Question 2 involves third-degree price discrimination by Feed-forward Drug Corporation, considering the demand and cost functions in Europe and the United States.
In Question 2, the firm's total profit function is derived by combining the demand curves for Europe and the US, along with the total cost function. The optimal number of drugs to sell in each market is calculated by maximizing profit, considering the respective demand curves. Similarly, the optimal prices to charge in Europe and the US are determined based on the profit-maximizing conditions. The firm's total profit under price discrimination is then computed using the optimal quantities and prices.
Moving on to Question 3, the firm's single demand function is derived under no price discrimination by setting the prices in Europe and the US equal. The total quantity sold is obtained by summing the quantities demanded in each market. The profit function is then derived, considering the total quantity, prices, and the total cost function. The managers would choose the optimal price and output combination that maximizes profit under no price discrimination. Finally, the firm's optimal profit under no price discrimination is calculated and compared to the profit obtained under price discrimination from Question 2.
The analysis in both questions provides insights into the effects of price discrimination and the optimal strategies for profit maximization in different market conditions.
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A firm (that produces a single type of product) has a Lerner index of 0.08 and is charging a price of $50 per unit for its product a) Calculate the marginal cost of the firm's product. b) Which industry is the firm more likely in: PERFECT COMPETITION, OR OLIGOPOLY? Carefully explain your answer. Your answer must clearly indicate the you understand the concepts: Lemer Index, Perfect Competition, and Oligopoly (Clearly label each answer and show all calculations that you do, or you will receive no credit for your answers.) 1 F T: B I EE
Given the firm's low lerner index, it is more likely to be operating in a perfect competition industry.
a) to calculate the marginal cost, we can use the formula:
lerner index = (price - marginal cost) / price
given that the lerner index is 0.08 and the price is $50, we can rearrange the formula to solve for the marginal cost:
0.08 = ($50 - marginal cost) / $50
0.08 * $50 = $50 - marginal cost
$4 = $50 - marginal cost
marginal cost = $50 - $4 = $46 per unit
b) based on the lerner index of 0.08, the firm's market power is relatively low. in perfect competition, firms have no market power and the lerner index would be zero. in oligopoly, firms have some degree of market power. a) the lerner index measures a firm's market power by comparing the difference between the price and marginal cost relative to the price. by rearranging the formula, we can solve for the marginal cost, which in this case is $46 per unit.
b) perfect competition is characterized by a large number of firms, homogeneous products, ease of entry and exit, and no market power. in perfect competition, firms are price takers and cannot influence the market price. oligopoly, on the other hand, is characterized by a small number of large firms, differentiated or homogeneous products, high barriers to entry, and some degree of market power. given that the firm's lerner index is low (0.08), it suggests that the firm has limited market power, making it more likely to be operating in a perfect competition industry where firms have no market power.
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You Are Invested In GreenFrame, Inc. The CEO Owns 3% Of GreenFrame And Is Considering An Acquisition. If The Acquisition Destroys $60 Million Of GreenFrame's Value, But The Present Value Of The CEO's Compensation Increases By $6.8 Million, Will He Be Better Or Worse Off? (Note: Ignore Taxes.) (Select From The Drop Down Menu.) The CEO Will Be Because His
Determine if the CEO will be better off, let's compare the change in the value of his ownership in GreenFrame, Inc. with the change in the present value of his compensation.
First, let's calculate the change in the CEO's ownership value. If the acquisition destroys $60 million of GreenFrame's value, the CEO's 3% ownership stake will decrease by $60 million * 3% = $1.8 million.
Next, let's calculate the change in the present value of the CEO's compensation. If the present value of his compensation increases by $6.8 million, then this is the benefit he will receive.
Comparing the two changes, we see that the CEO's increase in compensation ($6.8 million) is greater than the decrease in his ownership value ($1.8 million). Therefore, the CEO will be better off overall.
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When the free market system cannot deliver allocative efficiency, despite zero government intervention.
A.Monopoly
B.Microeconomics
C.Tragedy of the commons
D.Market failure
Question 24 (1 point)
Analyzing the effects of adding just one more unit.
A.Cost/benefit analysis
B. Marginal analysis
C. Cross-price elasticity
D.Entrepreneurship
Q24 B. Marginal analysis.
Marginal analysis refers to the examination of the effect of producing or consuming one additional unit of a good or service. It involves comparing the additional benefits and costs of the last unit produced or consumed, and determining whether the benefits outweigh the costs. It is used to make decisions about how much of a good or service to produce or consume, and helps firms and individuals to maximize their profits or utility.
The Hotel & Catering sector in Spain and the Covid-19 Pandemic (±500 words).
According to the information discussed in class, what is the definition of "Change". What are the 3 most common alterations regarding change? Discuss your answer.
Considering the situations in the Case Study, define the 2 metaphors of change and identify which is the one currently happening. Discuss your answer.
Considering the previous situations, what are the internal and external forces of change? Discuss your answer.
o Remember that in this type of assignments, the proposed questions should serve as a guide, but do not limit yourself exclusively to answering the questions. Make sure you include enough theoretical information (definitions of concepts, usefulness of management tools, etc.). Also, remember to back up your arguments on relevant and reliable sources.
Change in an organization refers to alterations in the way people operate and conduct their work. Changes that take place within an organization can be a response to a particular situation or an internal force.
What are the changes?There are three types of alterations regarding change, which are as follows:
Planned change, Unplanned change, and Emergent change.Planned change is a deliberate and intentional shift to achieve a particular goal or objective. Unplanned change is unexpected and occurs due to external or internal forces. Emergent change takes place over a long time and happens gradually. It is caused by small changes that, when accumulated, lead to more significant changes. The Hotel & Catering sector in Spain has faced significant changes since the Covid-19 pandemic hit. The Covid-19 pandemic had a tremendous impact on the Hotel & Catering sector. Many countries had to close their borders and implement lockdown measures to control the spread of the virus. Many hotels and restaurants have experienced a drop in revenue due to the lack of tourists. Metaphors of change describe how changes take place in an organization. The two metaphors of change are the mechanistic metaphor and the organic metaphor.The internal forces of change that the Hotel & Catering sector in Spain experienced during the Covid-19 pandemic include changes in management structure, changes in staff, and changes in procedures.
The external forces of change include the Covid-19 pandemic, new regulations, and the changing customer needs.
In conclusion, the Covid-19 pandemic had a significant impact on the Hotel & Catering sector in Spain.
The pandemic led to significant changes in the sector, and organizations had to adapt quickly to survive.
Changes took place through the organic metaphor of change.
The internal and external forces of change were the factors that caused the organizations to change their operating procedures, their staffing, and their products and services to meet the needs of the customers.
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ABC stock just paid $2.25 in dividends per share. If the
required return is 6.75% and the dividends are expected to grow at
2.4%, what is the expected value of this stock in 7 years?
The value of the stock can be determined by the dividend discount model. The dividends per share received every year are multiplied by a discount factor which is the expected rate of return minus the growth rate of dividends.
The discount factor determines the present value of the dividends which is then added to the present value of the expected selling price of the stock at the end of the holding period. This calculation is as follows:Dividend for the current year = $2.25Growth rate of dividends = 2.4%Expected rate of return = 6.75%The dividend for the next year will be $2.25 × (1 + 2.4%) = $2.30.The discount factor can be calculated as 6.75% − 2.4% = 4.35%.Therefore, the dividend for year 1 has a present value of $2.30 ÷ (1 + 4.35%) = $2.20.The dividend for year 2 will be $2.30 × (1 + 2.4%) = $2.36.The present value of the dividend for year 2 is $2.36 ÷ (1 + 4.35%)² = $2.11.The dividend for year 3 will be $2.36 × (1 + 2.4%) = $2.42.The present value of the dividend for year 3 is $2.42 ÷ (1 + 4.35%)³ = $2.03.The expected selling price of the stock in 7 years can be calculated as the present value of the expected selling price in year 7.
The expected selling price of the stock in year 7 is $2.42 × (1 + 2.4%)⁷ = $2.42 × 1.191 = $2.89.The present value of the expected selling price of the stock in year 7 is $2.89 ÷ (1 + 4.35%)⁷ = $2.17.The expected value of the stock in 7 years is the present value of all future dividends and the present value of the expected selling price of the stock at the end of the holding period.The present value of all future dividends is $2.20 + $2.11 + $2.03 + $2.17 = $8.51.The expected value of the stock in 7 years is $8.51.
Therefore, the expected value of the stock in 7 years is $8.51.In the calculation process, we first used the dividend discount model to calculate the present value of all future dividends. The present value of all future dividends is the sum of the present value of all future dividends.The present value of the expected selling price of the stock in year 7 is calculated by first calculating the expected selling price of the stock in year 7. We then use this to calculate the present value of the expected selling price of the stock in year 7.The expected value of the stock in 7 years is the present value of all future dividends and the present value of the expected selling price of the stock at the end of the holding period.In conclusion, the expected value of the stock in 7 years is $8.51.
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1. Which of the following statements best describes variable costs
a. Costs that remain fixed in total, but vary on per unit basis
b. Costs that remain constant in total and on a per unit basis
c. Cost that vary in total and fixed on per unit basis
2. Which of the following statements is not a basis for absorbing manufacturing overheads
a. direct labour hours
b. direct material costs
c. conversion cost
d. machine hours
d. None of the above
The statement that best describes variable costs is c. Cost that vary in total and fixed on per unit basis.
1. The statement that best describes variable costs is: C. "Costs that vary in total and fixed on a per unit basis." Variable costs are expenses that change in direct proportion to the level of production or sales.
Examples of variable costs include raw materials, direct labor, and commissions.
2. The statement that is not a basis for absorbing manufacturing overheads is: a. "Direct material costs."
The basis for absorbing manufacturing overheads typically includes direct labor hours, machine hours, or conversion costs. Direct material costs are considered part of the direct costs and are not typically used to allocate manufacturing overhead expenses.
Therefore, the statement that best describes variable costs is c. Cost that vary in total and fixed on per unit basis.
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How COVID-19 has affected the Beauty Industry in Bangladesh? Use
demand, supply, elasticity, and graphs in explaining your
answer.
The graph illustrating the demand curve for beauty products and services would shift to the left, indicating a decrease in quantity demanded at each price level.
The COVID-19 pandemic has led to a decline in demand for beauty products and services in Bangladesh. With lockdowns and social distancing measures, people have reduced their outings and events, resulting in decreased demand for cosmetics, skincare, and salon services. The graph illustrating the demand curve for beauty products and services would shift to the left, indicating a decrease in quantity demanded at each price level.
The supply side of the Beauty Industry has also been affected. Manufacturing facilities faced disruptions due to restrictions and reduced workforce, leading to supply shortages. Additionally, salon closures and reduced operations affected the availability of beauty services. The graph representing the supply curve would shift to the left, indicating a decrease in quantity supplied at each price level.
The elasticity of demand for beauty products and services is an important factor. With the economic impact of the pandemic, consumers may prioritize essential goods and cut back on non-essential items like beauty products. The demand elasticity for these products may be relatively elastic, meaning a small change in price can lead to a significant change in quantity demanded.
Overall, the COVID-19 pandemic has caused a decline in demand and supply in the Beauty Industry in Bangladesh. The industry has faced challenges due to reduced consumer spending and operational limitations.
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Athens, Inc has a credit rating of A and wants to issue 15-year bonds at par value. If the 15-year Treasury bond has a YTM of 4.44% and the credit spread for Single A debt over Treasuries is 5.57%, what coupon rate should Athens select? Enter your answer as a decimal and show four decimal places. For example, if your answer is 5.25%, enter .0525.
After calculating the yield to maturity of the bond, we can say that the coupon rate should be 9.01%.
To determine the coupon rate that Athens, Inc should select for its 15-year bonds, we need to calculate the yield to maturity (YTM) for the bond using the given information.
YTM = 15-year Treasury bond YTM + Credit spread for Single A debt over Treasuries
15-year Treasury bond YTM = 4.44%
Credit spread for Single A debt over Treasuries = 5.57%
YTM = 4.44% + 5.57%
YTM = 9.01%
The coupon rate on the bond should equal the YTM, as the bond is issued at par value. Therefore, the coupon rate should be 9.01% (0.0901 as a decimal) to provide a yield to maturity consistent with the market conditions and the credit rating of Athens, Inc.
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Activity I - What is the purpose of a Stakeholder Register and how is it used? How can a project manager incorporate this tool into controlling the project?
Activity II - What are the elements within a Stakeholder Management Plan? Why is it important to have a Stakeholder Management Plan?
It is important to have a Stakeholder Management Plan
A Stakeholder Register serves to identify and document information about stakeholders involved in a project, including their interests, expectations, and potential impact. It helps project managers understand and manage stakeholder relationships effectively. To incorporate this tool into controlling the project, project managers can continuously update the register, assess stakeholder engagement levels, mitigate stakeholder risks, and monitor stakeholder satisfaction.
A Stakeholder Management Plan includes elements such as stakeholder identification, analysis, engagement strategies, a communication plan, and monitoring and control mechanisms. It is important to have a Stakeholder Management Plan because it ensures that stakeholders are properly identified and engaged, minimizes risks and conflicts, and ultimately enhances project success by gaining stakeholder support and maintaining positive relationships.
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6. How much do you have to deposit today so that you can withdraw $50,000 a year at the end of years 5 through 9 , and $25,000 at the end of year 10 ? Assume that you can earn an annual rate of 8 percent. a) $170,983 d) $158,318 b) $146,591 e) $159,243 c) $146,737
The amount that needs to be deposited today to meet the withdrawal requirements is $170,983.
To calculate the present value of future cash flows, we can use the formula for the present value of an annuity:
PV = C * [(1 - (1 + r)^(-n)) / r]
where:
PV is the present value,
C is the cash flow per period,
r is the interest rate per period, and
n is the number of periods.
In this case, the cash flows are $50,000 for years 5 through 9 and $25,000 for year 10. The interest rate is 8% per year.
Using the formula, we can calculate the present value of the cash flows:
PV = [tex]$50,000 * [(1 - (1 + 0.08)^{-5}) / 0.08] + $50,000 * [(1 - (1 + 0.08)^{-6}) / 0.08] + $50,000 * [(1 - (1 + 0.08)^{-7}) / 0.08] + $50,000 * [(1 - (1 + 0.08)^{-8}) / 0.08] + $50,000 * [(1 - (1 + 0.08)^{-9}) / 0.08] + $25,000 * (1 / (1 + 0.08)^{10})[/tex]
Calculating this expression, we find that the present value is approximately $170,983.
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Future value of an annuity) Imagine that Homer Simpson actually invested the
$120,000
he earned providing Mr. Burns entertainment
6
years ago at
8
percent annual interest and that he starts investing an additional
$1,600
a year today and at the beginning of each year for
10
years at the same
8
percent annual rate. How much money will Homer have
10
years from today?
Homer will have approximately $215,240.26 in total 10 years from today.
To calculate the future value of an annuity, we can use the formula: FV = P * ((1 + r)^n - 1) / r, Where: FV = future value, P = payment per period, r = interest rate per period, n = number of periods
First, let's calculate the future value of the initial investment: FV_initial = $120,000 * (1 + 0.08)^6
Next, let's calculate the future value of the annual investments: FV_annual = $1,600 * ((1 + 0.08)^10 - 1) / 0.08
Finally, let's calculate the total future value: Total FV = FV_initial + FV_annual
By plugging in the numbers and performing the calculations, you'll find out how much money Homer will have 10 years from today.
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11. Kami Buat Semua Berhad (KBSB) is a conglomerate with businesses in many economic sectors like consumer products, plantation, real estate, and financial services, to name a few. KBSB is now contemplating venturing into internet technologies and services. The company is considering making a sizable investment in this area by setting up a new business division. To assess the commercial viability of this proposal, the relevant cash flows have been estimated. To discover the Net Present Value (NPV) of this investment, an appropriate discount rate has to be used. KBSB's weighted average cost of capital (WACC) is 10%. The average cost of capital of companies in the internet technologies and services sector is 14%. If KBSB decided to go ahead with this, it is most likely going to finance it via raising of new equity capital. KBSB's investment banker has projected that raising external equity capital is going to be particularly costly, given the current sentiments in capital markets, estimating the cost of external equity capital at about 19%. In your opinion, which rate should be used as the discount rate to compute NPV in this situation, and why?
[5 marks]
In this case, the discount rate that should be used to compute NPV is 19%. The weighted average cost of capital (WACC) is a way of measuring a company's cost of capital, which is the cost of capital weighted according to the proportion of each source of capital.
The WACC of KBSB is 10%, whereas the average cost of capital of companies in the internet technologies and services sector is 14%. Raising external equity capital is going to be particularly costly, given the current sentiments in capital markets, estimating the cost of external equity capital at about 19%. The cost of raising new equity capital is relatively high since the sentiment in capital markets is negative. As a result, the firm's cost of capital is expected to rise as it raises external equity capital.In order to determine whether this investment is worthwhile, it is necessary to compute its net present value. Net present value (NPV) is the difference between the present value of cash inflows and the present value of cash outflows over a period of time. It's critical to have a clear understanding of the discount rate to use while calculating the NPV. Since KBSB is contemplating venturing into internet technologies and services and has decided to finance it via raising new equity capital, the discount rate that should be used as the discount rate to compute NPV in this situation is 19%.
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(Related to Checkpoint 9.4) (Bond valuation) A bond that matures in 20 years has a $1,000 par value. The annual coupon interest rate is 14 percent and the market's required semiannually? a. The value of this bond if it paid interest annually would be ↑ (Round to the nearest cent.)
The value of the bond can be calculated using the formula for present value of a bond.
In this case, since the bond pays interest semiannually, we need to adjust the coupon rate and the number of periods. The semiannual coupon interest rate is half of the annual coupon interest rate, so it would be 7% (14% divided by 2).
The number of periods would be twice the number of years, so it would be 40 (20 years multiplied by 2).
Using these values, we can calculate the present value of the bond. However, since the question specifies that the bond pays interest annually, the value of the bond would be different.
To calculate the value of the bond if it paid interest annually, we can use the same formula with the annual coupon interest rate and number of periods.
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A portfolio is invested 45 percent in Stock G, 40 percent in Stock J, and 15 percent in Stock K. The expected returns on these stocks are 11 percent, 9 percent, and 15 percent, respectively. What is the portfolio's expected return? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. Expected return_____
The portfolio's expected return is 10.7%.The portfolio's expected return can be calculated using a weighted average. The expected return of each stock is multiplied by its percentage of the portfolio, and then all of these weighted returns are added up to give the overall expected return.
The formula for this calculation is as follows:
Expected return = (Weight of Stock G x Expected return of Stock G) + (Weight of Stock J x Expected return of Stock J) + (Weight of Stock K x Expected return of Stock K)
Where the weight of each stock is the percentage of the portfolio invested in that stock.
Using the values given in the problem, we can substitute them into this formula:
Expected return = (0.45 x 0.11) + (0.40 x 0.09) + (0.15 x 0.15)
Expected return = 0.0495 + 0.036 + 0.0225
Expected return = 0.107
Expected return = 10.7%
Therefore, the portfolio's expected return is 10.7%.
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Your colleague lionel has just finished drafting an important business proposal. now he has asked you for advice on how to review the document. what should you tell him to do?
To review the business proposal, you can advise Lionel to follow these steps:Start with a quick skim, Review the introduction and conclusion, Analyze the body of the proposal, Check for errors and inconsistencies etc.
1. Start with a quick skim: Begin by quickly skimming through the document to get an overall understanding of its structure and main points. This will help identify any major issues or areas that require more attention.
2. Review the introduction and conclusion: Pay close attention to the introduction and conclusion sections. These sections should clearly outline the purpose of the proposal, its key objectives, and a compelling summary of the main points. Ensure that these sections are concise and persuasive.
3. Analyze the body of the proposal: Carefully read through each section of the proposal, assessing the flow of ideas and the clarity of the content. Check if the information provided is relevant, accurate, and well-supported. Look for any inconsistencies or gaps in the logic of the arguments presented.
4. Check for errors and inconsistencies: Review the proposal for any grammatical, spelling, or punctuation errors. Additionally, check for consistency in formatting, headings, and numbering. This will enhance the overall professionalism and readability of the document.
5. Evaluate the visuals and graphics: If the proposal includes visuals such as graphs, charts, or tables, ensure that they are clear, accurate, and effectively support the information presented in the text. Verify that all visuals are labeled correctly and referenced appropriately in the body of the proposal.
6. Seek feedback from others: It can be valuable to seek feedback from colleagues or supervisors. Share the proposal with them and request their input. Others may be able to provide fresh perspectives, catch errors that you might have missed, and offer suggestions for improvement.
7. Proofread the final version: Before submitting the proposal, carefully proofread the document one final time. Pay close attention to detail and ensure that there are no typos or formatting errors. It may be helpful to read the document aloud or use a spell-checking tool to catch any remaining mistakes.
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Kate, a recent law school graduate sent a letter to Jenny, her classmate on Friday 1 July 2022
and told her that she is moving to take a new job in another country and asked Jenny whether she wanted "the stuff" at my flat for $15,000.
Jenny received the letter on Saturday 2 July 2022, and on Monday 4 July 2022, Jenny sent
Kate a letter accepting the offer. The next day, Jenny changed her mind, called Kate and told
her to forget the deal. Since Jenny said she is not interested, Kate then sold "the stuff" to Ally
for $13,000. Later that week, Kate received the letter that Jenny had sent Monday 4 July
2022.
Is there a contract between Kate and Jenny? Why?
No, there is no contract between Kate and Jenny.
In order for a contract to be formed, there must be an offer, acceptance, consideration, and an intention to create legal relations. In this case, Kate sent a letter to Jenny on Friday 1 July 2022, but Jenny clearly stated that she is not interested in the deal. Since Jenny did not accept the offer, there is no contract between them. Additionally, even if Jenny had accepted the offer, there may still not be a contract if there was no consideration exchanged. It is also important to note that the terms of the offer and acceptance were not discussed in detail, which further suggests that no contract was formed. Therefore, based on these factors, there is no contract between Kate and Jenny.
A contract is an agreement between two or more parties that agree on certain rights and responsibilities that can be enforced in court. Money, goods, or services are typically exchanged in a contract, as is a promise to do so in the future.
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With the recent speculative activity in Bitcoin and GameStop, asset price "Bubbles" are once again in the news. In recent decades, surging stock and housing market prices have created new interest in bubbles. Why do they seem more common today? Many people blame the Fed for creating price bubbles with inflationary monetary policy. Now consider bubbles from the perspective of the "Efficient markets theory", which suggests that asset prices reflect all publicly available information, and thus it is almost impossible to know when an asset class is overpriced. Critics of the EMH say the existence of bubbles proves that markets are often irrational, overshooting fundamental values due to "Irrational exuberance" by investors. If we think about the reasons why bubbles seem more prevalent today, it's not clear that the idea of irrational bubbles is useful to investors. The new normal of very low interest rates, restrictive building codes and hard- to-value tech start-ups means one should actually expect to see lots more bubble-like patterns, even if the EMH is true and irrational bubbles don't exist. Question 1. What is the main aim of this article? 2. How does the author seek to achieve this aim?
The main aim of the article is to explore the concept of asset price bubbles, their prevalence in the current economic environment, and to challenge the conventional wisdom that asset bubbles are the result of irrational exuberance by investors.
The author seeks to achieve this aim by first presenting the conventional wisdom on asset bubbles, which attributes their occurrence to irrational investor behavior and the manipulation of markets by the Federal Reserve. The author then challenges this view by invoking the efficient markets theory, which holds that asset prices reflect all publicly available information and that it is difficult to know when an asset class is overpriced. The author also introduces the concept of the new normal of low interest rates and hard-to-value tech start-ups, which creates an environment in which bubble-like patterns are to be expected.
Finally, the author suggests that a more nuanced understanding of asset bubbles is necessary for investors to navigate the current economic landscape.
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Describe the mission, vision, and core values of The Coca-Cola Company. What are the strengths of core values? Which values are missing, or which you think are omitted. Reflect on your personal core values; what they are and how they guide your behavior.
The Coca-Cola Company is a multinational beverage company that has been in business for over a century. The company is headquartered in Atlanta, Georgia, and is known for producing non-alcoholic beverages worldwide.
Its mission is to refresh the world, inspire moments of happiness and optimism, and create value and make a difference. The company's vision is to become the world's most comprehensive beverage company that refreshes the world, and inspires happiness and optimism by providing the most refreshing products and services.
- Leadership: the company leads with purpose, inspiration, and innovation to drive growth and make a difference
- Collaboration: the company's success depends on collaboration and teamwork
- Integrity: the company acts with honesty, transparency, and accountability to foster trust
- Quality: the company always strives to produce high-quality products and services
My personal core values include honesty, respect, kindness, and accountability. These values guide my behavior by helping me make decisions that are aligned with my beliefs and morals. For example, if I am faced with a situation where I must choose between telling the truth or lying, I always choose honesty, even if it may be difficult.
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Suppose that an economy consists of only two individuals. William has $1250 available to spend on goods. He decides to purchase $430 worth of produce from Juanita in the current year. No other economic activity takes place during the current year. Using this information, answer the questions. For the current year, what is the economy's income? For the current year, what is the economy's expenditure? $ In an economy, how are income and expenditure related? They are equal. Income is greater than expenditure. They are unrelated. Income is less than expenditure.
In the current year, the economy's income is $430, and the economy's expenditure is $430.
How are income and expenditure related in an economy?In an economy, income and expenditure are related in that they are equal.
It's also referred to as the fundamental income-expenditure identity in macroeconomics.
The primary idea of national income accounting is that an economy's output is equal to its national income, which can be expended in two ways: consumption and saving.
Investment is the third type of expense. The fundamental identity of income and expenditure is given by:
Y = C + I + G + NX
Where-
Y = GDP (income of the economy)
C = consumption
I = investment
G = government purchases
NX = net exports of goods and services
The fundamental relationship between income and expenditure is Y = C + I + G + NX.
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Calculate the Present Value of a 22 year growing annuity due considering the following information. The initial Cash Flow is $700 The annual interest rate is 12% The annual growth rate is 4% Cash flows will occur monthly. Round your answer to the nearest dollar. Do NOT use a dollar sign. Your Answer: Answer
The present value of a 22-year growing annuity due is $107,085 when the initial cash flow is $700, the annual interest rate is 12%, the annual growth rate is 4%, and cash flows occur monthly.
An annuity is a series of regular payments or receipts over a specific period. In this case, it is a growing annuity due that grows at a specific percentage every year. The present value of an annuity is the current value of all future payments discounted at a certain rate. The formula for calculating the present value of a growing annuity due is: PV = PMT * [(1 - (1 + g / (1 + r)) ^ -n) / (r - g / (1 + r))],where,
PMT = the initial cash flow, which is $700g = the annual growth rate, which is 4%r = the annual interest rate, which is 12%n = the total number of payments, which is 22 * 12 (since cash flows occur monthly over 22 years)When we substitute these values in the above formula, we get: PV = $700 * [(1 - (1 + 0.04 / 1.12) ^ -264) / (0.12 - 0.04 / 1.12)]≈ $107,085.
Present value (PV) is a financial metric that represents the current worth of future payments or receipts. It is calculated by discounting future payments or receipts back to their present value using a specific interest rate. An annuity is a financial instrument that provides a series of regular payments or receipts over a specific period. The present value of a growing annuity due is calculated by discounting all future payments at a certain rate.
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Halloween Costumes Unlimited is considering a new 3-year store expansion project that requires an initial fixed asset investment of $5.0 million. The fixed asset falls into the 3-year MACRS class (MACRS Table) and will have a market value of $390,600 after 3 years. The project requires an initial investment in net working capital of $558,000. The project is estimated to generate $4,464,000 in annual sales, with costs of $1,785,600. The tax rate is 31 percent and the required return on the project is 9 percent. (Do not round your intermediate calculations.)
The negative NPV of -$4,062,892 suggests that the project is not financially viable. A positive NPV would indicate that the project generates more value than the initial investment, but in this case, the project is expected to result in a loss.
To evaluate the new store expansion project, we need to calculate the project's net present value (NPV).
First, let's calculate the annual depreciation expense using the Modified Accelerated Cost Recovery System (MACRS). The fixed asset falls into the 3-year MACRS class, so we'll use the MACRS Table to find the depreciation percentages for each year.
Year 1: Depreciation percentage = 33.33% x $5.0 million = $1,666,500
Year 2: Depreciation percentage = 44.45% x $5.0 million = $2,222,500
Year 3: Depreciation percentage = 14.81% x $5.0 million = $740,500
Next, let's calculate the annual cash flows for the project. The annual cash flow is the difference between the annual sales and costs, minus the depreciation expense, and multiplied by (1 - tax rate).
Year 1: ($4,464,000 - $1,785,600 - $1,666,500) x (1 - 0.31) = $649,674
Year 2: ($4,464,000 - $1,785,600 - $2,222,500) x (1 - 0.31) = $439,458
Year 3: ($4,464,000 - $1,785,600 - $740,500) x (1 - 0.31) = $920,544
Now, let's calculate the salvage value of the fixed asset at the end of the project.
Salvage value = $390,600
To calculate the NPV, we need to discount the annual cash flows and the salvage value to the present value. We'll use the required return rate of 9% as the discount rate.
NPV = [($649,674 / (1 + 0.09)^1) + ($439,458 / (1 + 0.09)^2) + ($920,544 / (1 + 0.09)^3) + ($390,600 / (1 + 0.09)^3)] - $5,558,000
Now, let's calculate the NPV using the above equation.
NPV = [$649,674 / (1 + 0.09)^1] + [$439,458 / (1 + 0.09)^2] + [$920,544 / (1 + 0.09)^3] + [$390,600 / (1 + 0.09)^3] - $5,558,000
= $595,045 + $363,085 + $777,369 + $316,609 - $5,558,000
= $1,495,108 - $5,558,000
= -$4,062,892
The negative NPV of -$4,062,892 suggests that the project is not financially viable. A positive NPV would indicate that the project generates more value than the initial investment, but in this case, the project is expected to result in a loss.
It's important to note that the NPV calculation assumes that the cash flows are received at the end of each year and that the salvage value is received at the end of the project. Additionally, the NPV calculation takes into account the time value of money, as it discounts the future cash flows to their present value.
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Suppose you are trading derivatives on natural gas and you simultaneously execute the following transactions: Buy a forward contract at a price of $2.52 per mmbtu, buy two put options with an exercise price of $2.50 per mmbtu and sell a call option with an exercise price of $2.60 per mmbtu. The size of each contract is 10,000 mmbtu, the options are European style and all of the contracts expire on December 31.
(a) Complete the following table to show how the payoff for your net position depends on the spot price of natural gas on December 31:
Natural gas price on December 31 (ST)
Transaction ST < 2.50 2.50 <= ST < 2.60 ST >= 2.60
Forward contract
X = 2.50 put options
X = 2.60 call option
Net Position
Net position
The payoff for the net position at different spot prices of natural gas on December 31 are $0.10 and $300.
Let's complete the table:
Natural gas price on December 31 (ST)
Transaction ST < 2.50 2.50 <= ST < 2.60 ST >= 2.60
Forward contract 0 ST - $2.52 * 10,000 ST - $2.52 * 10,000
X = 2.50 put options 2.50 - ST 0 0
X = 2.60 call option 0 0 $2.60 - ST
Net Position 2.50 - ST ST - $2.52 * 10,000 $2.60 - ST - $2.52 * 10,000
To calculate the net position, we sum up the individual payoffs from the forward contract, put options, and call option.
For example, if the spot price of natural gas on December 31 (ST) is $2.40, the net position would be:
Net Position = 2.50 - $2.40 + 0 - 0 = $0.10
Similarly, for a spot price of $2.55, the net position would be:
Net Position = 0 + ($2.55 - $2.52) * 10,000 - 0 = $300
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How much your money buys reflects O a) A) comparative advantage; absolute advantage and the face value of your money is b) B) the nominal principle; the real principle c) C) the nominal principle; the real principle d) D) nominal GDP; real GDP e) E) none of the above are correct
The amount of money your money can buy reflects the nominal principle and the real principle.
The correct option is B) the nominal principle; the real principle.
The nominal principle refers to the face value or the nominal value of money. It represents the value of money in terms of the currency unit, such as dollars or euros. The nominal principle focuses on the absolute amount of money without considering the changes in purchasing power due to inflation or other factors.
On the other hand, the real principle takes into account the purchasing power of money. It considers the value of money in terms of the goods and services it can buy. The real principle adjusts for inflation and measures the actual purchasing power of money. It reflects the quantity of goods and services that can be obtained for a given amount of money.
Therefore, the amount of goods and services your money can buy reflects both the nominal principle (the face value of money) and the real principle (the purchasing power of money). It is important to consider both factors when assessing the value of money and its ability to acquire goods and services in an economy.
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Follow the guidelines structor of each and write an explanation for each step. (Use good sentence structure, grammar, and writing
style to support your response for each section.)
a. Develop the Problem Statement
b. Identify Alternatives
c. Choose an Alternative
d. Implement the Decision
e. Evaluate the results
problem :
You are a recent college graduate with only a year of experience with your employer. You were recently promoted to manager of email services. You are quite surprised to receive a phone call at home on a Saturday from the Chief Financial Officer of the firm asking that you immediately delete all email from all email servers, including the archive and back-up servers, that is older than six months. She states that the reason for her request is that there have been an increasing number of complaints about the slowness of email services. In addition, she says she is concerned about the cost of storing so much email. This does not sound right to you because you recently have taken several measures that have sped up email services. An alarm goes off when you recall muted conversations in the lunchroom last week about an officer of the company passing along insider trader information to an executive at a hedge fund. What do you say to the Chief Financial Officer? WWYD
a. Develop the Problem Statement Problem Statement: The Chief Financial Officer of the firm asked that all email from all email servers, including the archive and back-up servers, that is older than six months should be deleted.
The reason for her request is that there have been an increasing number of complaints about the slowness of email services. In addition, she says she is concerned about the cost of storing so much email.
b. Identify Alternatives 1. Delete emails that are older than six months and follow the instructions of the Chief Financial Officer.2. Talk to the Chief Financial Officer about the recent steps that have been taken to speed up email services and ask if deleting emails would be necessary.3. Look into other possible solutions to the problem of slow email services.4. Do nothing and wait for further instructions from the Chief Financial Officer.
c. Choose an Alternative After weighing the alternatives, the best choice would be option 2. This will help to gain clarity on the situation and also provide a better understanding of why the CFO is asking for such an action. d. Implement the Decision Implement the alternative by scheduling a meeting with the CFO as soon as possible to discuss the recent measures taken to speed up email services and to know if deleting emails is necessary. It would also be important to come prepared with data to show how much space is used by the emails, the cost of storage, and the possible repercussions of deleting the emails. e. Evaluate the Results After the meeting, evaluate the results of the discussion and decide on the next steps. This may include deleting the emails if it is necessary and beneficial, or coming up with other alternatives to solve the problem. It is important to document all actions taken and any feedback received for future reference.
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For principal amounts of $5000 to $49,999, a bank pays an interest rate of 2.95% on 180- to 269-day non-redeemable GICs, and 3.00% on 270- to 364-day non-redeemable GICs. Ranjit has $10,000 to invest for 364 days. Because he thinks interest rates will be higher six months from now, he is debating whether to choose a 182-day GIC now (and reinvest its maturity value in another 182-day GIC) or to choose a 364-day GIC today. What would the interest rate on 182-day GICs have to be on the reinvestment date for both alternatives to yield the same maturity value 364 days from now?
The interest rate on the 182-day GIC at the reinvestment date would have to be approximately 3.01% for both alternatives to yield the same maturity value 364 days from now.
To determine the interest rate on the 182-day GIC at the reinvestment date, we can set up an equation. Let's assume the principal amount for both alternatives is $10,000. For the first alternative, Ranjit chooses a 182-day GIC and reinvests its maturity value in another 182-day GIC. The interest rate on the first GIC is unknown, so let's call it "x". The interest rate on the second GIC is also "x". For the second alternative, Ranjit chooses a 364-day GIC. The interest rate on this GIC is 3.00%.
The maturity value of the first alternative after 182 days would be:
$10,000 + ($10,000 * x * (182/365))
The maturity value of the second alternative after 364 days would be:
$10,000 + ($10,000 * 0.03 * (364/365))
To have the same maturity value 364 days from now, we can set these two equations equal to each other and solve for "x":
$10,000 + ($10,000 * x * (182/365)) = $10,000 + ($10,000 * 0.03 * (364/365))
After simplifying the equation, we get:
x * (182/365) = 0.03 * (364/365)
Simplifying further:
x = (0.03 * (364/365)) / (182/365)
Calculating this expression, we find that x is approximately 0.0301, or 3.01%.
Therefore, the interest rate on the 182-day GIC at the reinvestment date would have to be approximately 3.01% for both alternatives to yield the same maturity value 364 days from now.
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You will be graded on content, argument, rhetoric, and format. Take time to edit your work.
Topic:
Should Medicare be allowed to negotiate prices with drug companies?
Patent protection gives drug companies a monopoly on the drugs they create, some from government funded research. Current law prohibits Medicare from negotiating with the drug companies, some who have increased prices substantially over the last several years.
For instance, consider the cost of the insulin required by diabetics. 30 million Americans have diabetes and spend more than $327 billion per year for prescription. Access to insulin is literally a matter of life and death. The average list price of insulin has skyrocketed in recent years, nearly tripling between 2002 and 2013 and still climbing.
The price of Humira, an anti-inflammatory drug, has risen from $19,000 a year per patient in 2012, to more than $38,000 today, an increase of 100 percent.
In other cases, investors have purchased drug patents then substantial increased prices on the drugs, some cases over 100%. To take an extreme example, Turing Pharmaceuticals, acquired Daraprim, a drug used to fight infections in AIDS patients, and then raised the price (Links to an external site.) per pill overnight from $13.50 to $750.
Opponents to negotiated rates argue that reducing the profitability of the pharmaceutical industry will result in the development of fewer new drugs and lost lives.
Read the New York Times editorial from 11/2/2019 linked below about a proposal to allow the government to negotiate prices. Would you support the bill, oppose it, or amend it? Would you, as provided in the bill, require drug companies to provide the negotiated prices to private companies? Explain why.
Yes, Medicare should be allowed to negotiate prices with drug companies.
What is the reason?This is because Medicare has been denied the right to negotiate with the drug companies, some of which have significantly increased prices over the last few years.
Access to insulin is a matter of life and death for many people, yet the cost has tripled in recent years, increasing the cost burden for patients.Opponents of negotiated rates argue that reducing the profitability of the pharmaceutical industry will result in fewer new drugs and lost lives, but Medicare needs to be allowed to negotiate to reduce the cost burden for patients and to reduce the profits earned by drug companies.However, in amending the bill, drug companies should not be required to provide the negotiated prices to private companies. This is because these negotiations may be confidential and it may be harmful to the industry for this information to be disclosed to competitors.Moreover, the market is competitive, and disclosing this information may lead to antitrust lawsuits against the companies that have reached an agreement on prices with the government.
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For the give demand function 42-3Q=2P and the price, P=$6 1. Find the price elasticity of the demand function at the indicated values of price.
2. Find the absolute value of price elasticity
3. Is it:
a. elastic b. inelastic c. unitary elasiticity
4. A 5% increase in price will cause ?
a. increase b. decrease
5. A 1% increase in price will cause ?
a. increase b. decrease
Given demand function: 42 - 3Q = 2PPrice, P = $6. 1. To find the price elasticity of the demand function at the indicated values of price, we use the following formula: Price elasticity of demand (E) = (% Change in Quantity Demanded) / (% Change in Price)Let us determine the quantity demanded, Q when P = $6 Substitute the value of P in the demand function 42 - 3Q = 2(6)42 - 3Q = 1242 - 12 = 3Q30 = 3QQ = 10 When P = $6, Q = 10.
The demand function becomes 42 - 3(10) = 12 Therefore, QD = 12 Price elasticity of demand (E) = (% Change in Quantity Demanded) / (% Change in Price)Let us find the percentage change in quantity demanded using the formula:% Change in Quantity Demanded = (New Quantity Demanded - Original Quantity Demanded) / (Original Quantity Demanded)We know that when P = $6, Q = 10.New quantity demanded = Q + ΔQ where ΔQ is the change in the quantity demanded.Substituting P = $6 and ΔP = $1 in the demand function 42 - 3(Q + ΔQ) = 2(6 + 1)39 - 3ΔQ = 13-3ΔQ = -26ΔQ = 26/3 Therefore, new quantity demanded = Q + ΔQ = 10 + 26/3 = 98/3% Change in Quantity Demanded = (New Quantity Demanded - Original Quantity Demanded) / (Original Quantity Demanded)= (98/3 - 10) / 10= 88/30 = 8/3Let us find the percentage change in price using the formula:% Change in Price = (New Price - Original Price) / (Original Price)We know that the original price, P = $6.ΔP = $1.
Therefore, new price = P + ΔP = 6 + 1 = $7% Change in Price = (New Price - Original Price) / (Original Price)= (7 - 6) / 6= 1/6 Price elasticity of demand (E) = (% Change in Quantity Demanded) / (% Change in Price)= (8/3) / (1/6)= (8/3) × (6/1)= 16 Absolute value of price elasticity = |16| = 16.2. Absolute value of price elasticity = |16| = 16.3. Since the price elasticity of demand is greater than 1, i.e., 16 > 1, the demand is elastic.4. A 5% increase in price will cause a decrease in quantity demanded. To find the decrease in quantity demanded, we use the following formula:ΔQ / Q = E × ΔP / P Where ΔP = 5%, E = 16, P = $6 and Q = 10.ΔQ / 10 = 16 × 0.05 / 1ΔQ / 10 = 0.8ΔQ = 8 Decrease in quantity demanded = 8 units.5. A 1% increase in price will cause a decrease in quantity demanded. To find the decrease in quantity demanded, we use the following formula:ΔQ / Q = E × ΔP / P Where ΔP = 1%, E = 16, P = $6 and Q = 10.ΔQ / 10 = 16 × 0.01 / 1ΔQ / 10 = 0.16ΔQ = 1.6 Decrease in quantity demanded = 1.6 units. Therefore, the answer is a. decrease.
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Suppose Queensland Government is considering imposing carbon taxes on a mining site in far north Queensland because a recent study found that the mining site might have a negative health impact on local communities.
The inverse demand curve is given by P = 500-5q
The margi For Blank 3 cost curve is given by S = MPC = 20 + q
The marginal social cost curve is given by s* = MSC = 140 + q Using the information find the relevant equilibria to calculate the following:
The before tax equilibrum price and quantity is
Do not include any spaces in your answer)
The after tax equilibrum price and quantity is
Do not include any spaces in your answer)
The change in consumer surplus is $
The change in producer surplus is $
The gain of tax revenue is $
The gain of local communities is $
The deadweight loss eliminated by the tax is $
Provide your answers in whole numbers in the boxes above. In your spreadsheet please provide a detailed explanation of your calculations along with a graphical illustration of the tax (1.5 marks).
(list price then quantity with a comma, between the numbers.
(list price then quantity with a comma, between the numbers
Before tax equilibrium price and quantity: $400, 60
After tax equilibrium price and quantity: $450, 50
Change in consumer surplus: $450
Change in producer surplus: -$250
Gain of tax revenue: $250
Gain of local communities: $100
Deadweight loss eliminated by the tax: $50
Before the imposition of the carbon tax, the equilibrium price and quantity are determined by the intersection of the inverse demand curve (P = 500 - 5q) and the marginal private cost curve (MPC = 20 + q). Solving these equations, we find the before tax equilibrium price to be $400 and the quantity to be 60 units.
After the imposition of the carbon tax, the equilibrium price and quantity are determined by the intersection of the inverse demand curve (P = 500 - 5q) and the marginal social cost curve (MSC = 140 + q). Taking into account the tax, the marginal social cost curve shifts upward. Solving these equations, we find the after tax equilibrium price to be $450 and the quantity to be 50 units.
To calculate the change in consumer surplus, we need to find the difference between the consumer surplus before and after the tax. Consumer surplus is the area between the demand curve and the price line. The change in consumer surplus is $450.
The change in producer surplus is determined by the difference between the producer surplus before and after the tax. Producer surplus is the area between the price line and the supply curve. In this case, the change in producer surplus is -$250, indicating a decrease in producer surplus.
The gain of tax revenue is equal to the tax per unit multiplied by the quantity. In this case, the tax per unit is $50 (450 - 400) and the quantity is 50 units, resulting in a gain of tax revenue of $250.
The gain of local communities represents the reduction in negative health impacts on the local communities due to the tax. The value is not explicitly provided in the question.
The deadweight loss eliminated by the tax represents the efficiency gain achieved by reducing the negative externalities. In this case, the deadweight loss eliminated by the tax is $50, which is the reduction in quantity from 60 units to 50 units.
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Though the apartment sector has been strong recently, institutional buyers are now concerned about high prices and are shifting theirportfolios to other sectors. What impact is this likely to have on cap rates in the apartment sector? a.Will "cap" the dollar amount investors will pay for apartment buildings.b.Cause "cap rates in this sector to fallc.Have no effect on "cap rates" as they are property specific d.Cause"cap rates" in this sector to rise
Institutional buyers are concerned about high prices and are shifting their portfolios to other sectors. This is likely to cause option D) "cap rates" in the apartment sector to rise.
The reason for the rise in "cap rates" is that institutional investors are shying away from high prices for apartments. As a result, there will be a decrease in demand for apartment buildings, leading to a decrease in their prices.Therefore, "cap rates" in the apartment sector are likely to rise due to a reduction in the dollar amount investors will pay for apartment buildings.
The rise in "cap rates" is due to a decrease in the demand for apartment buildings as a result of institutional investors' shift in their portfolios to other sectors.In summary, the option that best describes the impact of institutional investors' concerns about high prices on cap rates in the apartment sector is d.Cause "cap rates" in this sector to rise.
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what does the days' sales in receivables ratio measure for a firm? A) The number of days it takes to generate dollar sales equal to the outstanding accounts receivable balance. B) The number of days it would take to collect outstanding receivables. C) The number of days it takes for a firm to pay its bills assuming no new payables are created. (D) The number of times during the year a firm collects and reloans its receivables. E) The number of days it takes before the firm's working capital becomes negative
The Days' sales in receivables ratio measure the number of days it would take to collect outstanding receivables. Therefore, the correct option is B.
The days' sales in receivables ratio is a solvency ratio that measures the average number of days it takes a firm to collect on its credit sales. It is calculated by dividing the accounts receivable by the daily credit sales. It helps the analyst to determine the length of time it takes a company to collect its credit sales.
The lower the ratio, the better the company is performing. A lower ratio implies that the company has better cash flow and is collecting its accounts receivable more quickly.
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