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antoniya [11.8K]
3 years ago
6

Consider the single factor APT. Portfolio A has a beta of 1.3 and an expected return of 21%. Portfolio B has a beta of .7 and an

expected return of 17%. The risk-free rate of return is 8%. If you wanted to take advantage of an arbitrage opportunity, you should take a short position in portfolio ________ and a long position in portfolio ________.
Business
1 answer:
svetoff [14.1K]3 years ago
3 0

Answer:

Portfolio A and Portfolio B

Explanation:

In this question, we apply the Capital Asset Pricing Model (CAPM) formula which is shown below

Expected rate of return = Risk-free rate of return + Beta × (Market rate of return - Risk-free rate of return)

The Market rate of return - Risk-free rate of return) = Market risk premium

Let us assume the market risk premium be X

For Portfolio A:

21% = 8% + 1.3 × X

13% = 1.3  × X

So, the X = 10%

For Portfolio B:

17% = 8% + 0.7 × X

9% = 0.7  × X

So, the X = 12.86%

Based on the market risk premium calculations, we can conclude that Portfolio A should be in short position while Portfolio B should be in long position as portfolio B has higher market risk premium than B

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The answer is: satisfying customer needs and wants.

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One of the most crucial tasks you must take when building a monthly budget is classifying your expenditures by "need" or "desire" status.

The distinction between a need and a want might vary from person to person, making it one of the hardest challenges. It is also simple to mistake requirements for wants if you have been accustomed to something to the point that it is difficult to imagine life without it.

You classify your expenditure on the budgeting worksheet as either needs or wants. By doing this, you may distinguish between the expenses that are absolutely necessary for your existence and well-being (what you need) and those that are only desirable but not necessary (wants).

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1 year ago
An engineering firm wrote a new policies and procedures manual that helped everyone know exactly what to do and how to do it. Wh
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Answer:

The correct answer is: the cost of it.

Explanation:

To begin with, knowing that planning, organizating, controling and directing are the basis of an structured company in order to achieve efficiently those there is a cost that has to be done, therefore that the major drawback of becoming more structured in the company is the cost of doing it, due to the fact that creating documents and teaching every one how to use it and more, the costs of the company will increase as well as the company will become more structured.

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Answer:

A) Shortage, B) Fall in Price

Explanation:

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Above condition gives us equilibrium price & quantity.

If market price < equilibrium price, as given case 15 < 20. Then, supply being directly related to price is lesser, demand being inversely related to price is higher. So, there is a situation of excess demand, ie <u>shortage </u>(graphically denoted by distance between demand & supply curve at actual price below equilibrium price)

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3 years ago
Use the information below to answer questions 4-7. Drake Company's income statement for the most recent year appears below:
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Answer:

(A) $731,250

Explanation:

The formula to compute the break-even point in sales dollars is shown below:

= (Fixed expenses or Fixed cost) ÷ (Contribution ratio)

where,

Contribution ratio = Contribution margin ÷ sales

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Now put the values to the above formula

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Hanif will supply less tutoring now, shifting supply to the left as he is expecting this price increase in the future.

<h3>What is a supply curve?</h3>

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Product price is measured on the vertical axis of the graph and the number of products provided on the horizontal axis.

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