1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Darya [45]
4 years ago
9

The stock of ABC Corporation has a beta of 1.8 ABC Corporation earned an annual return of 14 percent during a period when the re

turn on the market portfolio was 12.5 percent. If the risk-free rate was 6 percent, did ABC Corporation outperform the market on a risk-adjusted basis?

Business
1 answer:
eimsori [14]4 years ago
5 0

Answer:

See explanations for step by step aoproach to answer and see attachment for graph

Explanation:

Plot E(R) = Rf + Beta*(Rm-Rf) as function of beta.

at 1.4

E(R) = 5% + 1.4*(12-5) = 14.8%

E(R) = WfRf + Wa*E(Ra)

= 0.4*5% + 0.6*14.8%

= 10.88%

3. Since, the beta of risk free asset is zero

Bp = wf*Bf + wa*Ba

0.6 = 1.4*wa

wa = 42.8%

wf = 57.2%

d. 14% = 5% + B*(12%-5%)

B = 9/7 = 1.28

e. 2 = wfBf + waBa

wa = 2/1.4

= 142%

It means the portfolio is created by leveraging. Take 42% of value on risk free rate as loan and invest in risky asset.

You might be interested in
Which of the following is a distance-based method for location alternatives evaluation?Factor rating methodDecision treeBreak-ev
Pachacha [2.7K]

Answer: The correct answer is the center of gravity approach.

Explanation: The center of gravity approach is a distance-based method for location alternatives evaluation. This method is an approach that seeks to compute geographic coordinates for a potential single new facility that will minimize costs.

5 0
3 years ago
Read 2 more answers
An increase in the price of oil will a. shift the supply curve of oil to the left. b. shift the supply curve of oil to the right
klasskru [66]

Answer:

The correct answer is option c.

Explanation:

An increase in the price of oil will cause the quantity demanded of a commodity to decline and the quantity supplied to increase. This will cause a surplus in the market.

There will be no change in the demand and supply curve.

This is because of the law of demand and supply.

According to the law of demand, the price of a commodity is inversely related to the quantity demanded of the commodity, while other factors are kept constant.

Similarly, the law of supply states that the price of a commodity is positively related to the quantity demanded of a commodity.

The demand and supply curves are not affected by the changes in price, they change as a result of changes in other factors.

3 0
4 years ago
The Statement of Net Position of South State University, a government-owned university, as of the end of its fiscal year June 30
alexandr402 [8]

Answer:

Explanation:

Base on the scenario been described in this question, we can use the following method to be solve the question below using Microsoft word we have the solution in the image attached file below

5 0
3 years ago
Two items are omitted from each of the following three lists of cost of goods sold data from a manufacturing company income stat
WARRIOR [948]

Answer;

Cost of goods manufactured =  Cost of finished goods available for sale - Beginning inventory of finished goods.

Cost of goods sold = Cost of finished goods available for sale - Ending finished goods

a. Cost of goods manufactured =  Cost of finished goods available for sale - Beginning inventory of finished goods.

331,000 = a - 64,900

a = 331,000 + 64,900

= $395,900

b. Cost of goods sold = Cost of goods manufactured - Ending finished goods

b = 395,900  - 76,800

= $319,800

c. Cost of goods manufactured =  Cost of finished goods available for sale - Beginning inventory of finished goods.

c = 178,600 - 18,800

= $159,800

d. Cost of goods sold = Cost of finished goods available for sale - Ending finished goods

d = 178,600 - 37,500

= $141,100

e. Cost of goods manufactured =  Cost of finished goods available for sale - Beginning inventory of finished goods.

65,800 = 103,400 - e

e = 103,400 - 65,800

= $37,600

f. Cost of goods sold = Cost of finished goods available for sale - Ending finished goods

- missing figure (ending finished goods).

7 0
3 years ago
The partners in the biz partnership have agreed that partner mandy may sell her $100,000 equity in the partnership to brittney,
Ivahew [28]

Answer:

Mandy Capital                     A/c   Dr.  $100,000

Brittney Capital                  A/c    Cr.                     $100,000

Explanation:

Mandy selling $100,000 shares of assets, so we will report the transaction on the sale of stock by the amount of equity sold. Now, all parties will negotiate the price that one can sell to another for this equity valuation, which would be $85,000 in this case.

3 0
3 years ago
Other questions:
  • Who controls the supply of money in the United States today? A. The United States Treasury B. The Federal Reserve System C. Cong
    7·2 answers
  • A copyright registered on or after January 1, 1978 lasts how long?
    8·1 answer
  • Calculate the amount of depreciation to report during the year ended December 31, 2013, for equipment that was purchased at a co
    12·1 answer
  • When banks borrow money from a federal reserve bank, they are given a certain interest rate to pay back the loan. if the federal
    13·1 answer
  • Increased grants and loans for college expenses would ________ the number of college graduates, while ________ wages paid to col
    12·1 answer
  • Barbara is an employee of Baltimore Company. Baltimore Company pays employees the Friday after the wages are earned. Overtime in
    13·1 answer
  • A commercial oven with a book value of $67,000 has an estimated remaining 5 year life. A proposal is offered to sell the oven fo
    14·1 answer
  • Scenario 1 Your deliveries to retail stores have not been on time lately, and neither have the departures of loaded trucks from
    6·1 answer
  • Suppose Nike, Inc. reported the following plant assets and intangible assets for the year ended May 31, 2022 (in millions): othe
    7·1 answer
  • Name one of the three different levels at which an organization can be diagnosed?
    12·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!