Here, the investor is risk-neutral.
A=0
Thus, U = E(r).
We have the requisite information to answer the question, hence option E is eliminated.
Investment Mean Return Std Dev U
1 0.12 0.3 0.12
2 0.15 0.5 0.15
3 0.21 0.16 0.21
4 0.24 0.21 0.24
Thus, it can be seen that investment 4 given the maximum utility, and is thus the selected investment for a risk neutral investor. Thus, option D.
What options does a risk-averse individual select?
- When someone is considering different investment options, they are said to have a risk-neutral mentality.
- One is considered to be risk neutral if they just consider possible profits, regardless of the danger.
- To assess profit without considering risk may look like a dangerous behavior by nature.
Learn more about risk-neutral person
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<u>The complete question is - </u>
Use the below information to answer the following question Investment WN - Expected Return E() 0.12 0.15 0.21 0.24 Standard Deviation 0.3 0.5 0.16 0.21 U= E(r)-(A/2)s2 Which investment would you select if you were risk neutral? A. 1 B.2 C. 3 D. 4 E. Cannot be determined from the information given. If you are risk neutral, your only concern is with return, not risk.
Answer:
$11,000
Explanation:
The cash flow statement categories the company's transactions in a financial period into 3 groups; these are operating, investing and financing.
The net profit/loss, depreciation, changes in current assets (other than cash) and liabilities are considered as operating activities including income taxes.
The sale of assets, interest received, purchase of investments are examples of investing activities while the issuance of stocks, debt principal deduction (loan settlement), issuance of debt securities etc are examples of financing activities.
An increase in assets other than cash is an outflow while an increase in liabilities is an inflow. Depreciation and other non-cash expenses deducted in the income statements are added back while the non-cash income such gain on asset are deducted from net income.
net investing cash flows
= $21,000 - $10,000
= $11,000
The correct option is B. Cash register scheme is a type of fraud scheme in which an employee falsely document a refund for a returned product and pocket the money meant for the refunding. It may also occur in form of accepting cash from customers without recording it in the cash register.
Answer:
43.57 %
Explanation:
The computation of the gross margin for the cat condos is given below:
Total Manufacturing Cost per unit is
= Direct materials + Direct labor + Manufacturing overhead
= $22 + $15 + ( 280% of $15)
= $79
Now
Gross Profit is
= Selling price per unit - Total Manufacturing Cost per unit
= $140 - $79
= $61
And finally
Gross Profit Margin is
= (Gross Profit ÷ Selling Price ) × 100
= ($61 ÷ $140) × 100
= 43.57 %
Answer:
$20,781.25
Explanation:
Bond carrying amount after the first interest payment on June 30, 2018:
= Carrying value of bond On January 1, 2018 + Amortization of discount on June 30, 2018
= 20,300 + 481.25
= $20,781.25
