Which of the following statements is true of financial accountants

We would like to invest $10,000 into shares of companies XX and YY.

garri49 [273]

Answer:

c. $5,000 into each company

Explanation:

Let X be the actual (random) return from each share of XX, and Y be the actual return from each share of YY. Computing the returns from each option:

A) Investing $10,000 into XX

Given that variance = (standard deviation)²

Since XX cost $20 per share, only 500 shares can be bought.

Expected value = 500 * E(x) = 500 * 1 = 500

Variance = 500² * Var(x) = 500² * 0.5² = 62500

B) Investing $10,000 into YY

Since YY cost $50 per share, only 200 shares can be bought.

Expected value = 200 * E(y) = 200 * 2.5 = 500

Variance = 200² * Var(y) = 200² * 1² = 40000

C) Investing $5,000 into each company

Since XX cost $20 per share and YY cost $50 per share, only 250 shares of XX and 100 shares of YY can be bought.

Expected value = 250 * E(x) + 100 * E(y) = 250 * 1 + 100 * 2.5 = 500

Variance = 250² * Var(x) + 100² * Var(y) = 250² * 0.5² + 100² * 1 = 25625

Since all options have the same expected return, but option C has the lowest variance hence it is the least riskiest. So the best option is C

5 0

3 years ago

6. Suppose that the returns on the stock fund presented in Spreadsheet 6.1 were 240%, 214%, 17%, and 33% in the four scenarios.

Basile [38]

Answer:

Explanation:

Base on the scenario been described in the question, stock variance refers to the volatility that arises from the average. Volatility shows the degree of risk that will be helpful in determining the level of risk an investor should take while purchasing a particular security.

5 0

3 years ago

Sasha has run a small diner near the train station for the past ten years. Six months ago, a chain restaurant serving gourmet bu

fenix001 [56]

Answer:

threat of new entrants

Explanation:

Based on the information provided within the question it can be said that force that has affected Sasha's business, from Porters five forces was the threat of new entrants. This force refers to the threat that comes from new competitors entering an industry with existing competitors. If the barrier to entry of the market is low/easy for these new companies then it creates a huge threat to the existing company's since it allows them to get established in the market fast and at a low cost.

6 0

3 years ago

Assume that on September 1, Office Depot had an inventory that included a variety of calculators. The company uses a perpetual i

Alisiya [41]

Answer and Explanation:

The journal entries are shown below:

1. Inventory $1,800

Accounts Payable $1,800

(Being purchased on account)

2. Inventory $50

To Cash $50

(being freight paid)

3. Accounts Payable $51

To Inventory $51

(being the returned calculator is recorded)

4. Accounts Receivable $670

To Sales Revenues $670

(Being sales is recorded)

5. Cost of Goods Sold $460

To Inventory $460

(Being cost of goods sold is recorded)

6. Sales returns $40

To Accounts Receivable $40

(being sales return is recorded)

7. Inventory $28.20

To Cost of Goods Sold $28.20

(Being cost return is recorded)

8. Accounts Receivable $780

To Sales Revenues $780

(Being the sales is recorded)

9. Cost of Goods Sold $560

To Inventory $560

(Being the cost of goods sold is recorded)

5 0

3 years ago

1. A parent provides consulting services to its wholly-owned subsidiary during the year. The parent charged the subsidiary $600,

Fed [463]

Answer:

C

Explanation:

When consolidating parent and a wholly-owned subsidiary we aim to eliminate entries related to the inter company services. Since the subsidiary had recorded a debit to service expense when it was rendered, the adjusting entry would be a credit to the service expense amount by the same figure charged i.e. $600,000 in this case

6 0

3 years ago