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Rama09 [41]
3 years ago
15

Diversification works because:I. unsystematic risk exists.II. combining stocks into a portfolio reduces the standard deviation o

f each stock in the portfolio.III. firm-specific risk can be dramatically reduced if not eliminated.A) I onlyB) III onlyC) I and II onlyD) I and III onlyE) I, II, and III
Business
1 answer:
DaniilM [7]3 years ago
4 0

Answer:

D) I and III only.

Explanation:

II is false because the standard deviation of each stock is an inner characteristic of the stock and cannot be affected by combining it with other stocks in an investment portfolio. I. is true because each stock risk answer to the sector risk and company risk essentially, and by having stock of different sectors and companies is expected that unsystematic risks as these are off-setted. By having a portfolio with wide not-correlated stocks is expected that the risk can be reduced dramatically.

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Pasadena Candle Inc. budgeted production of 730,000 candles for the January. Wax is required to produce a candle. Assume 13 ounc
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Answer:

Direct material budget (in pounds)= 588,125

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Giving the following information:

Production= 730,000 candles

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The desired January 31 wax inventory is 13,600 pounds.

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First, we need to calculate the amount of wax for the period:

Production= 730,000 candles*13 ounces= 9,490,000 ounces

In pounds= 9,490,000/16= 593,125 pounds.

Direct material budget (in pounds)= Production for the month + ending inventory - beginning inventory

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5 0
3 years ago
Gonzales Corporation generated free cash flow of $88 million this year. For the next two years,the companyʹs free cash flow is e
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Answer:

A) $1384.24

Explanation:

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FCF of last forecast = $88*(1+10%)^2 = $106.48

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6 0
3 years ago
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