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Paraphin [41]
3 years ago
7

Stocks offer an expected rate of return of 10% with a standard deviation of 20% and gold offers an expected return of 5% with a

standard deviation of 25%. In light of the apparent inferiority of gold to stocks with respect to both mean return and volatility, would anyone hold gold?
Business
1 answer:
liq [111]3 years ago
8 0

Answer:

Yes

Explanation:

It is possible for an investor to be attracted to holding gold as a part of his portfolio despite that it appears stocks dominate gold.

An investor may elect to hold gold if there is a low correlation between stocks and gold. However, if the correlation between gold and stocks is high, gold will not be attractive and no investor will hold god.

Therefore, an investor will hold gold when there is a low correlation between stocks and gold.

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Investment risk may broadly be categorized as either unsystematic or systematic risk; both types of risk together constitute tot
olganol [36]

Answer:

standard deviation

Explanation:

Systemic risk is risk inherent in a market and cannot be diversified.

systemic risk is measured by beta

unsystemic risk is risk specific to a business and it can be eliminated by diversifying portfolio

the sum of systemic and unsystemic risk gives total risk and it is measured by standard deviation

3 0
3 years ago
If investors receive shares of stock in companies that they fund on crowdfunding websites like Kickstarter, would their investme
garik1379 [7]

Answer:

Yes, because it is an investment of money in a common enterprise and the investors expect profit from the efforts of others.

Explanation:

In the case when the investor would received the shares of the companies and that should be funded on the website of crown funding so this would be considered as securities as this a money investment that to be made in a common enterprise also the investor expected the profit. In addition to this, the SEC permits the equity crowdfunding with effective from May 2016

Therefore the first option is correct

3 0
3 years ago
A company is interested in buying a new machine to replace outdated equipment. Before committing to the purchase, the company as
Dafna11 [192]

The efficiency of this particular machine is 96.25%.

<h3>Who is the manufacturer?</h3>
  • A manufacturer is a person or a registered corporation that produces finished goods from raw materials in order to profit.
  • Following that, the goods are delivered to wholesalers and retailers, who subsequently sell to clients.
  • The products are displayed by sellers in physical stores or on third-party eCommerce platforms.
<h3>To find the efficiency of this particular machine:</h3>

The mechanical efficiency = actual work / ideal work

So ζ = 1540 / 1600 × 100%

= 96.25%

Therefore, the efficiency of this particular machine is 96.25%.

Know more about manufacturers here:

brainly.com/question/26320301

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4 0
2 years ago
Firms with volatile operating income tend to have lower debt ratios because Blank______. Multiple choice question. there is a lo
lubasha [3.4K]
<h3>Option 2 is correct - There is a higher probability of experiencing Financial distress.</h3>

Firms with volatile operating income tend to have lower debt ratios because there is a higher probability of experiencing financial distress.

Financial distress is a condition in which a company or individual cannot generate sufficient revenues or income, making it unable to meet or pay its financial obligations. This is generally due to high fixed costs, a large degree of illiquid assets, or revenues sensitive to economic downturns.

Following reasons can lead to financial distress in a firm.

  • Cash flows - The first sign that things are going wrong is a constant shortage of cash. The old adage that cash is king exists for a reason
  • Falling margins and poor profits - Experienced entrepreneurs have learnt that for long-term survival what matters are profits, not only sales. Poor profits are usually the first indicators that a business is not doing well.
  • Poor sales growth or decline in revenues - When there is no sales growth despite extreme marketing activities, this could indicate a lack of customer acceptance, which is key to any business success.
  • Extended payment days - Another sign of possible trouble is a rise in either creditor or debtor payment days. If business has to delay payments to its creditors, this can force some suppliers to stop supplying
  • Difficulty in raising capital - If a company is constantly borrowing and asking its investors to inject more capital, this is an underlying sign that it is increasingly finding it difficult to self-sustain.

Hence, Firms with volatile operating income tend to have lower debt ratios because there is a higher probability of experiencing financial distress.

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7 0
2 years ago
If a union is present in a firm that has a(n) _________ shop arrangement, workers may join the union if they wish, but they are
drek231 [11]
In condition if a union is existing in a firm that has an open shop arrangement, workforce may link the union if they desire but they are not compulsory to join or pay a union charge in order to keep their occupations. In an open shop agreement, union membership is intended for new and current employees. Individuals who do not join the union do not have to recompense union fees but few union arrangements are of this kind and it is an agreement in right to work states that provides workers the choice to join or not join a union, if one happens in their workplace. Right to work laws is a government that gives workers the right under an open shop arrangement to join or not join a union if it is current.
8 0
4 years ago
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