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Nana76 [90]
3 years ago
11

An investor will choose between Asset Q with an expected return of 6.5% and a standard deviation of 5.5%, Asset U with an expect

ed return of 8.8% and a standard deviation of 5.5%, and Asset B with an expected return of 8.8% and a standard deviation of 6.5%. Which one should the investor prefer?A. Asset B B. Cannot be determined C. Asset Q D. Asset U
Business
1 answer:
Alexxx [7]3 years ago
7 0

Answer:

The investor will prefer asset U. So the correct answer is option D

Explanation:

To choose between these stocks, we will calculate the coefficient of variation (CV) which is used to assess the risk per unit of expected return. As most people are risk averse, we assume that the investor is risk averse. We will calculate the CV for all three investments and the stock having lowest CV will be selected.

<u>Coefficient of Variation (CV)</u>

Coefficient of Variation =  standard deviation / expected return

<u />

Asset Q = 5.5% / 6.5% = 0.846

Asset U = 5.5% / 8.8% = 0.625

Asset B = 6.5% / 8.8% = 0.738

Thus, asset U has the lowest CV and the investor =, being a risk averse, will prefer asset U.

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Consider a two-period resource allocation problem where the efficient allocation of the resource implies a market price of $10 i
RideAnS [48]

Answer:

$10.80

Explanation:

Given that:

A first-period efficient allocation cost = $10

The constant marginal extraction cost  MEC for both periods = $2

The social discount rate (r) = 10%

∴

The efficient undiscounted market price for the 2nd period can be determined by using the formula:

P_1 - MEC_1 = \dfrac{P_2 -MEC_2}{1+r} \\ \\  \implies 10 -2 = \dfrac{P_2-2}{1+0.1} \\ \\ 8 = \dfrac{P_2-2}{1.1} \\ \\ P_2 -2 = 8 \times 1.1 \\ \\ P_2-2=8.8 \\ \\ P_2 = 8.8+2 \\ \\ \mathbf{P_2 = \$10.80}

3 0
3 years ago
The Callie Company has provided the following information: Operating expenses were $244,000; Cost of goods sold was $378,000; Ne
creativ13 [48]

Answer:

Callie's Gross Profit is $562000

Explanation:

Gross profit is the profit earned by a business after deducting the costs associated with producing or selling its goods (for manufacturing and trading businesses) or the costs associated with providing the services (for service businesses) from the net revenue.

It is the profit from the trading section of the business before deducting the operating and financing expenses of the business and before adding any other income.

The gross profit is simply calculated as follows,

Gross Profit = Net Revenue - Cost of Goods Sold

Callie's gross profit = 940000 - 378000

Callie's Gross Profit = 562000

6 0
3 years ago
30 points please help!
WINSTONCH [101]

Answer:

B.

Explanation:

Social Security is Payroll Tax.

3 0
3 years ago
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A , cash flow statement !
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