Answer:
a) 16%
b) 2.25
c) Increase in expected market risk premium
Explanation:
Expected standard deviation of market return = 20%
measure of risk aversion ( A ) = 4
a) Determine a reasonable expected market risk premium
= A * ( std ) ^2
= 4 * ( 20%)^2
= 16%
b) determine Value of A
market risk premium = A * ( std )^2
∴ A = 9% / ( 20% ) ^2
= 0.09 / 0.04
= 2.25
c) If investors become more risk tolerant the expected market risk premium will increase
For sale by owner, 3 bedroom home, family room, fireplace, den , large master bedroom
Answer:
The total dollar return on this investment is $1765
Explanation:
The total dollar return on the investment by Sue is a sum of the interest earned by Sue during this period and the profit due to the increase in bid/ask price of the bond.
Interest earned = [(0.035/2) x $100,000] = $1750;
The selling price by Sue today will be the bid quote today and for the purchase price on which Sue bought the bond we will take the asked quote on purchase.
bid quote today = 124.2175
asked quote on purchase = 124.2025
Profit earned on selling = (Bid quote today - Asked quote on purchase) * $100,000
= [(124.2175 - 124.2025) x $100,000] = $15
Total return = $1750 + $15 = $1765
Answer: $69,959
Explanation:
The amount of interest expense, that Corso will record on December 31, 2019, the company’s fiscal year end will be calculated thus:
First, we calculate the present value of payment which will be made on September 30,2020 and this will be:
= $1000000 × 0.857339
= $857339
Then, the interest expense on December 31,2018 will be:
= $857339 × 8%/12 × 3
= $17147
Therefore, the Interest expense on December 31,2019 will be:
= ($857339 + $17147) × 8%
= $874486 × 0.08
= $69959
Proforma statements are those that depict proposed transactions' results as if they had already happened.
<h3>What are
Proforma statements?</h3>
There are several aspects of corporate decision-making that rely heavily on figures. You must show that your ideas are financially sound in order to gain support from important stakeholders, attract investors, and strategically plan.
A historical snapshot of a company's performance can be provided by some financial documents, such as balance sheets, income statements, cash flow statements, and annual reports, but they sometimes lack the ability to provide foresight when making future planning decisions. Because of this, professionals frequently use predictions and financial projections to inform their decisions and provide crucial "what if" scenarios. A frequent kind of projection that can be helpful in these circumstances is pro forma financial statements.
Learn more about Proforma statements here:
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