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
Thepotemich [5.8K]
3 years ago
13

An investor is forming a portfolio by investing $50,000 in stock A which has a beta of 1.50, and $25,000 in stock B which has a

beta of 0.90. The return on the market is equal to 6 percent and Treasury bonds have a yield of 4 percent. What is the required rate of return on the investor’s portfolio?
Business
1 answer:
kvv77 [185]3 years ago
5 0

Answer:

6.6%

Explanation:

For computing the required rate of return, first we have to determine the weights of stock A and stock B and portfolio beta which is shown below:

Stock A weighatge = Invested amount ÷ total amount

= $50,000 ÷ $75,000

= 0.66667

Stock B weighatge = Invested amount ÷ total amount

= $25,000 ÷ $75,000

= 0.333333

Total amount = $50,000 + $25,000 = $75,000

Now multiply the weighatge into its beta

= Stock A weighatge × stock A beta + Stock B weighatge × stock B beta

= 0.66667 × 1.50 + 0.333333 × 0.90

= 1 + 0.30

= 1.30

Now the required rate of return would be

Expected rate of return = Risk-free rate of return + Beta × (Market rate of return - Risk-free rate of return)

= 4% + 1.30 × (6% - 4%)

= 4% + 1.30 × 2%

= 4% + 2.6%

= 6.6%

You might be interested in
Write 2-3 short paragraphs about the marketing message you will use and why you chose this message. Why does it appeal to your t
pochemuha

Explanation:

A marketing message that is highly regarded in today's world, is one that manages to demonstrate business values in the form of procedures, products and services that contain added value in addition to the purely profitable.

As an example that would write a marketing message about a new clothing brand, it would include information that demonstrates that the manufacturing process and raw materials used in making the clothing is sustainable and has a low impact on the environment.

This is a strategy that increases the perception of stakeholders in relation to products, a brand that actually has parameters of sustainability in its processes can demonstrate them through its marketing messages to create value and greater reliability in the brand, being a great differential for consumers.

3 0
3 years ago
The comparative balance sheets for Kingbird Corporation appear below:
otez555 [7]
Banana is good and good for me
7 0
2 years ago
Describe the current global strategy and provide evidence about how the firm’s resources and competencies support the pressures
oksian1 [2.3K]

Describe the current global strategy and provide evidence about how the firm’s resources and competencies support the pressures regarding costs and local responsiveness. Describe entry modes they have usually used, and whether the modes are appropriate for the given strategy is described below

Explanation:

Global Strategy’ is a shortened term that covers three areas: global, multinational and international strategies. Essentially, these three areas refer to those strategies designed to enable an organisation to achieve its objective of international expansion.

In developing ‘global strategy’, it is useful to distinguish between three forms of international expansion that arise from a company’s resources, capabilities and current international position.

Implications of the three definitions within global strategy:

International strategy: the organisation’s objectives relate primarily to the home market.

Multinational strategy: the organisation is involved in a number of markets beyond its home country. But it needs distinctive strategies for each of these markets because customer demand and, perhaps competition, are different in each country. Importantly, competitive advantage is determined separately for each country.

Global strategy: the organisation treats the world as largely one market and one source of supply with little local variation. Importantly, competitive advantage is developed largely on a global basis.

3 0
3 years ago
Diane's Designs purchased a one-year liability insurance policy on March 1 of a year for $8,400 and recorded it as a prepaid exp
Liula [17]

Answer:

$700 (not given in the options)

Explanation:

When the policy is purchased with a payment made in advance, the entries recorded are

Debit prepaid insurance  $8,400

Credit Cash account         $8,400

After the first month, the expense incurred is

= 1/12 × $8,400

= $700

Entries then required

Debit Insurance expense   $700

Credit Prepaid Insurance    $700

5 0
3 years ago
If you have contacted a seller to report a problem with a product and you were ignored, what should you do next?
KatRina [158]
Call back and try to report the problem again.
8 0
2 years ago
Other questions:
  • Ann is in the middle of completing her first 1040EZ tax form. She has some questions about an instruction on the form. What shou
    15·1 answer
  • Which of the following is an entrepreneur?a lawyer in a high-profile law firm that specializes in business law an artist who run
    9·1 answer
  • At the end of the day, the cash register's record shows $1,278, but the count of cash in the cash register is $1,259. The correc
    6·1 answer
  • There are many activities in marketing that are interrelated and similar in purpose. These activities are referred to as marketi
    10·1 answer
  • Galaxy Products is comparing two different capital structures, an all-equity plan (Plan I) and a levered plan (Plan II). Under P
    15·1 answer
  • Different customer statement types are available to suit different client situations. Heather wants to help her client send out
    12·1 answer
  • Rate us 1 to 10!!!!!!!!
    14·2 answers
  • HELP!
    11·2 answers
  • Consider the economies of Hermes and Gobbledigook, both of which produce gaggles of gop using only tools and workers. Suppose th
    6·1 answer
  • Which marketing philosophy could most help a company outperform its competitors in today's marketplace?
    10·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!