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
vitfil [10]
3 years ago
7

The stock of Business Adventures sells for $50 a share. Its likely dividend payout and end-of-year price depend on the state of

the economy by the end of the year as follows: Dividend Stock Price Boom $3.00 $60 Normal economy 1.20 58 Recession 0.75 49 a. Calculate the expected holding-period return and standard deviation of the holding-period return. All three scenarios are equally likely. (Do not round intermediate calculations. Round your answers to 2 decimal places.)
Business
1 answer:
Delvig [45]3 years ago
7 0

Answer:

Holding period return = 14.49%, Standard Deviation = 11.08 approx

Explanation:

Eco Scenario    Dividend     Stock Price  HPR    Prob     Expected HPR

Boom                         3                 60         26        0.33        8.58

Normal                       1.2               58        18.4       0.33       6.072

Recession                  0.75            49        (0.5)      0.33      <u> (0.165)</u>

              Expected HPR                                                       14.49%

<u>Calculation Of Standard Deviation</u>

                                      (A)                     (B)           (A) - (B)  

P_{1}          P_{0}       D_{1}       Given return   Exp return       d          p           p.d^{2}

60        50      3            26                     14.49         11.51       0.33      43.718    

58        50      1.2          18.4                   14.49         3.91       0.33      5.045

49        50      0.75      (0.5)                    14.49        14.99     0.33      <u> 74.15</u>

                                                                                         Total p.d^{2} =  122.91

wherein, d = deviation

               p = probability

               Standard Deviation = \sqrt{Total\ p.d^{2} }  = \sqrt{122.91} = 11.08  

<u></u>

<u>Working Note</u>:

Holding period return = \frac{P_{1}\ -\ P_{0} \ +\ D_{1}  }{P_{0} }

Boom = \frac{60\ -\ 50 \ +\ 3  }{50 }   = 26%

Similarly, for normal = \frac{58\ -\ 50 \ +\ 1.2  }{50 }  = 18.4%

Recession = \frac{49\ -\ 50 \ +\ 0.75  }{50}  = (0.5)%

figure in bracket indicates negative return

You might be interested in
What are your opinons on doge coin?
Reil [10]

Answer:

i think that this the first step for meme domination and how it will be the future currency for the republic of the memers

and also a great leap for the dogs of the united doggys

we will not just take it to the moon but to mars as a meaing of human and dog friendship

Explanation:

dont take it to the moon put it in your  closet for your childs to seal for lots of money

5 0
3 years ago
Read 2 more answers
Determinants of how long a firm should borrow money include?
mario62 [17]

Determinants of long a firm should borrow money include are:

⇒the seasonal environment of the business

⇒the cost of inventory

⇒the cash flow forecast

The term "capital structure" describes how a company decides to finance its projects and assets through a combination of internal resources, debt, and equity.

To lower their risk of insolvency, remain effective, and ultimately maintain or become profitable, a company should determine the ideal debt to equity ratio.

The capital structure of a company is influenced by a wide range of variables, including leverage or trading on equity, company growth, the nature and scale of the business, the desire to maintain control, the flexibility of the capital structure, investor requirements, the price to float new securities, the timing of the issue, the corporate tax rate, and the legal requirements.

To learn more about Capital Structure here

brainly.com/question/15041466

#SPJ1

4 0
2 years ago
Distinguish between the substitution and income effects of a price change. If a good’s price increases does each effect have a p
vesna_86 [32]
The economics concepts of income effect and substitution effect express changes in the market and how these changes impact consumption patterns for consumer goods and services. The income effect expresses the impact of increased purchasing power on consumption, while the substitution effect describes how consumption is impacted by changing relative prices. Different goods and services experience these changes in different ways. Some products, called inferior goods, generally decrease in consumption whenever incomes increase. Consumer spending and consumption of normal goods typically increases with higher purchasing power, in contrast with inferior goods.



Read more: What's the difference between the income effect and the substitution effect? | Investopedia http://www.investopedia.com/ask/answers/041415/whats-difference-between-income-effect-and-substitution-effect.asp#ixzz4wcsy3IOK
Follow us: Investopedia on Facebook
7 0
3 years ago
How can surveys and questionnaires be used to gather data for informal reports?
zavuch27 [327]

Answer:

<em>Surveys and questionnaires allow you to collect data efficiently and economically from groups of people.</em>

Explanation:

<em>Surveys are research  often used to assess opinions, thoughts, and feelings of people towards a subject area or environment. it can either be limited or specific or they also can have more widespread goal which can be global.</em>

<em>Questionnaires is a set of questions written or printed with answer choices , devised for the purposes of  a statistical study or survey.</em>

6 0
3 years ago
Read 2 more answers
When the Sales Tax feature is enabled in QuickBooks Online, where must you record sales tax payments?
scoray [572]

Answer:

Sales Tax Center

Explanation:

          QuickBooks Online is an online service for accounting software package that is developed as well as marketed by Intuit. Its products are mainly small or medium sized business and other accounting applications and cloud based version which accept management and payment of bills, business payments, payroll functions, etc.

         In QuickBooks, we use the Pay sales tax window to create the sales tax payments. Intuit offers a new and advance version of sales tax feature in QuickBooks Online. We must record the sales tax payments in the sales tax center when the sales tax feature is enable in QuickBooks Online.

7 0
3 years ago
Other questions:
  • The following variable production costs apply to goods made by O'Brien Manufacturing Corporation: Item Cost per Unit Materials $
    10·1 answer
  • Takt time is calculated as Demand volume divided by customer required volume Customer required volume divided by available work
    12·1 answer
  • PSI, a financial services consultant, estimates that over _____ million U.S. households have a net worth in excess of $1 million
    8·1 answer
  • Suppose during a year an economy produces $10 trillion of consumer goods, $4 trillion of investment goods, $6 trillion in govern
    5·1 answer
  • Mattress​ Wholesalers, Inc. is constantly trying to reduce inventory in its supply chain. Last​ year, cost of goods sold was ​$7
    14·1 answer
  • What is a router?<br> (please describe in a specific way)
    6·1 answer
  • Causes of low economic growth
    6·2 answers
  • If your company matches 75 cents on the dollar,and you contribute $200 a paycheck, how much will your employee match?
    14·1 answer
  • On January 1, 2019, Cullumber Company had $1,000,000 of common stock outstanding that was issued at par. It also had retained ea
    14·1 answer
  • How can manage my budget?
    8·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!