Stock Y has a beta of 1.40 and an expected return of 14.8 percent. Stock Z has a beta of .85 and an expected return of 11.3 perc
1 answer:
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Answer:
13.85% and 18.9%
Explanation:
As in this exercise we have a free risk asset we will assume that the t-bill has a standard deviation of 0%, so let´s firts calculate the expected return:
where E(r) is the expected return, is the return of the i asset and
is the investment in i asset, so applying to this particular case we have:
the calculation of standar deviation follows the same logic of the previous formula:
Answer: 19.93 minutes
Explanation:
This is the complete question
Fast Auto Service provides oil and lube service for cars. It is known that the mean time taken for oil and lube service at this garage is 15 minutes per car and the standard deviation is 2.4 minutes. The management wants to promote the business by guaranteeing a maximum waiting time for its customers. If a customer's car is not serviced within that period, the customer will receive a 50% discount on the charges. The company wants to limit this discount to at most 2% of the customers. What should the maximum guaranteed waiting time be? Assume that the times taken for oil and lube service for all cars have a normal distribution
The solution is attached below
