true or false, when a firm is experiencing diminishing returns, marginal costs are rising?
108517
false many things could be causeing the returns to the firm. fewwer sales, or incressed cost to stay in business could be the cause.
519939
If you ignore the increased cost due to default concerns, then no.  Most of the time, the cost of the debt is less than the cost of equity because of various reasons, including the tax shield on interest payments for debt.\n\nSo, increasing the weighting of debt would decrease WACC.
876104
D) is the answer that the question-writer is looking for - it is the only one that requires you to look at the marginal cost of capital.  \n\nHowever, this question in practice could be a trap for the well-traveled young aspiring investment banker.  What is a marginal cost of capital?  The cost of obtaining more money from equity or debt investors to be invested into a project.  However, this presumes a system based on capitalist or semi-capitalist notions.  If you were to be investing on behalf of the government in, say, Cuba or Venezuala,  you would not be looking at the cost and benefits in terms of a return on capital, but rather the effect of the investment on the broader economy & society, which may or may not be captured in returns to the capital provider.  As every Wall St employee knows: "From each according to their ability, to each according to their needs".\n\nAnother example of a system where investment decisions should not be made based on investment costs and benefits is in a situation where the capital is free.  This can occur as a result of a government desire to stimulate investment in a certain area or when a management team is not responsive to the needs of investors, a situation in which the management expectation of shareholder return is zero.  In  this situation, investments would be ranked by the return they provide to management as opposed to the capital providers.  Consider for example the returns created for the shareholders of Tyco when their CEO invested in a $10,000 shower curtain with their capital.\n\nFinally, the other point to bear in mind is the range of potential returns in a investment portfolio.  If you are making a series of investments, it may not be wise to emulate, say, Amaranth and place all your eggs in one natural-gas dependent basket.  Instead, spreading your investments across a range of companies, industries, markets and currencies is corporate finance's only "free lunch" where the trade off between risk and return demonstrably improves.
860256
Of course this sounds like a good idea - when does not making more money not sound like a good idea? Only thing is, with employers having to jump minimum to $7.25, we'll end up seeing the results in higher product and living costs so minimum wage earners are back to not making enough for living expenses.
690043
If by the diminishing rate of interest you mean the APR (in the UK) - ie the rate that takes into account the fact that the loan will decrease in value over the term as it is repaid off....\n\nthen it will be slightly less than double the flat rate - so about 15%.\n\nNow this does depend on the size of the loan and the term - but it's a good approximation.
986833
Fees are excepted in exchange for managing the fund. The thinking that you receive a greater rate of return with someone  carefully managign your investuaory.
269790
many studies have been done on this subject. here is just one of them www.cob.ohio-state.edu/fin/journal/dice/papers/1998/98-1.pdf\n\nforward splits can have the effect of bringing in more investors by a lowered entry price. many investors don't realize that it does not effect the overall value of the stock or the company. the real tough part is knowing if the stock has run up prior to the split because of leaked information or if it will move afterwards.\n\nmy personal observation has always been that a stock tends to move prior to the split, then settles down afterwards. very unscientific on my part.
140
Yes, not any time soon, but expect the trend to increase as companies find ways to reduce costs. Get into management and your job will be saved.
592097
Depending on the securities, the firm might have to cash them in at an unexpected time to pay for business expenses.  With that, it might not be the optimal time to get out of the securities.\n\nAlso, the investments might be poor and lose money for the firm.
415441
C.  He'll produce at anything above AVC because even if he sells at a loss, he'll recoup something to pay the fixed costs.  If price < AVC, though, each unit, the loss increases and there's no point in producing at all.
184716
Generally, it means that you weigh the risk of a project against the return. If the return is great, you might be willing to take on more risk and vice versa
378682
No, it cannot. The logic is essentially as follows:\n1. A firm is said to have economy of scale when it's cost per unit decreases when volume increases\n2. Cost has 2 components: fixed (e.g. infrastructure, factory) and variable\n3. In most cases investment that requires fixed cost has an optimal point at which unit cost is at the lowest, i.e. unit cost is higher before and after that (e.g. For a production facility that at optimal point can produce 100 units of goods per hour, its unit cost to produce the 101th unit will be higher than the 100th)\n4. Therefore, economy of scale cannot be indefinite
727395
in a way firms are worse off.  they now have to find other ways to make back the money that they now have to pay out in additional pay.  they will either have to pay other employees less, raise the price or fire  employees.  so in the long run firms are just fine.  it is the public who is ultimately worse off
986283
I'm not going to do you're homework for you and I suggest that if you can't answer this you may want to consider dropping your econ class or getting some special help.  In most cases Marginal Cost = Supply for a given firm.  You're market clearing point will be Supply = Demand (for a competitive firm).  You can use that information to solve the rest.
1081421
Yes, returns are high ON ACCOUNTS THAT PERFORM.  And not all accounts do.
341291
In some ways, yes, beause it shows the speed at which your market is turning in cash rather than disbursing it in real time, at the very least, daily.  Your accounting profit is a rather static measure of your performance for the accounting period covered.
25691
As interest rates rise, so does the cost of capital. Therefore (eventually) labor becomes cheaper than capital, and capital improvements decline until the reverse is true i.e. falling interest rates. If you are an Indian firm that manufactures products for an American company, then this will harm Indian industry (but only to a degree, as even in a time of rising interest rates Indian labor is still cheaper than American labor). For Indian manufacturers producing machinery, this is not good news, since the cost of capital will not be exceptionally less expensive than labor.