Answer:hes wrong i just failed a mf test cause of it the right answer is bootstrapping on oddy
Explanation:
What are choices for this question
Answer:
a) Portfolio ABC's expected return is 10.66667%.
Explanation:
Some information is missing:
Stock Expected Standard Beta
return deviation
A 10% 20% 1.0
B 10% 10% 1.0
C 12% 12% 1.4
The expected return or portfolio AB = (1/2 x 10%) + (1/2 x 10%) = 10% (it is the same as the required rate for stock A or B)
The expected return or portfolio ABC = (weight of stock A x expected return of stock A) + (weight of stock B x expected return of stock B) + (weight of stock C x expected return of stock C) = (1/3 x 10%) + (1/3 x 10%) + (1/3 x 12%) = 3.333% + 3.333% + 4% = 10.667% <u>THIS IS CORRECT</u>
Options B, C, D and E are wrong.
Answer:
C) the safety and soundness of the financial system in aggregate.
Explanation:
Macroprudential regulation focuses on reducing systemic risk.
Systemic risk is the financial risk associated with an event from a specific company damaging the whole financial system. Systemic risk was responsible for the collapse leading to the Great Recession (2008-2010).
The "too big to fail" policy is an example of macroprudential regulation.
The correct answer to this open question is the following.
Although the question is incomplete because it does not attach the model to answer it we can comment on the following.
The problem is that Jamal, trying to increase profits, decided to sell two different products that are not part of the Subway products. When the franchisor visited Jamal's location, it realized the changes and set an ultimatum to Jamal to respect the franchise agreement.
The cause of the problem is that although Jamal wanted to diversify the products to have more income, this contradicts and is against the franchise agreement he signed when he bought the Subway franchise. The contract clearly states that the owner of the franchise can only sell products authorized in the contract by Subway. That is exactly one of the characteristics of a franchise. That you visit one of them any place in the world, and you are going to find de the same products with the same quality. That is the product guarantee of a franchise like Subway.
So the effects for the company are that its reputation an image can be questioned for selling different products that are hot approved by Subway. It is a major risk the company is not going to allow. Furthermore, it is stated in the contract. So Jamal has no right to break it.
One possible solution is that Jamal respects those 30 days to make the proper corrections, follow the guidelines established in the Subway's manuals, offer a sincere apology, and commit himself to operate the franchise just as it is stated on the agreement.
