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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%

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Ne4ueva [31]

Answer:

1. Production units for April      3,650 units

  Production units for May       4,200 units

  Production units for June       4,370 units

2. Budgeted cost of materials for April = $ 21,980

   Budgeted cost of materials for April = $ 23,996

Explanation:

Computation of budgeted production units

                                                                                  April          May         June  

                                                                                 Units         Units        Units

Ending Inventory - 50 % of next  month                 1,915        2,285       2,085

Add: Sales                                                                 3,470       3,830      4,570

Less: Opening Inventory-50% of current month   <u>( 1,735)</u>      <u>(1,915)</u>     (<u>2,285)</u>

Production units for the  month                            3,650       4,200      4,370

Computation of cost of materials

Units production                                                      3,650         4,200      4,370

Material requirement per unit - 2 pounds            

Total material requirement for production             7,300         8,400      8,740

Closing inventory-50% next month production     4,200         4,370                                                                                                    

Opening inventory-50% of current production     <u>( 3,650)  </u>    <u> (4,200)</u>

Total material requirement for production              7,850        8,570

Cost per pound of direct material  $ 2.80

Total direct material Budget                                 $ 21,980   $ 23,996

4 0
3 years ago
The "Brasher doubloon," which was featured in the plot of the Raymond Chandler novel, The High Window, was sold at auction in 20
Strike441 [17]

Answer:

The time line from minting to the first sale is:

0-192

$15 - $430,000

we can use either the FV or the PV formula. Both will give the same answer since they are the inverse of each other. We will use the FV formula, that is:

FV = PV(1 + r)t

Solving for r :

r = (FV/PV)1/t - 1

r = ($430,000/$15)1/192 - 1

r = .0549, or 5.49%

The time line from the first sale to the second sale is:

0-35

$430,000 - $4,582,500

we can use either the FV or the PV formula. Using the FV formula, that is:

FV = PV(1 + r)t

Solving for r:

r = (FV/PV)1/t - 1

r = ($4,582,500/$430,000)1/35 - 1

r = .0699, or 6.99%

The time line from minting to the second sale is:

0-227

$15 - $4,582,500

we can use either the FV or the PV formula. Both will give the same answer since they are the inverse of each other. We will use the FV formula, that is:

FV = PV(1 + r)t

Solving for r, we get:

r = (FV/PV)1/t - 1

r = ($4,582,500/$15)1/227 - 1

r = .0572, or 5.72%

6 0
3 years ago
Reynolds Construction's value of operations is $750 million based on the free cash flow valuation model. Its balance sheet shows
zhuklara [117]

Answer:

option (d) $500

Explanation:

Data provided in the question:

Reynolds Construction's value of operations = $750 million

short-term investments = $50 million

accounts payable = $100 million

notes payable = $100 million

long-term debt = $200 million

common stock = $40 million

retained earnings = $160 million

Now,

Firm value of equity

= Free cash flow value + Investments - Debt - Notes payable

= $750 million + $50 million - $200 million - $100 million

= $500 million

Hence,

the correct answer is option (d) $500

6 0
3 years ago
Democratic leadership is characteristics by........
Alex787 [66]

Answer:

B. is a democratic leadership

3 0
3 years ago
Excom sells radios and each unit carries a two-year replacement warranty. Typically, 5% of the radios sold need to be replaced c
Leona [35]

Answer:

The amount in September would Excom debit Product Warranty Expense is $805

Explanation:

According to the given data In order to calculate the amount in September would Excom debit Product Warranty Expense we would have to make the following calculation:

Product warranty expense = 700 radios * 5% * cost per radio $23

Product warranty expense =35*$23

Product warranty expense =$805

The amount in September would Excom debit Product Warranty Expense is $805

7 0
3 years ago
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