Answer:
The average beta of the new stocks would be 1.75 to achieve the target required rate of return
Explanation:
In order to calculate the average beta of the new stocks to achieve the target required rate of return we would have to calculate the following:
average beta of the new stocks = (Required Beta-(portfolio /total fund) *old beta)/(additional portfolio/total fund)
To calculate the Required Beta we would have to use the formula of Required rate of return as follows:
Required rate of return=Risk free return + (market risk premium)*beta
0.13=0.0425+(0.06*Required Beta)
Required Beta = (0.13-0.0425)/0.06
Required Beta = 1.45
Therefore, average beta of the new stocks =(1.45-($40/$100) *1)/($60/$100)
average beta of the new stocks =1.05/0.6
average beta of the new stocks =1.75
The average beta of the new stocks would be 1.75 to achieve the target required rate of return
Answer:
The team has completed 'developing alternatives' step in decision making process
Explanation:
Decision making is a very crucial activity carried out by a manager. Various strategies are adopted in the decision making process so as to to come arrive at an appropriate decision.
One of the stages in decision making process is 'developing alternatives' as a prospective course of action. Out of these alternatives, the best one is chosen based on various analysis.
Here, after brainstorming session, the team came up with three ideas to avoid future crashes. These three ideas represent alternatives. Out of these three ideas, the best idea or alternative would be selected.
So, team has completed 'developing alternative' stage in decision making process.
Answer:
The company's days' sales in receivables is 22 days
Explanation:
In order to calculate the company's days' sales in receivables we would have to calculate first the total sales with the following formula:
Total Sales = Net Income / Profit Margin
= $190,000/9.4%=$2,021,276
Hence, Credit Sales = $2,021,276*0.85= $1,718,085
Accounts receivable turnover ratio = Credit sales / Accounts Receivable
= $1,718,085 /$106,351
= 16.15485
Therefore, Days sales in receivables = 365/16.15485= 22.59 days
The company's days' sales in receivables is 22 days
Answer:
C. Economic entity assumption
Explanation:
Monetary unit assumption: As per this assumption, US dollar is considered to be a king. The accountants are forbidden of logging transactions in any other currency. It also grant accountants permission to ignore inflation when reviewing the statements considering that purchasing power of a dollar remains unchanged.
Going concern assumption: As per this assumption, a firm will continue its operations for the foreseeable years. Irrespective of the fact, whether the owner is alive or not, a firm may continue to operate unless dissolved. In case of bankruptcy, a firm will discontinue its operations.
Cost principle: As per this principle, an asset should be recorded at the acquired price. The acquired price is the price at which the asset was originally purchased i.e. the historical cost of an asset.
Economic entity: Each firm or organization is an economic entity and has a separate artificial identity from its owner or stakeholders. So, only the transactions pertaining to business are recorded and personal expenses are excluded from the financial statements of the firm.
Thus, the personal expense of president of the company should not have been recorded in the financial statements of the company.
Answer:
Accounting or accountancy is the measurement, processing, and communication of financial and non financial information about economic entities such as businesses and corporations.
Explanation:
