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nika2105 [10]
3 years ago
9

A stock has a beta of 1.24, an expected return of 13.68 percent, and lies on the security market line. A risk-free asset is yiel

ding 2.8 percent. You want to create a $6,000 portfolio consisting of Stock A and the risk-free security such that the portfolio beta is 0.65. What rate of return should you expect to earn on your portfolio?
Business
1 answer:
Lemur [1.5K]3 years ago
3 0

Answer:

Expected rate of return on the portfolio is 8.46

Explanation:

RR: Rate of return

Stock has RR_{1} = 13.68, Beta_{1} = 1.24

Risk-free asset has RR_{2} = 2.8, Beta_{2} = 0

(Yield can be considered equivalent to RR here)

Let x_{i} be the weight of the assets.

Portfolio's beta is given by:

Beta = \sum{x_{i} \beta _{i}}  = 0.65

=> 1.24x_{1} + 0x_{2} = 0.65

=> x_{1} = 0.52

=> x_{2} = 1 - 0.52 = 0.48

Rate of return of the portfolio is given by

RR= \sum{x_{i}RR _{i}} = (0.52 * 13.68) + (0.48 * 2.8) = 8.46

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<h3>What is tourism?</h3>

Tourism is the process of spending time away from your home for the following purposes:

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In Africa, tourism centers have been identified in Uganda, Algeria, Egypt, South Africa, Kenya, Morocco, Tunisia, Ghana, and Tanzania.

The types of tourism include:

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Thus, the private sectors in Africa have different roles in tourism development.

Learn more about tourism in Africa at brainly.com/question/3079557

6 0
2 years ago
Presented below is the partial bond discount amortization schedule for Cullumber Corp. Cullumber uses the effective-interest met
Kazeer [188]

Answer:

Journal entry is given below

Explanation:

To record the payment of interest and the discount amortization at the end of period 1 we should debit the Interest expense and credit cash and discount

DATA

Interest expense in year 1 = $38,936

Interest to be paid = $36,450

Discount amortization = $2,486

Entry                                         DEBIT              CREDIT

Bond interest expense       $38,936

Cash                                                                  $36,450    

Discount on bonds                                           $2,486

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3 years ago
Burger King decided to add breakfast to its hours of operation in order to increase its customers. This was an attempt to improv
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Answer:

Option A                  

Explanation:

Effectiveness refers to the capability of an institution to produce the desired result or the required performance. Once something is considered to be successful, it implies it has a planned or anticipated impact, or it generates a deep, vibrant impression.

In other words,  The magnitude to which goals are accomplished and to what extent perceived needs are met is effective. Unlike efficiency, effectiveness is measured in regards to expenses and while output implies "doing the right thing," effectiveness, means "just doing correct thing."

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4 years ago
You receive a text from a number claiming to be your credit card company that requires you to verify some suspicious charges usi
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A phishing assault occurs when someone sends credit card-related emails, texts, or information and then clicks on a link to verify account information.

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Phishing is the process of obtaining vital or sensitive information for malevolent objectives, such as a username, password, code, current bank balance, and credit card information.

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2 years ago
Which statements best describe how businesses can take advantage of globalization? Check all that apply.
hammer [34]

Answer:

Answers 1, 3 and 5 are correct

Explanation:

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5 0
3 years ago
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