That method is called the Breakeven analysis
It basically used to determine at which point will your business start to cover all the expense and start to gain profit
In startups, the faster your business reach breakeven point, the more investors will be interested to invest in your business
This is the concept of financial mathematics, the amount that July was looking to pay will be found as follows;
Buying price =$250
let the amount July was looking to buy be x
let the percentage amount be 100-30=70%
percentage buying price be 100%
thus the value of x was:
x=70/100*250
x=$175
the answer is x=$175
Based on the probability distributions of the funds and the correlation, the following is true:
- Investment proportions would be 33% Equity and 67% debt.
- Standard deviation would be 21.16%.
<h3>What would be the Investment proportions?</h3>
The expected return can be found as:
= (Return on stock x Weight of stock) + (Return on debt x Weight of debt)
As we already have the return as 12%, we can solve the formula for weights :
12% = (16% x Weight of equity ) + (10% x Weight of debt)
12% = (16% x W of equity ) + (10% x (1 - W of equity))
12% = 0.16W + 10% - 0.1W
2% = 0.06W
W = 2% / 0.06
= 33%
Equity is 33% so Debt is 67%.
<h3>What would be the standard deviation?</h3>
= √(Weight of stock ² x Standard deviation of stock ² + Weight of debt ² x Standard deviation of debt² + 2 x standard deviation of stock x standard deviation of debt x Correlation x weight of stock x weight of debt )
= √(33%² x 34% ² + 67%² x 25%² + 2 x 34% x 25% x 0.11 x 0.33 x 0.67)
= 21.16%
Find out more on portfolio standard deviation at brainly.com/question/20722208.
I would say bond. Bob would most likely going to buy bonds. Bonds are known to be very safe however it has low return.