the price of passing up a better option or opportunity and so leaving money on the table, is one type of lost income.
What exactly does the opportunity cost principle mean?Opportunity cost is a term from economics that refers to the values or advantages that a company, business owners, or organisations forego when they select a particular choice or an alternative option.
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If the resources that an entrepreneur uses have a higher value if used for other production, the entrepreneur will
Answer:c
Explanation:
An entrepreneur should focus his or her efforts on ventures that will provide the most profit.
If they invested in something else, they would lose money since the project they chose would yield less profit than the optimal one that would have yielded more.
Thus, Lose Money is correct.
What is the most important resource for business owners?Human capital, sometimes known as "talent" or "employees," was frequently the most highly regarded resource among those polled.
Management and technical workers were regularly mentioned as being very significant by respondents. Debt and equity capital are used to provide access to funding or finance.
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are good places to look to find your current expenses when building your budget.
A) Online research websites
B )Banks and credit unions
C)Bank and credit statements
D)Grocery stores and concerts
Answer:
C)Bank and credit statements
Explanation:
The good places to look to find your current expenses when building your budget is "Bank and Credit Statements"
This is because the credit statement is a document showing a list of transactions or money spent on goods or expenses made. This credit statement can be gotten from a bank of the person whose credit statement is under analysis or credit union.
Hence, in this case, the correct answer is Bank and credit statement.
In 2014, the EU filed a complaint that the government of Washington state violated international trade rules by:
Answer:
extending tax incentives to Boeing for in-state manufacture of the 777x jetliner
In the statement of cash flows, the section for cash flows from operating activities will include which of the following?
(A) Dividends paid
(B) Issuance of common stock
(C) A decrease in accounts payable
(D) Purchase of a building financed entirely by a mortgage
In the statement of cash flows, the section for cash flows from operating activities includes the cash inflows and outflows that arise C. A decrease in accounts payable.
What can these include?These can include cash received from customers, cash paid to suppliers and employees, and any other operating expenses. Dividends paid, issuance of common stock, and the purchase of a building financed entirely by a mortgage are not included in this section.
A decrease in accounts payable, on the other hand, is included as it represents a reduction in the amount owed to suppliers, which is a cash outflow related to operating activities.
It is essential to understand the components of the statement of cash flows as it provides valuable insights into a company's liquidity and financial health.
Therefore, option C is the correct answer.
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Explain a situation where user would transpose data on a spreadsheet in Microsoft Excel. Give at least one example to illustrate your reasoning
Answer:
You can do this by copying, pasting, and using the Transpose option. But doing that creates duplicated data. If you don't want that, you can type a formula instead using the TRANSPOSE function. For example, in the following picture the formula =TRANSPOSE(A1:B4) takes the cells A1 through B4 and arranges them horizontally.
Step 1: Select blank cells
First select some blank cells. But make sure to select the same number of cells as the original set of cells, but in the other direction. For example, there are 8 cells here that are arranged vertically:
Cells in A1:B4
So, we need to select eight horizontal cells, like this:
Cells A6:D7 selected
This is where the new, transposed cells will end up.
Step 2: Type =TRANSPOSE(
With those blank cells still selected, type: =TRANSPOSE(
Excel will look similar to this:
=TRANSPOSE(
Notice that the eight cells are still selected even though we have started typing a formula.
Step 3: Type the range of the original cells.
Now type the range of the cells you want to transpose. In this example, we want to transpose cells from A1 to B4. So the formula for this example would be: =TRANSPOSE(A1:B4) -- but don't press ENTER yet! Just stop typing, and go to the next step.
Excel will look similar to this:
=TRANSPOSE(A1:B4)
Step 4: Finally, press CTRL+SHIFT+ENTER
Now press CTRL+SHIFT+ENTER. Why? Because the TRANSPOSE function is only used in array formulas, and that's how you finish an array formula. An array formula, in short, is a formula that gets applied to more than one cell. Because you selected more than one cell in step 1 (you did, didn't you?), the formula will get applied to more than one cell. Here's the result after pressing CTRL+SHIFT+ENTER:
why do your feet stink
Answer:
feet become smelly if sweat soaks into shoes and they don't dry before you wear them again. Bacteria on the skin break down sweat as it comes from the pores.
According to Kotter, companies manage complexity in all the following ways except _____.
A. planning
B. budgeting
C. lobbying
D. organizing and staffing
E. controlling and solving problems
According to Kotter, companies manage complexity in all the following ways except lobbying. Therefore the correct option is option C.
Other strategies for managing complexity include planning, budgeting, organising and staffing, and regulating and solving problems.
Setting goals, formulating strategies, and assigning resources to attain those goals are all part of the planning process.
Budgeting entails making financial plans and keeping track of spending to ensure that resources are spent efficiently.
Organising and staffing entail the development of structures and processes to ensure that activities are assigned and executed in an efficient manner. Monitoring performance and recognising and addressing issues as they develop are all part of controlling and solving problems.
However, lobbying is not commonly thought of as a technique of dealing with complexity. Lobbying is a political activity in which an attempt is made to influence government policies or decisions, generally by persuasion, advocacy, or campaign contributions. Therefore the correct option is option C.
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HELP PLEASE!!!!
In general, reducing the monthly payment (P) of a credit card but keeping the interest rate (i) and present value (PV) the same will __________.
a. decrease the number of periods (n) needed to pay off the debt
b. increase the number of periods (n) needed to pay off the debt
c. eliminate the number of periods (n) needed to pay off the debt
d. have no effect on the number of periods (n) needed to pay off the debt
The answer is B. Just took the test
Answer:
B. ¯\_(ツ)_/¯ᵐᵃʸᵇᵉ cause yeah
Reducing the monthly payment (P) of a credit card but keeping the interest rate (i) and present value (PV) the same will increase the number of periods (n) needed to pay off the debt.
What is an Interest rate?Interest is paid by a borrower and this is the amount of money that is added to the money borrowed.
Interest is usually recovered with the money borrowed in bits and the rate or amount is determined by the lender.
There is a given period to pay a loan depending on the amount borrowed the more you pay the lesser the time of repayment.
Therefore, reducing the monthly payment (P) of a credit card but keeping the interest rate (i) and present value (PV) the same will increase the number of periods (n) needed to pay off the debt.
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which is most likely the reason why policymakers would impose a a price ceiling on the market for coffee?
The reason for imposing the price ceiling is to prevent the producer/seller from taking advantage of the consumer.
Price ceiling refers to an economic tools used by policymaker to mandate a maximum price that the seller must charge for sales of a product or service.
Price ceiling serves as a tool to prevent the producers from exploiting the consumers.
The price ceiling are imposed by the policymaker to prevent producer or seller of coffee to have price advantage of its sales to the coffee consumers.
Therefore, in conclusion, aim of preventing exploitation of consumer is the reason of imposing price ceiling on coffee market.
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The hedonic property value method can be used to estimate lost non-use value associated with oil pollution at remote ,uninhabited location (yes or no). explain your answer (3 marks).
Yes, the hedonic property value method can be used to estimate lost non-use value associated with oil pollution at remote, uninhabited locations.
The hedonic property value method is a widely used technique to measure the non-use value of environmental goods and services. This method uses property values as a proxy for the benefits derived from the environment.
In the case of remote, uninhabited locations affected by oil pollution, the hedonic property value method can be used to estimate the value that people attach to these pristine areas, even though they may not be directly using them. This value can be estimated by comparing property values of similar areas that are not affected by oil pollution. The difference in property values can be attributed to the lost non-use value associated with the oil pollution.
This method is particularly useful for remote, uninhabited locations as it is often challenging to directly measure the value that people attach to these areas. The hedonic property value method provides a reliable and objective way to estimate the non-use value of these areas, which can be used in cost-benefit analysis to inform policy decisions.
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us bank pulls from what credit bureau washington state
Exchanging a good or service for money is called
Answer:
The meaning of the word is Exchange
Explanation:
Retail websites can most advisedly grow their email list by:.
Retail websites can most advisedly grow their email list by giving their customers the option to sign up their email during the check in.
What are retail websites?The retail websites are websites that offer products for sale to the public. They can be owned and operated by individual retailers or by larger companies that offer products from multiple retailers.
These websites typically feature a variety of products, ranging from clothing and electronics to home goods and food. They allow customers to browse and purchase items from the comfort of their own homes, using their computers or mobile devices.
The examples of retail websites are Amazon, Walmart. The retail websites can most advisedly grow their email list by giving their customers the option to sign up their email during the check in.
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Imagine that you are reading one of your favorite magazines. if you see a logo and recognize the brand as it is being presented to you, this is an example of
Assuming you see a logo and recognize the brand as it is being presented to you, this is an example of Aided recall.
What is aided recall?Aided recall can be defined as the process in which a person is being asked a question partaining to the advertisement he/she saw.
Aided recall in important as it help to create product awareness and it enables people to recognize a brand based on the advert they saw and to showcase their knowledge about the advert when asked.
Inconclusion this is an example of Aided recall.
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suppose your monthly net income is $2,400. your monthly debt payments include your student loan payment and a gas credit card. they total $360. what is your debt payments-to-income ratio?
Debt payments-to-income ratio is 3 : 20.
What is a debt?Debt is money you owe and credit is money you can borrow. You create debt by borrowing money on credit. Borrowed: Obligation unable to pay his debt. The most important types of personal debt are secured debt, unsecured debt, revolving debt and mortgages. Secured debt requires some form of guarantee, while unsecured debt is based solely on personal creditworthiness. A debt is a financial obligation or obligation owed by one person, the debtor, to another creditor.A loan (creditor or lender) to repay that money.To learn more about debt from the given link :
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An investment by the stockholders in a business increases a. assets and stockholders' equity. b. assets and liabilities. c. liabilities and stockholders' equity. d. assets o
Option A is correct. Cash, an asset account, will grow as a result of a stockholder investment. Also, it will boost stockholder equity. Total assets must equal total liabilities and stockholders' equity on the balance sheet.
More stock investments or increased net income both improve stockholders' equity. It gets smaller as a result of dividend payments or net losses. Retained profits rises as revenue accounts are closed out into it and falls when expense accounts and cash dividends are closed out into it.
The amount that a company's owners have invested in their enterprise is known as shareholders' equity. This covers the funds they have directly invested as well as the total amount of earnings the business has generated and reinvested since its beginning.
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how did the confederacy, with its agricultural economy, acquire the products and equipment it needed to supply its army?
The money to buy imported goods was provided by the profits from cotton exports.
What means of supply did the Confederacy have?The blockade became more effective as the war went on and more land came under Union control, but it became less of a global problem. The Confederate Army was still able to acquire some supplies by blockade-running ships up until the surrender of Fort Fisher in 1865, nonetheless.
How did the Confederacy raise money to wage war?The Need for the Confederacy to Generate Income
Needing to raise money through taxing, borrowing, and currency creation was of immediate concern. In order to raise the funds required to maintain its operations and finance the war effort, the Confederate government turned to issuing bonds and printing money.
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Question 6
The US Treasury bond yield curve experienced a significant flattening in the first quarter of 2022. Explain how to structure a 2s10s duration-neutral US Treasury yield curve flattening strategy.
[8 marks]
To structure a 2s10s duration-neutral US Treasury yield curve flattening strategy, you would aim to take positions in Treasury securities that would benefit from a flattening of the yield curve while maintaining a duration-neutral stance.
Here's a step-by-step approach to implement such a strategy:
Understand the yield curve flattening: Yield curve flattening refers to a scenario where the yield spread between short-term and long-term Treasury bonds decreases. In this case, you want to take advantage of the expected flattening.
Select the securities: Identify the specific Treasury securities that you will use in your strategy. For a 2s10s duration-neutral strategy, you would focus on the 2-year and 10-year Treasury bonds.
Determine the duration-neutral position: Duration measures the sensitivity of bond prices to changes in interest rates. In a duration-neutral strategy, the goal is to ensure that the overall duration of your portfolio remains unchanged. To achieve this, you will need to adjust the weights of the 2-year and 10-year Treasury bonds in your portfolio.
Analyze the yield spread: Assess the current yield spread between the 2-year and 10-year Treasury bonds. If the spread is expected to narrow (indicating a flattening), you would want to reduce your exposure to the 10-year bond and increase your exposure to the 2-year bond.
Adjust the portfolio weights: Determine the appropriate weights for the 2-year and 10-year Treasury bonds in your portfolio to maintain a duration-neutral stance. You would typically increase the weight of the 2-year bond and decrease the weight of the 10-year bond.
Execute the strategy: Based on your analysis, make the necessary trades to adjust the portfolio weights. Sell a portion of your 10-year Treasury bond holdings and use the proceeds to buy more 2-year Treasury bonds.
Monitor and rebalance: Continuously monitor the yield curve and the performance of your portfolio. As market conditions change, you may need to rebalance your portfolio to maintain the duration-neutral position.
By implementing this strategy, you aim to benefit from the flattening of the yield curve by capitalizing on the expected narrowing of the yield spread between the 2-year and 10-year Treasury bonds while maintaining a duration-neutral stance.
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