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posledela
3 years ago
6

homeworklib You want to evaluate three mutual funds using the information ratio measure for performance evaluation. The risk-fre

e return during the sample period is 6%, and the average return on the market portfolio is 19%. The average returns, residual standard deviations, and betas for the three funds are given below. Average Return Residual Standard Deviation Beta Fund A 20 % 4.00 % 0.8 Fund B 21 % 1.25 % 1.0 Fund C 23 % 1.20 % 1.2 The fund with the highest information ratio measure is Multiple Choice Funds A and C (tied for highest). Funds A and B (tied for highest). Fund A. Fund C. Fund B.
Business
1 answer:
bezimeni [28]3 years ago
5 0

Answer:

The fund with the highest ratio is Fund B.

Explanation:

Risk-free return = 6%

The average return on the market portfolio = 19%

The ratio equation formula is as follows:

FUND A: Return on fund - Risk free rate - Beta (Return on market portfolio -  Risk free rate)/Standard deviation of fund

FUND A : 20 - 6 - 0.8(19 - 6 ) / 4 = 0.9

FUND B : 21 - 6 - 1(13)/1.25 = 1.6

FUND C : 23 -6 - 1.2 (13 ) /1.2 = 1.167

Therefore, the fund with the highest ratio is Fund B.

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Investment X offers to pay you $4,020 per year for 12 years, whereas Investment Y offers to pay you $2,041 per year for 7 years.
inna [77]

Answer:

$16,481.68

Explanation:

Note that the present value of each yearly cash inflow can be determined using the formula provided below:

PV of cash inflow=cash inflow/(1+discount rate)^n

n is the year in which the cash inflow is expected, it is 1 for year 1 cash inflow, 2 for year 2 and so on.

PV of Investment X=$4,020/(1+11%)^1+$4,020/(1+11%)^2+$4,020/(1+11%)^3+$4,020/(1+11%)^4+$4,020/(1+11%)^5+$4,020/(1+11%)^6+$4,020/(1+11%)^7+$4,020/(1+11%)^8+$4,020/(1+11%)^9+$4,020/(1+11%)^10+$4,020/(1+11%)^11+$4,020/(1+11%)^12

PV of investment X=$26,099.27

PV of investment Y=$2,041/(1+11%)^1+$2,041/(1+11%)^2+$2,041/(1+11%)^3+$2,041/(1+11%)^4+$2,041/(1+11%)^5+$2,041/(1+11%)^6+$2,041/(1+11%)^7

PV of investment Y=$9,617.59  

the difference in PV=$26,099.27-$9,617.59

the difference in PV=$16,481.68  

5 0
3 years ago
The company is in the process of preparing a cash budget and must determine the expected cash collections by month. To this end,
nydimaria [60]

Answer: $186,000

Explanation:

January is the 2nd month from November which means that all of November's $31,000 will be collected in January.

January is the first month after December so 30% of December sales should be collected in January. 50% has already been collected in December and this left $50,000.

Total credit sales in December must have been:

= 50,000 / 50%

= $100,000

Amount to be collected in January for December:

= 100,000 * 30%

= $30,000

Amount to be collected from January credit sales:

= 50% * 150,000

= $75,000

January cash sales = $50,000

Total cash in January :

= 31,000 + 30,000 + 75,000 + 50,000

= $186,000

4 0
2 years ago
Question 13 (5 points)
ANTONII [103]

Answer:

Improved education is the key to economic development.

Explanation:

What is development without education, then we will just go back to the Savage civilization, education is fundamental in our professional and personal life, it deals with everything. Like industrialization, cooking, economic development and everything else. So for sustainable development for a developed or developing country one needs education to become skilled and help in the development of ones country

4 0
2 years ago
On June​ 30, Police Company issues 6 %​, 10​-year bonds payable with at face value of $ 100 comma 000. The bonds are issued at f
Fiesta28 [93]

Answer:

The journal entry upon issuance of the bond is as follows:

Dr Cash             $100,000

Cr Bonds payable                 $100,000

to record issuance of bond for cash

Journal entry for semi-annual interest

Dr Interest expense       $6000

Cr Cash                                       $6000

Being payment of bond semi-annual interest

Explanation:

Upon issuance of the bond with face value and issue price of $100,000, the cash position of the Police company increases by $100,000, hence the cash account should receive a debit of $100,000, but the issue also implies increased debt obligation, as a result , the bonds payable account is also credited with the same amount.

Concerning, the interest payment, which is an outflow of cash, the cash account is credited and the interest expense account is debited as an increase in expense.

The amount of interest is $6000(6%*$100,000).

5 0
2 years ago
At December 31, Amy Jo's Appliances had account balances in Accounts Receivable of $314,000 and in Allowance for Uncollectible A
Alex787 [66]

Answer:

$11,750

Explanation:

The computation of bad debt is shown below:-

Bad debt expense = Estimated allowance for uncollectible at the year end - Existing balance in allowance for uncollectible account credit balance

= ($314,000 × 4%) - $810

= $12,560 - $810

= $11,750

Therefore for computing the bad debt expenses we simply applied the above formula.

8 0
2 years ago
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