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1

Finance Sep 29, 2020

1.1 pt Corporate income tax) . R. Edwin Inc. hades of $6.01 milion during the past year. The cost of goods sold mounted to 12.8 million Operating expense wated $2.5 milion, and expense was $27.000 the corporate as shown in the OUD Window to determine the ability What we the feverage and rargalt? The's taxabity for the years and to the newest The 's were tax rates (Round towels The firm's marginal tax rates N Round to the nearest
i Data Table - X Taxable income Marginal Tax Rate $0-$50,000 15% $50,001 - $75,000 25% $75,001 - $100,000 34% $100,001 - $335,000 39% $335,001 - $10,000,000 34% $10,000,001 - $15,000,000 35% $15,000,001 - $18,333,333 38% Over $18,333,333 35% Print Done

2.Corporate income tax Barrington terprises came 54 min intable contenitore dhe most recent year of prions. Use the companies shown in the window to cut the sta ove your Whales and mana? The first bity for the yow Rand to the need The few's age rate is found to two decimale) Trasna taxe Round to the wester)
i Data Table 02 Taxable Income Marginal Tax Rate $0-$50,000 15% $50,001 - $75,000 25% $75,001 - $100,000 34% $100,001 - $335,000 39% $335,001 - $10,000,000 34% $10,000,001 - $15,000,000 35% $15,000,001 - $18,333,333 38% Over $18,333,333 35% 

3.Use the information for the question(s) below. An exchange traded fund (ETF) is a security that represents a portfolio of individual stocks. Consider an ETF for which each share represents a portfolio of 2 shares of International Business Machines (IBM), 3 shares of Merck (MRK), and 3 shares of Citigroup Inc. (C). Suppose the current market price of each individual stock is shown below: Stock Current Price IBM MRK $40 $75 $92 ? Suppose that the ETF is trading for $561.00. Assuming there are no transaction costs and no taxes, what arbitrage opportunity is available? O Buy the ETF and sell 2 shares of IBM, 3 shares of MRK, and 3 shares of C. O Buy the ETF and sell 3 shares of IBM, 2 shares of MRK, and 3 shares of C. No arbitrage opportunity exists. O Sell the ETF and buy 2 shares of IBM, 3 shares of MRK, and 3 shares of C. O Sell the ETF and buy 3 shares of IBM, 2 shares of MRK, and 3 shares of C.

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answer 3.

Buy the ETF & sell 2 shares of IBM, 3 of MRK, 3 shares of C

Let us compute the estimated price of the ETF based on its composition

Estimated Price of ETF = 2 * Share price of IBM + 3 * Share price of MRK + 3 * Share price of C

Estimated Price of ETF = 2 * $40 + 3 * $75 + 3 * $92

Estimated Price of ETF = $581

Actual price of ETF = $561

Estimated Price of ETF > Actual price of ETF

There is an arbitrage opportunity to exploit in the ETF. It can be done by buying(taking a long position) in the ETF & selling(taking a short position) in the ETF constituents i.e 2 shares of IBM, 3 of MRK, 3 shares of C

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