Answer:
- 0.5844
Explanation:
Portfolio Variance can be calculated using the following formula:
σP2 = wA2 * σA2 + wB2 * σB2 + 2* wA * wB * σA * σB * ρAB
Here
wA is the percentage of stock A of the total portfolio which is 60%
σA is the standard deviation of Stock A which is 18%
wB is the percentage of stock A of the total portfolio which is 40%
σB is the standard deviation of Stock B which is 24%
σBσP is the variance return on the portfolio which is 0.033
And
ρAB is correlation coefficient between the returns on A and B which is to be calculated.
By putting values, we have:
0.033 = 60%^2 * 18%^2 + 40%^2 * 24%^2 + 2 * 60% * 40% * 18% * 24% * ρAB
ρAB = - 0.5844
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Answer with Explanation:
<u>Risk which can’t be mitigated</u>: The risks that the share price would fall due to sudden political environment instability or events that effects the economy will definitely affect the business operations as well. Thus are the risks that can not be mitigated at all. Another example would be Corona virus implications on the operation of the company which is again a risk that can't be mitigated.
<u>Risks, that aren’t worth the effort to reduce the exposure any further: </u>
The part of the sentence talks about the risk exposure which says that if the company doesn't resides in an area which is not prone to seismic activity and the chances of earthquake in a country is below 0.000001% which is almost negligible but still it is worthless to purchase the earthquake insurance. As this risk is almost negligible hence it is not worth the effort to reduce the exposure any further.
<u>Risks that wouldn't be addressed in short term due to other priorities: </u>
The risks that will not occur in the next 12 month, can be addressed after 6 months and thus allowing the company to prioritize the risks that must be resolved first. This means that if their is a risk that one of our several products that would be launched after 12 months from now will not be winning customer market can be addressed after 6 months because it is dependent on our future action. If we don't launch our product, our product is not rejected by the customer. Hence situations like this allows us to prioritize our risks.
Answer:
b)Horizontal diversification
Explanation:
Horizontal diversification is defined as the process by which a business starts providing a product that is unrelated to its previous products supplied.
However the market is a similar one.
In the given scenario Marble Cakes, Inc. has set up business in three other states with additional menu options of cupcakes, donuts, and coffees to generate new customers.
The new set of products are completely different from the one initially supplied, but sales is in similar market as before.
Answer: capital budgeting
Explanation:
The process of analyzing alternative long-term investments and deciding which assets to acquire or sell is known as Capital budgeting.
Capital budgeting is typically used by an organization or a business to know whether it will be worth it if an organization invest in an asset such as new plants, machineries, development projects etc and different alternatives are also considered in order to choose the best option.
