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Nitella [24]
3 years ago
9

Your investment has a 20% chance of earning a 30% rate of return, a 50% chance of earning a 10% rate of return, and a 30% chance

of losing 6%. What is your standard deviation on this investment?a. 12.8%b. 15.6%c. 15.4%d. 12.5%

Business
1 answer:
ANTONII [103]3 years ago
4 0

Answer:

a: 12.8%

Explanation:

Standard Deviation would be calculated with the probability approach since there is probability given in the question.

  • Formula of Standard Deviation and the solution is given in the pictures below.
  • Although ERR the required part to calculate Standard Deviation is calculated in the text.

Calculating ERR:

ERR= Sum of Probabilities × Rate of returns.

In our question = ERR= 0.2 × 30% + 0.5 × 10% + 0.3 × (-6%) = 0.128 = 12.8%

Thus, by putting all the values in the formula you will get the answer 12.8%.

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5 0
3 years ago
Some companies want to get their products into as many outlets as possible, understanding that the more exposure a product gets,
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5 0
3 years ago
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Frieda Inc. is considering a capital expansion project. The initial investment of undertaking this project is $105,500. This exp
Nana76 [90]

Answer:

WACC = 0.18 or 18%

Option b is the correct answer.

Explanation:

The WACC or weighted average cost of capital is the cost of a firm's capital structure that can contain one or more of the following components, namely debt, preferred stock and common equity. The formula to calculate the WACC is as follows,

WACC = wD * rD * (1-tax rate)  +  wP * rP  +  wE * rE

Where,

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  • r represents the cost of each component
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7 0
3 years ago
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Answer:

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Answer:

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0.215 x $120,000 = $25,800

I hope my answer helps you

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3 years ago
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