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Vaselesa [24]
3 years ago
10

1. Assume that you manage a risky portfolio with an expected rate of return of 20% and a standard deviation of 25%. The T-bill r

ate is 7%. Suppose that you have a client that prefers to invest in your risky portfolio a proportion (y) of his total investment budget so that his overall portfolio will have an expected rate of return of 15%. (1) What is the investment proportion, y? (2.) What is the standard deviation of the rate of return on your client’s portfolio? 2. The expected rates of return for stocks A and B are 28% and 22% respectively. The T-bill rate is 12% and the expected rate of return on S&P 500 index is 24%. The standard deviation of stock A is 22% while that of B is 20%. If you could invest only in T-bills plus one of these stocks, which stock would you choose?
Business
1 answer:
tangare [24]3 years ago
6 0

Answer:

The computations are shown below:

Explanation:

The computation is shown below:

Overall portfolio Expected rate of return = Risky portfolio expected rate of return × investment proportion + t- bill rate × 1 - investment proportion

0.15 = 0.20(y) + 0.07(1 - y)

0.15 = 0.20y + 0.07 - 0.07y

So,

y = 61.54%

2.  Now Standard Deviation is

= investment proportion × standard deviation

= (0.6154) × (0.25)

So,

Standard Deviation = 15.38%

2. We Use Sharpe Ratio to choose out the right stock which is shown below:

Sharpe Ratio = (Expected rate of return - Risk free rate of return) ÷ Standard deviation

For Stock A, it is

= (22% - 12%) ÷ 20%

= 0.5

For Stock B, it is  

= (28% - 12%) ÷22%

= 0.73

Since the Sharpe ratio has highest in Stock B and the same is to be choose

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Marina86 [1]

The relationship between the natural environment and business organizations can best be described as <u>c. Interdependent.</u>

<h3>What is interdependence?</h3>

Interdependence describes a situation where two entities engage in exchanges for their continued sustenance.

Interdependence exists in many forms and between different organizations.

For instance, the natural environment of a business provides the resources that the organization requires for productivity and profitability.  

Similarly, the natural environment utilizes the products and services of business organizations for continued development.  Business organizations also protect the natural environment for their self-interest.

Thus, there is an interdependent relationship between the natural environment and the business organizations because one cannot exist sustainably without the other.

Learn more about the interdependence of the natural environment and business organization at brainly.com/question/23479668

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<h3>Question Completion with Answer Options:</h3>

a. A U-shape

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6 0
1 year ago
The markdown could be a dollar amount or a
BabaBlast [244]

Answer:

Percentage of the selling price

Explanation:

Markdown refers to a reduction in the regular selling price of an item. When a trader wants to clear some old inventory or in a sales promotion, they may reduce the regular price to attract more customers. The rate at which the price has been reduced in the markdown.

Markdown can be given in dollar amount. The seller indicates the amount of money that has been knocked off the price. Markdown can also be expressed as a percentage of the regular selling price. In such a case, the new price after the markdown has to be calculated.

4 0
2 years ago
Piedmont Hotels is an all-equity company. Its stock has a beta of .87. The market risk premium is 7.4 percent and the risk-free
vovikov84 [41]

Answer:

12.64%

Explanation:

In this question, we apply the Capital Asset Pricing Model (CAPM) formula which is shown below

Expected rate of return = Risk-free rate of return + Beta × (Market rate of return - Risk-free rate of return)

= 4% + 0.87 × 7.4%

= 4% + 6.438%

= 10.438%

The Market rate of return - Risk-free rate of return)  is also known as the market risk premium and the same is applied.

Now the required rate of return would be

= 10.438% + 2.2%

= 12.64%

7 0
3 years ago
"Glenn runs his own sign shop, where he does his own advertising, cleanup and stocking the shelves. He benefits from his own pro
Korolek [52]

Answer:

Self Employed

Explanation:

Self employed is the person who not working under someone and is independent to work or is owner of the business. In this case, Glenn is owner of his shop and is working for his own business not for someone else so he is self-employed. Another examples of self employed are freelancers, shopkeepers (who own the business), owner of utensil stores, etc.

In simple words the owner of the business is self employed.

3 0
2 years ago
At a Schlage Lock factory, many employees are needed to use tiny screwdrivers and other tools to carefully assemble the inner wo
Sonja [21]

Answer:

A. Labour intensive technology

Explanation:

Labour intensive technology involves the use of excess labour required for the production process. Industries carrying out labour intensive technique requires a high amount of labour to produce it's good and services. In this case, the physical efforts of employees is needed in the organization to assemble inner workings of a door knob and locks. The level of labour intensity is usually measure with capital used. The higher the labour use, the more labour intensive it is.

7 0
3 years ago
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