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hjlf
3 years ago
7

Ariel holds a $5,000 portfolio that consists of four stocks. Her investment in each stock, as well as each stockâs beta, is list

ed in the following table:
Stock Investment Beta Standard Deviation
Andalusian Limited (AL) $1,750 0.90 18.00%
Tobotics Inc. (TI) $1,000 1.30 11.00%
Water and Power Co. (WPC) $750 1.10 18.00%
Flitcom Corp. (FC) $1,500 0.60 19.50%
Required:
1. Suppose all stocks in Arielâs portfolio were equally weighted. Which of these stocks would contribute the least market risk to the portfolio?
O Water and Power Co.
O Flitcom Corp.
O Tobotics Inc.
O Andalusian Limited
2. Suppose all stocks in the portfolio were equally weighted. Which of these stocks would have the least amount of stand-alone risk?
O Flitcom Corp.
O Andalusian Limited
O Water and Power Co.
O Tobotics Inc.
Business
1 answer:
Natali5045456 [20]3 years ago
7 0

Answer:

1) Flitcom Corp (Beta = 0.60)

2) Tobotics Inc. (s.d. = 11%)

Explanation:

1. Suppose all stocks in Ariel's portfolio were equally weighted. Which of these stocks would contribute the least market risk to the portfolio?

The indicator of the market risk is the Beta. It relates the variation of the price or value of the stock relative to the variation of the total stocks in the market.

The value of Beta indicates how risky is a stock relative to the risk of the market. A Beta =1 means it has the same systemic risk as the market. If Beta<1, the stock is less volatile than the market, and if Beta>1, it is more volatile than the market.

Then, the stock with less value of Beta will contribute the least risk to the portfolio.

This is the case of Flitcom Corp (Beta=0.60)

2. Suppose all stocks in the portfolio were equally weighted. Which of these stocks would have the least amount of stand-alone risk?

The stand-alone is reflected by the standard deviation. The less the standard deviation, the less risk of the stock (measured only the stock variability).

This is the case of Tobotics Inc. (s.d. = 11%)

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Ierofanga [76]

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Explanation:

The Expectancy-Outcome Values Theory is one that is quite popular in many fields ranging from health to economics as it aims to explain that human behavior is governed by expectations of events.

Under the Expectancy-Outcome Values Theory, people will evaluate the cost, benefit, or value related to making a change in a particular attitude, value, belief, or behavior to decide if it is worthwhile or not.

For most if not all decisions taken therefore, there goes into it quite a lot of mental calculations involving the effects of an event before a decision is made.

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3 years ago
Lynn Ally, owner of a local Subway shop, loaned $51,000 to Pete Hall to help him open a Subway franchise. Pete plans to repay Ly
artcher [175]

Pete plans to pay off Lynn on the give-up of 9 years with 4% interest compounded semiannually=$116,815.96.

A = P(1 + r/100)t

A=59000(1+0.1/2)^(2*7)

=$59000*1.979931599

interest compounded =$116,815.96

Compounding hobby semiannually method that the fundamental of a loan or investment at the start of the compounding period, in this case, every six months, consists of the entire hobby from every preceding period.

Semiannual means an event that happens twice a year, every six months. In business surroundings, semiannual is something that is recurring like payments or an interest fee.

If you want to calculate what your investments may be really worth primarily based on returns that compound semiannually, first, divide the yearly fee of going back by way of 100 to convert it to a decimal. 2nd, divide the once-a-year price as a decimal by way of 2 to transform it into a semiannual fee for going back.

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6 0
1 year ago
For each of the following types of indirect expenses and service department expenses, identify one allocation basis that could b
hodyreva [135]

Answer: (A) Computer service expenses of production scheduling for operating departments

Explanation:

 The computer services expenses of the production scheduling is one of the type of indirect expenses and also the type of service department expenses type in the operating department.

 The indirect expenses is one of the type of expenses that cannot be directly contribute with the cost object or services in the business department expenses.

 According to the given question, the computer service expenses is one of the allocation basis that is used as the indirect expenses in an organization or firm and the indirect expenses are categorized into two main parts that is:

 1) Fixed

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Therefore Option (A) is correct answer.          

5 0
3 years ago
Wiley's has total equity of $679,400, long-term debt of $316,900, net working capital of $31,600, and total assets of $1,123,900
Elenna [48]

Answer:

The answer is 0.4

Explanation:

The formula for total debt ratio is total debt ÷ total assets.

Total debt equals current debt plus total long-term debt.

To find total debt(liability), remember Asset = Liability + Equity.

Therefore, Liability (debt) will be Asset - equity

$1,123,900 - $679,400

Total debt(liability) = $444,500

So, total debt ratio will be:

$444,500/$1,123,900

=0.4

This ratio means 0.4 or 40 percent of the company asset is financed by debt.

7 0
3 years ago
Norris Company declared cash dividends of $60,000 during the year. Cash dividends payable were $20,000 at the beginning of the y
Schach [20]

Answer:

Dividend paid during the year will be $55000

So option (B) will be the correct answer

Explanation:

We have given dividend declared during the year=$60000

Dividend payable at the beginning of the year=$20000

Dividend payable at the end of the year=$25000

We have to find the dividend paid during year

Dividend paid during the year=Dividend payable at the beginning of the year+ Dividend declared during the year-Dividend payable balance at the end of the year

Dividend paid during the year=$20000+$60000-$25000=$55000

So option (b) will be the correct answer

5 0
3 years ago
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