Answer:
$21.67
Explanation:
Exhibit 21-3 is attached with the answer .Please find it.
Total cost of production includes the fixed cost and variable cost. Fixed Cost remains constant as $500 in the exhibit, but the variable cost changes with each production level.
Cost of producing 60 units
Variable cost = $800
Fixed cost = $500
Total cost = $800+500 = $1,300
Product cost per unit = Total cost / numbers of unit = $1,300 / 60 = $21.67
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Answer:
SO expected return on Mkt Portfolio Rm = 10.75%
Explanation:
market degree of risk aversion A = 3
Var = 0.0225 = SD^2
Rf = 4%
What is expected return on Mkt Portfolio ie Rm??
According to CAPM, Rm-Rf = A*SD^2
where SD is Std Dev (Recall SD^2 = Variance)
A is market degree of risk aversion
So we have Rm-4% = 3*0.0225
ie Rm = 4% + 3*0.0225 = 10.75%
SO expected return on Mkt Portfolio Rm = 10.75%
