Question

Pelican Point Financial Group’s clientele consists of two types of investors. The first type of investor...

Pelican Point Financial Group’s clientele consists of two types of investors. The first type of investor makes many transactions in a given year and has a net worth of over $1.5 million. These investors seek unlimited access to investment consultants and are willing to pay up to $30,000 annually for no-fee-based transactions, or alternatively, $50 per trade. The other type of investor also has a net worth of over $1.5 million but makes few transactions each year and therefore is willing to pay $105 per trade.

As the manager of Pelican Point Financial Group, you are unable to determine whether any given individual is a high- or low-volume transaction investor. To deal with this issue, you design a self-selection mechanism that permits you to identify each type of investor. You offer two types of plans for customers with more than $1.5 million in assets: one plan has an annual maintenance fee but offers a large number of "free" transactions (call this the "Free Trade" Account); the other plan has no annual maintenance fee but charges for each transaction (call this the "Free Service" Account).

Determine the specifics for each plan as listed below:

"Free Trade" Account:

Annual maintenance fee = $

Number of "free" transactions =

Price for each transaction in excess of the number of "free" transactions = $


"Free Service" Account:

Price per transaction = $

Homework Answers

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Pelican Point Financial Group’s clientele consists of two types of investors. The first type of investor...
Pelican Point Financial Group’s clientele consists of two types of investors. The first type of investor makes many transactions in a given year and has a net worth of over $2 million. These investors seek unlimited access to investment consultants and are willing to pay up to $30,000 annually for no-fee-based transactions, or alternatively, $40 per trade. The other type of investor also has a net worth of over $2 million but makes few transactions each year and therefore is...
Pelican Point Financial Group’s clientele consists of two types of investors. The first type of investor...
Pelican Point Financial Group’s clientele consists of two types of investors. The first type of investor makes many transactions in a given year and has a net worth of over $2.5 million. These investors seek unlimited access to investment consultants and are willing to pay up to $20,000 annually for no-fee-based transactions, or alternatively, $50 per trade. The other type of investor also has a net worth of over $2.5 million but makes few transactions each year and therefore is...
?You have been asked by an investor to value a restaurant. Last year, the restaurant earned...
?You have been asked by an investor to value a restaurant. Last year, the restaurant earned pretax operating income of $350,000. Income has grown 5% annually during the last five years, and it is expected to continue growing at that rate into the foreseeable future. The annual change in working capital is $30,000, and capital spending for maintenance exceeded depreciation in the prior year by $20,000. Both working capital and the excess of capital spending over depreciation are projected to...
1-You recently sold 50 shares of Microsoft stock to your brother at a family reunion. At...
1-You recently sold 50 shares of Microsoft stock to your brother at a family reunion. At the reunion your brother gave you a check for the stock and you gave your brother the stock certificates. Which of the following best describes this transaction? * A. This is an example of a direct transfer of capital. B. This is an example of a primary market transaction. C. This is an example of a money market transaction. D. This is an example...
1-You recently sold 50 shares of Microsoft stock to your brother at a family reunion. At...
1-You recently sold 50 shares of Microsoft stock to your brother at a family reunion. At the reunion your brother gave you a check for the stock and you gave your brother the stock certificates. Which of the following best describes this transaction? * A. This is an example of a direct transfer of capital. B. This is an example of a primary market transaction. C. This is an example of a money market transaction. D. This is an example...
Pandora is the Internet’s most successful subscription radio service. As of June 2013, it had over...
Pandora is the Internet’s most successful subscription radio service. As of June 2013, it had over 200 million registered users (140 million of which access the service via a mobile device) and over 70 million active listeners. Pandora now accounts for more than 70% of all Internet radio listening hours and a 7% share of total U.S. radio listening (both traditional and Internet). At Pandora, users select a genre of music based on a favorite musician, and a computer algorithm...
Suppose you have been hired as a financial consultant to Defense Electronics, Inc. (DEI), a large,...
Suppose you have been hired as a financial consultant to Defense Electronics, Inc. (DEI), a large, publicly traded firm that is the market share leader in radar detection systems (RDSs). The company is looking at setting up a manufacturing plant overseas to produce a new line of RDSs. This will be a five-year project. The company bought some land three years ago for $3.9 million in anticipation of using it as a toxic dump site for waste chemicals, but it...
BLADES, INC. CASE Assessment of Exchange Rate Exposure Blades, Inc., is currently exporting roller blades to...
BLADES, INC. CASE Assessment of Exchange Rate Exposure Blades, Inc., is currently exporting roller blades to Thailand and importing certain components needed to manufacture roller blades from that country. Under a fixed contractual agreement, Blades' primary customer in Thailand has committed itself to purchase 180,000 pairs of roller blades annually at a fixed price of 4,594 Thai baht (THB) per pair. Blades is importing rubber and plastic components from various suppliers in Thailand at a cost of approximately THB2,871 per...
1. A Treasury bond has a 10% annual coupon and a 10.5% yield to maturity. Which...
1. A Treasury bond has a 10% annual coupon and a 10.5% yield to maturity. Which of the following statements is CORRECT? * a. The bond sells at a price below par. b. The bond has a current yield less than 10%. c. The bond sells at a discount. d. a & c. e. None of the above 2. J&J Company's bonds mature in 10 years, have a par value of $1,000, and make an annual coupon interest payment of...
Review the Robatelli's Pizzeria Case Study. Develop another internal controls system, but this time, in the...
Review the Robatelli's Pizzeria Case Study. Develop another internal controls system, but this time, in the purchases and fixed assets business areas. Prepare a 12- to 16-slide presentation describing the purchases and fixed assets business areas. Be sure to incorporate speaker notes as well as appropriate visuals, graphics, fonts, etc. Include any associated risk in these areas. Describe specific internal controls that include authorization of transactions, segregation of duties, adequate records and documentation, security of assets, and independent checks and...