Arbitrage pricing theory is model developed to be used by:

Q: Differentiate between price risk and reinvestment risk.

A: Price risk is the risk of decline of the price of the investment or an asset after the underlying…

Q: Under what conditions is a market-based transfer price most likely to be used?

A: Transfer Pricing: It is termed as the cost which is charged by the one department of the company…

Q: What assumption is usually made concerning sales mix inCVP analysis?

A: Sales mix: A proportion of two or more products sold by the company to maximize the profit, that…

Q: WHAT IS THE VALUE OF DISCOUNTED FLOWS

A: As per Time value of money, there are present values as well as future values.

Q: What are the calculation formulas for transfer pricing?

A: There are many methods for determining the transfer price. Most businesses actually set the transfer…

Q: What is a marketorder?

A: Market order It is a request made by a financial specialist generally through an intermediate person…

Q: The hypothesis that market prices reflect all publicly-available information is called efficiency in…

A: Efficiency of stock market is determined by the effect of information whether publicly available or…

Q: Explain the effect of issuance cost on firm value.

A: There are issues cost associated with debt and equity that has impact on  value of firm.

Q: Briefly explain the concept of economic, profitmaximizing pricing. It may be helpful to use graphs…

A: Pricing decisions: Pricing decisions is one of the most important and required decision for the…

Q: b. What i

A: Given as,

Q: Define the following terms, using graphs or equations to illustrate youranswers wherever feasible:…

A: APT                                                                              It is a model based…

Q: Discuss the assumptions, approach, estimation, benefits, limitations, and criticisms of Arbitrage…

A: Arbitrage Pricing Theory is a multi-factor pricing model. Arbitrage Pricing Theory can be used to…

Q: Describe the downward demand spiral and its implications for pricing decisions.

A: Downward Demand Spiral: A downward demand spiral is a continuing reduction in the demand for a…

Q: Distinguish between market-skimming pricing and market-penetration pricing.

A: Product pricing strategies: There are two product pricing strategies of a company. They are,…

Q: On what concept is the price-earnings multiple valuation approach based?

A: Price earning ratio is computed by dividing the market price of the share by the earnings per share.

Q: What is meant by purchasing power parity?

A: Purchasing power parity It is a measuring of the prices in various other countries that utilizes the…

Q: Discuss the following models in relation to purchasing power parity.

A: Comparative rates of inflation in different countries are the factors influencing the exchange rate.…

Q: Describe three limitations of the economic, profitmaximizing model of pricing.

A: Profit maximizing price: The price for which the relative quantity is identified by the intersection…

Q: which of the following could affect the price

A: Stocks are prone to systematic and unsystematic risks. Factors or risk that affect the entire…

Q: at is the difference among regular market, negotiated market, and cash market? please elaborate

A: Introduction : After an IPO, a corporation 's stocks are released on the secondary market, which is…

Q: iven the information below, calculate the reward-to-risk ratio implied by the CAPM pricing model.

A: The risk-reward ratio determines how much reward is there for risk of  every dollar.

Q: Describe the market multiple approach.

A: Answer: A multiple market analysis is a method of financial modelling which assigns a value to an…

Q: Explain how cost-of-carry is a factor in forward curve prices.

A: Cost of carry is the costs of holding the certain position in the market or in other words it is the…

Q: Give some examples of the market-value ratios?

A: Market value ratios may include various types of ratios which indicate the value of company’s share.…

Q: Briefly explain what the market to book ratio tells us about a firm

A: The market-to-book ratio (M/B ratio) is also called as P/B ratio or the price-to-book ratio. It is…

Q: Explain how a yield curve is constructed.

A: Yield curve is referred to as the line, which used to plot yields that are interest rates of the…

Q: What is purchasing power parity? How might afirm use this concept in its operations?

A: The question is based on the concept of equilibrium exchange rate in forex market, Purchasing power…

Q: Csn you incorporate Transactional pricing in the same agreement as formula pricing and why or why…

A: Answer Concept  Transactional pricing is  the pricing model in which customers are charged on the…

Q: Discuss the differences between a market order, limit order, and stop order.

A: Solution: Stock market is the place where securities are traded in market. There are different types…

Q: What is Transfer Pricing? What are the approaches in determining transfer prices? In your own…

A: Explanation of transfer pricing and approaches determining transfer pricing are as follows.

Q: Define Arbitrage Pricing Theory (APT)

A: Arbitrage is the method of making profit from the temporary change in the cost of shares by buying…

Q: What is the formulae used to find markup price?

A: Markup price is the price that the player comes up with after adding the mark up to the cost price…

Q: How can I explain the rationale behind the Arbitrage Pricing Theory (APT) model, and discuss its…

A: The Arbitrage Pricing Theory (APT) model is the asset pricing model that considering the difference…

Q: Discuss the key assumptions of Arbitrage Pricing Theory (APT) model and the implications of these…

A: Solution- APT(Arbitrage Pricing Theory) is a multi-factor technical model supported the link between…

Q: What is the financial meaning of each parameters and variables of the Arbitrage Pricing Theory model

A: The question is based on the concept of Arbitrage Pricing Theory mode (APT). APT is consider  a…

Q: Briefly explain law of one price with respect to the arbitrage pricing theory.

A: Arbitrage Pricing Theory: It is the multi-factor model that expresses the relationship between…

Q: Briefly explain the difference between the CAPMand the Arbitrage Pricing Theory (APT)

A: The Capital Asset pricing model assists investors in computing the expected return on investing in a…

Q: Explain the following assertion: “Price setting generally requires a balance between market forces…

A: Businesses have to make a lot of decisions in running a business one of which is price setting. They…