1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Alex787 [66]
3 years ago
8

There are three economy situations and two stocks Information is as follows Economy Stock A Stock B Booming 0.3 10 20 Neutral 0.

3 5 0 Recession 0.4 0 10 a What are the expected returns for both stock A and B respectively b What is the standard deviation risk for stock A c What is the portfolio return given that you have $10000 and allocate $4000 in stock A
Business
1 answer:
Bumek [7]3 years ago
6 0

Answer:

a) A = 4.50% and B = 2.00%

b) SD for A = 4.15 %

c) Portfolio Return = 3.0%

Explanation:

a) Expected Returns for Both A and B respectively:

In order to calculate the expected returns, let's categorize the given data first.

Economy        Probability      Stock A       Stock B

Booming            0.30               10%               20%

Neutral               0.30                5%                 0%

Recession          0.40                 0%                -10% (not 10%)

So,

Expected Return for Stock A:

A =   Sum of (all Probability x Stock A)

A = (0.30 x 0.10) + (0.30 x 0.05) + (0.40 x 0.00)

A = 0.045

<u><em>A = 4.50 % </em></u>

Return for Stock B:

B = Sum of all Probability x Stock B

B = (0.30 x 0.20) + (0.30 x 0.00) + (0.40 x -0.10)

B = 0.002

<u>B = 2.0%</u>  

<em>b) Standard Deviation /Risk for Stock A:</em>

SD for A = Sum (Square Root (Probability*(Stock A Return - Expected Return of Stock A)²) )

SD for A = \sqrt{0.30*(0.10-0.045)^2 + 0.30*(0.05-0.045)^2+0.40*(0.00-0.045)^2}

SD for A = 0.0415

<u><em>SD for A = 4.15%</em></u>

c) Portfolio Return Given that:

                                        Value          Weight         Return

Stock A                          4000              0.4               4.50%

Stock B                          6000             0.6                 2.0%

                                      10000

Portfolio Return =  Sum of ( Weight x Return)

                          = (0.4 x 0.045) + (0.6 x 0.02)

                          = 0.03

<em><u>Portfolio Return = 3%</u></em>

You might be interested in
Lucinda buys a new gps system for​ $250. she receives consumer surplus of​ $75 from the purchase. what value does lucinda place
jok3333 [9.3K]
Need more answer choices
6 0
3 years ago
Saffron Industries most recent balance sheet reports total assets of $42,000,000, total liabilities of $16,000,000 and stockhold
alexandr402 [8]

Answer:

A) Prepaying the debt would cause the firm's debt-to-equity ratio to improve from .62 to .50.

Explanation:

The computation of the impact is as follows:

The Debt equity ratio is

= Total liabilities ÷ total equity

Now

Debt equity prior to payment is

= $16,000,000 ÷ $26,000,000

= 0.62

And,

Debt equity after payment is

= $13,000,000 ÷ $26,000,000

= 0.50

So here as we can see that the debt equity would be improved from 0.62 to 0.50

Therefore the correct option is a.

7 0
3 years ago
Scenario 13-3 Ziva is an organic lettuce farmer, but she also spends part of her day as a professional organizing consultant. As
Murrr4er [49]

Answer:

c. −$80.

Explanation:

The computation of the economic profit is shown below:

Economic profit = Total revenue - Cost of seeds - Earning foregone

where,

Total sales revenue is $300

Cost of seeds is $130

And, the earning foregone is

= 10 hours × $25

= $250

So, the economic profit is

= $300 - $130 - $250

= -$80

We simply applied the above formula to determine the economic profit

5 0
3 years ago
An employee is given a formal written warning for an offense he has committed. Despite this, he proceeds to commit another offen
galben [10]

Answer:

temporary suspension and maybe an Improvement Plan.

Explanation:

Based on the scenario, if the company has adopted a progressive discipline program then the according response would be a temporary suspension and maybe an Improvement Plan. This is because a progressive discipline program follows the following steps accordingly.

1) Verbal Counseling. The first step in a progressive discipline process is to merely have a conversation with the employee. ...

2) Written Warning. The second step should be another conversation that is documented in a written format. ...

3) Employee Suspension and Improvement Plan. ...

4) Termination.

Seeing since step 2 has already been done the next course of action would be step 3.

6 0
3 years ago
Read 2 more answers
Which of the following charts would be best to draw out the movement of people or material?
masya89 [10]

Answer:

c) Flow diagram.

Explanation:

Flow diagram also known as a flowchart can be defined as a visual representation or an activity diagram which is typically used to illustrate or demonstrate the simple sequence of actions or movements within a complex process and workflow. A Flow diagram would be best to draw out the movement of people or material.

Generally, a flowchart or flow diagram makes use of symbols such as rectangle, oval, diamond, arrow to represent the steps, flow or sequence of a complex system.

3 0
3 years ago
Other questions:
  • Which of the following is important information for a recommender to provide? A student's transcripts B.A student's test scores
    8·2 answers
  • How would you politely tell a client that you do not wish to accept their friend request?
    7·1 answer
  • Loyal customers are price _____________ compared to brand-shifting patrons.
    7·1 answer
  • Elixir inc. has a recruitment policy that favors hiring people from minority groups. to ensure that its diverse workforce helps
    15·1 answer
  • If we accept "consumer satisfaction" as the objective of our macro-marketing system, this means that: consumer educators should
    12·1 answer
  • Gourmet Pretzels bakes soft pretzels on an assembly line. It currently bakes 800 pretzels each 8-hour shift. If the production i
    6·1 answer
  • An investor can design a risky portfolio based on two stocks, A and B. Stock A has an expected return of 21% and a standard devi
    8·1 answer
  • The difference in income between the richest and poorest citizens is called a command economy. unemployment. private property. t
    9·2 answers
  • Name 5 types of business farms​
    9·2 answers
  • Emily is a writer. She buys pens and paper for $20 and writes a 500-page novel that she sells to a publishing company for $500,0
    9·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!