1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Nataly_w [17]
2 years ago
8

Stock A has a beta of 1.2 and a standard deviation of 20%. Stock B has a beta of 0.8 and a standard deviation of 25%. Portfolio

P has $200,000 consisting of $100,000 invested in Stock A and $100,000 in Stock B. Which of the following statements is CORRECT? (Assume that the stocks are in equilibrium.) a. Portfolio P has a standard deviation of 22.5%. b. Portfolio P has a beta of 1.0. c. Stock B has a higher required rate of return than Stock A. d. More information is needed to determine the portfolio's beta. e. Stock A's returns are less highly correlated with the returns on most other stocks than are B's returns.
Business
1 answer:
noname [10]2 years ago
5 0

Answer:

The correct answer is option b.

Explanation:

Stock A has a beta of 1.2 and a standard deviation of 20%.

Stock B has a beta of 0.8 and a standard deviation of 25%.

Portfolio investment is $200,000.

Investment in stock A is $100,000.

Investment in stock B is $100,000.

The portfolio beta is

=\frac{Investment in stock A}{portfolio investment} *beta of stock A+\frac{Investment in stock B}{portfolio investment} *beta of stock B

=\frac{100,000}{200,000}*1.2+\frac{100,000}{200,000}*0.8

=0.6+0.4

=1

So, the portfolio beta for P is 1.

You might be interested in
Eric wants to invest in government securities that promise to pay $1,000 at maturity. The opportunity cost (interest rate) of ho
Scrat [10]

Answer:

The second option which 5 years to maturity exhibited a lower price of

$523.95  

Explanation:

In order to ascertain the option with lower, it is important we determine the price of each investment based on the fact the price of an investment opportunity today is the present value of its future cash flow is the maturity value of $1000 in both cases:

a.

PV=FV/(1+r)^n

PV=price of investment

FV=future value=$1000

r= 13.80%.

n=4 years

PV=$1000/(1+13.80%)^4

PV=$596.25

b.

PV=FV/(1+r)^n

PV=price of investment

FV=future value=$1000

r= 13.80%.

n=5 years

PV=$1000/(1+13.80%)^5

PV= $523.95  

7 0
3 years ago
​if an employee feels she is underpaid for the effort she exerts, she will probably:
9966 [12]
Quit or ask for a raise
4 0
3 years ago
Where do banks get money to lend to borrowers?
Marysya12 [62]

The answer is<u> "depositors".</u>


An individual who is making a deposit with the bank is known as a depositor. The depositor is the moneylender of the cash which will be come back to him/her toward the finish of the store time frame.  

A depositor (you) places cash in a banks vault, at that point the bank putts enthusiasm on it, and can utilize it in the event that it needs to. Up to a specific measure of it remains in the bank on the off chance that you need to come and withdraw.

5 0
3 years ago
Read 2 more answers
Each statement below is part of an economic model. Indicate whether the statement is a prediction of cause and effect or an assu
aivan3 [116]

Answer:

(a) Assumption

(b) Cause and Effect

(c) Cause and effect

(d) Assumption

Explanation:

(a)  People behave rationally: Assumption

Rational behavior refers to a decision-making process that is based on making assumptions that result in an optimal level of benefit or utility.

(b) Cause and Effect

If a price of goods falls that is a cause and the effect is that  people will consume more of the good.

(c) Cause and effect

As the population grows faster than food supply (cause), mass starvation is predicted to occur which is the resultant effect.

(d) Assumption

The maximization of profit is based on the assumption of theory of production and costs.

4 0
2 years ago
Read 2 more answers
A jet ski that previously sold for $5,599.99 has been reduced to $3,863.99. What is the markdown percent? (Round your answer to
tangare [24]

Answer:

31%

Explanation:

The current price is $3,863.99

The precious price is $5,599.99

The actual difference in price is  $5,599.99 - $3,863.99

=$ 1, 736.00

Percentage  decrease will be  actual decrease/ original price X 100

= $ 1736.00/ $5,599.99 x 100

=0.31 x 100

=31%

5 0
3 years ago
Other questions:
  • Ursus, Inc., is considering a project that would have a five-year life and would require a $2,400,000 investment in equipment. A
    14·1 answer
  • After completing the research process, writers should include their findings by
    5·1 answer
  • How would age determine which investment strategies you would choose?
    7·2 answers
  • The internet enables people to make better economic decisions because they can do which of the following?
    15·2 answers
  • Question 7
    11·1 answer
  • Choose one of the common workplace torts discussed in the chapter readings for this unit (except genetic testing). Prepare a spe
    11·1 answer
  • Read the sentence.
    9·2 answers
  • Difference between listening and hearing?​
    11·2 answers
  • Jacob Engineering Group views and organizes its marketing activities from the viewpoint of its buyers. Management works hard to
    9·1 answer
  • During August, the receipts and distributions of Material No. B4G9 are as follows: Received Aug. 31,100 units at $15 161,700 uni
    14·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!