Emilio paid $500,000 for the purchase of a franchise in a new professional soccer league. The franchise is in the form of a limited partnership under which Emilio is not permitted to actively participate in the management of the team. The promoters of
the league are to do all of the management and to make all of the decisions regarding that management. Emilio will receive 15% of all gate receipts and revenue generated from the sale of licensed items such as jackets and coffee mugs. Is the franchise a security within the meaning of the federal securities laws?
The franchise fits the definition of a security, because Emilio is a passive investor. The definition of security that found in Section 21. of the 1933 Act is broad enough to include the transaction here. Furthermore, the basic test enunciated by the Supreme Court for determining the existence of a security involves three elements: 1. an investment in a common venture; 2. premised on a reasonable expectation of profit; and 3. to be derived from the entrepreneurial or management efforts of others. The franchise meets all three elements of this test.
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You are planning to buy a stock, the risk on which is dependent on two factors: (1) the change over the last year in the inflation rate and (2) the spread between ten-year Treasury bonds and three-month Treasury bills. Suppose the average risk-free interest rate is 1 percent. The beta coefficients of the stock associated with the change in inflation rate and spread between ten-year Treasury bonds and three-month Treasury bills are -2 and 5 respectively. If you expect the inflation rate to rise 1 percentage point and you think the spread will be 3 percentage points. What is the expected return to this stock? Use the arbitrage-pricing theory.
A. 11 percent B. 12 percent C. 14 percent D. 18 percent
As negotiations move toward a close, negotiators must attend to two key aspects of communication and negotiation simultaneously: the avoidance of fatal mistakes and the achievement of satisfactory closure in a constructive manner.
Answer the following statement true (T) or false (F)
Carlton Corporation Carlton Corporation produces and sells faux-leather handbags. In the current year, the company budgeted for the production and sale of 1,000 handbags; however, 900 handbags were actually produced and sold. Each bag has a standard requiring two yards of material at a cost of $4.00 per yard and 1 hour of assembly time at a cost of $9.50 per hour. Actual costs for the production
of 900 bags were $7,215 for materials (1,850 yards purchased and used @ $3.90 per yard) and $10,125 for labor (1,125 hours @ $9.00 per hour). Refer to the Carlton Corporation information above. Carlton's direct materials usage variance is: A) $585 U. B) $600 U. C) $195 F. D) $200 U.
Three yards of material ____ needed for the costume
A) were B) was