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
Eastman Publishing Company is considering publishing an electronic textbook about spreadsheet applications for business. The fix
Ilia_Sergeevich [38]

Answer:

See the excel spreadsheet attached.

Anticipated profit/(loss) is ($20,000).

Explanation:

The net profit/(loss) is the difference between the total sales and total cost. The total sales is computed as the product of the sale of each book and the number of books sold. The total cost is the sum of the variable and fixed costs.

The total variable cost is the product of the variable cost per book and the total number of books sold.

Alternatively, sales less variable cost gives contribution margin. Contribution margin less fixed cost gives the net profit. As shown in the spreadsheet attached.

Download xlsx
3 0
3 years ago
Delores Bierlein paid a $200 deposit toward the rental of the Silver Room at Alex's Continental Inn for her wedding reception. L
sweet-ann [11.9K]

Answer:

It does not

Explanation:

In this question, we are asked to evaluate if a particular transaction carried out between a customer and an inn falls within the dictates of the local consumer protection law in the state.

Firstly, we look at what the local consumer protection law of the state talks about. It explicitly stated that customers should get receipts when suppliers receive deposits from them. Thus, this make the receipt act as the first thing to have if there would be any claim under the consumer protection law for the transaction carried out in the state.

Now, looking at the particular scenario we have, the customer paid for the room, but he was not issued a receipt. This makes the case not treatable within the consumer protection law of the state as the receipt which should have been a prerequisite for further exploration is not available

3 0
2 years ago
Read 2 more answers
You own a large company and would like to issue bonds for $12 million to pay for the construction of a new manufacturing facilit
mars1129 [50]

Answer:

Find a bondholder or purchaser.

Explanation:

A bond issuer is someone who borrows money, in this example, my company.

In order to being able to financiate the construction of a new manufacturing facility for my company, I would have to find a bondholder (or some ofthem) that would lend me all the money, with its pertinent clauses.

I would have to fill those clauses, perhaps its money returning timeline, some finantial records, etc.

3 0
3 years ago
If a johnny rocket's burgers has 11,500 burgers in inventory on hand and they sell 1,000 units a day, how many days of inventory
riadik2000 [5.3K]
11.5 days, assuming none of the burgers expire before then.
8 0
3 years ago
Invoro is a market leader in consumer electronics. If Finolo and Ethver, companies that manufacture televisions, develop the sam
Yanka [14]

Answer:

Invoro will have a resource that is valuable but no longer rare.

Explanation:

Invoro's competitive edge has been duplicated by Finolo and Ethics through their customer knowledge base and products that appeal to customers.

The resource that Invoro has is still valuable and can give the company a good market share, but it is no more rare.

5 0
3 years ago
Other questions:
  • Outdoor Adventure, a company that designs and manufactures sportswear, focuses their marketing efforts on people who participate
    11·1 answer
  • The group of accounting educators who perform research to determine the possible effects on financial reporting and the economy,
    5·1 answer
  • Average Common Stockholders' Equity, Return on Stockholders' Equity Rebert Inc. showed the following balances for last year: Jan
    11·1 answer
  • Which of the following changes would bring the U.S. capital stock, currently below the Golden Rule level, closer to the steady-s
    8·1 answer
  • A firm's database showed that the average value of all inventory items for the year was $7,650. The cost of goods sold was repor
    11·1 answer
  • A product line is a particular version of a product that can be designated as a distinct offering on the organization's list of
    8·1 answer
  • Suppose that the United States and Canada each produce only two products, televisions and food. The United States can produce 10
    15·1 answer
  • Which of the following would increase the likelihood that a company would increase its debt ratio, other things held constant?
    8·1 answer
  • Four transactions for Automotive Maintenance and Repair Shop that took place in November 2019 appear below. DATE TRANSACTION Nov
    11·1 answer
  • ENGLISH
    11·2 answers
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!