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ivolga24 [154]
3 years ago
14

Bill Dukes has $100,000 invested in a 2 stock portfolio; $75,000 is invested in Stock X and the remainder is invested in Stock Y

. X's beta is 1.50 and Y's beta is 0.70. What is the portfolio's beta?
A. 1.30
B. 1.00
C. 0.98
D. 1.39
E. 1.44
Business
1 answer:
Marta_Voda [28]3 years ago
3 0

Answer:

A. 1.30

Explanation:

In order to find portfolio beta we will multiply each individual stock's beta with its weight in the portfolio. Stock X has a weight of 75%(75,000/100,000) and a Beta of 1.5. Stock Y has a weight of 25%(25,000/100,000) and a Beta of 0.7.

Portfolio Beta = (1.5*0.75)+(0.70*0.25)=1.3

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Scenario B: Raney Pharmaceuticals Corp. has completed a SWOT analysis as part of their ongoing strategic planning process. They
pickupchik [31]

Answer:

SWOT ANALYSIS

Explanation:

A SWOT analysis looks at internal and external factors that can affect a business.

In SWOT analysis Internal factors are strengths and weaknesses. External factors are the threats and opportunities. An example of an external factor is changes in technology or a new government policy.

The Strategic planning process implored by Raney Pharmaceuticals Corp should help them:

1. respond to new trends

Since more people are becoming interested in natural alternatives to traditional chemical pharmaceuticals and the trend is expected to continue over the next decade Raney Pharmaceuticals Corp could take advantage of this opportunity by diversifying to produce natural alternative medication.

2. Discover threats (external factor)

Since New regulations have been passed limiting their ability to sell certain formulations over the counter, it would likely reduce their sales.

3. Overcome Weakness

The company has inadequate financial resources to invest in their operations and thus would need to get new investors.

Also, since they have fallen behind in research and development in the last few years adequate measures should be taken to improve their research and development.

4 0
3 years ago
Trendsetters has a cost of equity of 14.6 percent. The market risk premium is 8.4 percent and the risk-free rate is 3.9 percent.
Karolina [17]

Answer:

The answer is option ( C.) Increase of 1.06 percent

Explanation:

Data provided in the question:

Cost of equity = 14.6%

Market risk premium = 8.4%

Risk-free rate = 3.9%

Company's beta = 1.4

Now,

Expected Return = Risk-free rate + ( Beta × Market risk premium )

= 3.9% + ( 1.4 × 8.4% )

= 3.9% + 11.76%

= 15.66%

Therefore,

The change in firm's cost of equity capital = 15.66% - 14.6%

= 1.06%

Hence,

The answer is option ( C.) Increase of 1.06 percent

5 0
3 years ago
Bikul has just started a great job and plans to buy a fancy car worth $100,000. Bikul is risk-averse in money matters, but he li
dedylja [7]

Answer:

$10,000

Explanation:

Probability that Bikul wrecks the car is 0.10

loss of wrecking the car is $100000

Therefore risk of wrecking the car = Probability x loss

risk = 0.10 x 100000 = 10,000

premium can be equated with risk, hence premium = $10000

6 0
3 years ago
GAAP is comprised of: FASB financial standards. any accounting guidance included in the FASB Codification. FASB standards, inter
makkiz [27]

Answer:

FASB financial standards. Any accounting guidance included in the FASB Codification

Explanation:

GAAP (Generally accepted accounting principles) is primarily comprised of a series of pronouncements from the financial accounting standards board (FASB).

The FASB is not a governmental agency. It is an independent agency tasked with identifying the best way to account for corporate transactions and report them in the most appropriate manner.

GAAP, as set forth by the FASB, is only for US firms and international firms selling stock on US stock exchanges.

Other countries have their own accounting standards agencies that set their own form of GAAP rules.

5 0
3 years ago
The adversarial system is said to have developed from the trial by ordeal wherein disputes were settled by having the parties fi
nikdorinn [45]

The correct answer is cross-examination. Cross examination is being defined as an interrogation in which being asked to a witness that is being called out by the opponent in which this is being preceded by the direct examination which is followed by a redirect examination.

8 0
3 years ago
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