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snow_lady [41]
3 years ago
5

You have been managing a $5 million portfolio that has a beta of 1.25 and a required rate of return of 12%. The current risk-fre

e rate is 5.25%. Please answer the following three questions: What is the market risk premium from the CAPM
Business
1 answer:
olga nikolaevna [1]3 years ago
7 0

Answer:

1.

Required rate = risk free rate + beta (market rate – risk free rate)

.12 = 0.0525 + 1.25(X – 0.0525)

1.25X – 0.065625 = .12 – 0.0525

1.25X = 0.0675 + 0.065625

X = .1333125/1.25

 = 0.1065

Marker risk premium = market rate – risk free rate

  = .1065 – 0.0525

   = 0.054 (A)

2.

Beta of portfolio = (5000000/5500000)* 1.25 + (500000/5500000)* 1

= 0.90909* 1.25 + 0.090909* 1

= 1.136 + 0.090909

= 1.2273

3.

Required rate = risk free rate + beta (market rate – risk free rate)

= 0.0525 + 1.2273* 0.054

= 0.0525 + 0.06627

= .11877 or 11.88%

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You have been pricing an MP3 player in several stores. Three stores have the identical price of $300. Each store charges 24 perc
Valentin [98]

Answer:

a. $5

b. $4

c. $6

Explanation:

a. store A?

Beginning balance = $300

Ending balance = $300 - $100 = $200

Average balance = ($300 + $200) ÷ 2 = $250

Monthly APR = 24% ÷ 12 = 2%

June finance charge = Average balance × Monthly APR = $250 × 2% = $5

b. store B

June finance charge = (Beginning balance - Payments) × Monthly APR = ($300 - $100) × 2% = $4

c. store C?

June finance charge = Beginning balance × Monthly APR = $300 × 2% = $6

8 0
3 years ago
Equipment in general governmental service that had been acquired several years ago by a special revenue fund at a cost of $40,00
vivado [14]

Answer:

D. A credit to Other Financing Sources for $5,000.

Explanation:

As the equipment is used for governmental service and sold, the journal entry to record the disposal is as follows:

Debit    Cash                                                 $15,000

Debit    Accumulated Depreciation             $30,000

Credit                 Equipment                                      $40,000

Credit                 Gain on sale of equipment            $5,000

Calculation: Book value of equipment = Cost price - Accumulated depreciation = $40,000 - $30,000 = $10,000

Therefore, Gain on sale of equipment = Disposal value - Book value = $15,000 - $10,000 = $5,000.

Therefore, option A is correct. Option B is also correct. Option C is also correct. Therefore, option D is not correct and it is the answer as it will not include in the journal.

7 0
3 years ago
Which characteristic describes the privatization of social security
Softa [21]

Answer:

C

Explanation:

6 0
3 years ago
Suppose you are a supply chain manager for De Beers Diamond co., and your job is to order components for a manufacturing facilit
Fed [463]

Answer:

100 units

Explanation:

Given that,

Annual demand (D) = 500 units

Ordering cost (S) = $5 per order

Holding cost (H) = $0.50 per unit per year

Optimal order quantity(Q):

=\sqrt{\frac{2\times D\times S}{H}}

=\sqrt{\frac{2\times 500\times 5}{0.50}}

=\sqrt{\frac{5,000}{0.50}}

=\sqrt{10,000}

      = 100 units

So, the optimal number of diamonds to be ordered is 100 units.

4 0
2 years ago
Harry owns a Cadillac and a Porsche. Ryan has always wanted a Porsche and knows Harry owns one. Harry decides to sell his Cadill
seropon [69]

Answer:

mutual mistake

Explanation:

A mutual mistake happens when all the parties involved in a contract (two or more) are mistaken or do not know the correct information about some specific material fact that is relevant to the contract. In this case, the contract can be rescinded because Harry believes that Ryan wants to buy his Cadillac, while Ryan believes Harry is selling his Porsche.  

Since both of them are mistaken and do not know relevant material facts regarding the contract, the contract can be terminated.

6 0
3 years ago
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