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Why do firms enter an industry when they know that in the long run economic profit will be zero?
Firms enter an industry while they suppose to earn economic profit. These short-run profits are sufficient to encourage entry. Zero economic profits in the long run involve normal returns to the factors of production, as well as the labor and capital of the owners of firms. For instance, the owner of a small business might experience positive accounting profits before the foregone wages from running the business are subtracted from these profits. If the revenue minus another costs is just equivalent to what could be earned elsewhere after that the owner is indifferent to staying in business or exiting.
A cash-flow yield is the discount rate that makes the price of a mortgage-backed or asset-backed security equal to the present value of its cash flows. It is built
What are Municipal Bonds? Define this term. Municipal bonds are debt instruments issued through US local, state or county governments to finance public interest projects. These
1. Describe the types of financial ratios and other financial performance measures that are used during a venture's successful life cycle. Who are the users of financial performan
Interpretations of Profitability Ratio's - ROA: ROA or the Return on Assets ratio is the ratio of net profit to total assets and this ratio indicates whether total assets
WHAT IS METHOD FOR FINDING IRR
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A company has total debt of $1,200 and a debt-equity ratio of 0.5. What will be the value of the total assets?
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Control ratios: Three important ratios are usually used by the management to find out whether the variations from budgeted results are unfavorable or favorable. These ratios are
We have seen the valuation of bonds with embedded option using binomial model. This method can be used when cash flows do not depend on how interest rates evolve.
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