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ololo11 [35]
3 years ago
14

Assume the return on a market index represents the common factor and all stocks in the economy have a beta of 1. Firm-specific r

eturns all have a standard deviation of 33%.
Suppose an analyst studies 20 stocks and finds that one-half have an alpha of 3.1%, and one-half have an alpha of –3.1%. The analyst then buys $1.3 million of an equally weighted portfolio of the positive-alpha stocks and sells short $1.3 million of an equally weighted portfolio of the negative-alpha stocks.
a. What is the expected return (in dollars), and what is the standard deviation of the analyst’s profit?
Business
1 answer:
SOVA2 [1]3 years ago
8 0

Answer:

The Expected return is $80,600

The standard deviation of the analyst’s profit is $191854.63.

Explanation:

the expected return

= $1,3 million*[0.031 + 1.0*Rm] - 1,3 million*[-0.031 + 1.0*Rm]

= $403,000 + $1,300,000Rm + $403,000 - $1,300,000Rm

= $80,600

Therefore, The Expected return is $80,600

the varience = 20*[(130,000*0.33)^2]

                     = $36808200000

Therefore, The standard deviation of the analyst’s profit is $191854.63.

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Answer:

-Income of buyers

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Explanation:

Income of buyers: When there is a rise in income of buyer then demand would increase. Also when there is a fall in buyer's income, demand would decrease.

Consumer expectation: If consumers perceive that there would likely be an amount increase in price of certain commodities then demand for such commodities would increase now.

Taste of consumers: If the taste, preference or emotions of buyers changes in favour of a product then there would be increase in demand for such product and vice versa.

Price of the goods or services: The higher the price of a product, the lower the quantity demanded and the lower the price, the higher the quantity demanded.

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5 0
3 years ago
In an effort to provide some structure to the value perspective, David Garvin of the Harvard Business School identified eight di
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Answer:

the product or service was made according to the specifications

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1. Performance

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6 0
3 years ago
On July 1, 2022, Sandhill Co. pays $22,000 to Cullumber Company for a 2-year insurance contract. Both companies have fiscal year
drek231 [11]

Answer:

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Cr Prepaid insurance 5,500

Explanation:

Preparation of Journal entries

Based on the information given we were told that Sandhill Company pays the amount of $22,000 to another company which is Cullumber Company for a 2-year insurance contract in which Both the companies have fiscal years that is ending December 31 which means that the Journal entry will be recorded as:

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[(22,000*6/12)/2]

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4 years ago
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Answer:

Explanation:

I hope you get a second answer to this so I can see what the actual answer is. My guess is that the Federal Reserve has just put money into the system by purchasing Doe's bond. The fact that Doe puts it in a bank account does not change the fact that we are uncertain where the Feds got the money to buy the bond. They have the power to print money. They've just used some of that printed money to buy something that might be of value.

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3 years ago
The SOC categorizes occupations according to _____.
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similar occupations in different industries require similar skills.

Hope it helps


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3 years ago
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