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Diano4ka-milaya [45]
3 years ago
15

Jonathan Crowley is a portfolio manager for a large pension fund. Last year his portfolio had an actual return of 12.6% with a s

tandard deviation of 13% and a beta of 1.3. The market risk premium for this period of time was 6% and the risk-free rate of return was 5%.82.
Based on the Capital Asset Pricing Model (CAPM), what is the required rate of return for this portfolio?
Business
1 answer:
ycow [4]3 years ago
5 0

Answer:

The required rate of return of the portfolio is 13.62%

Explanation:

The required rate of return is the minimum return that investors require to invest in a stock or portfolio. The required rate of return can be calculated using the CAPM formula for required rate of return. The formula is,

r = rRF + Beta * rpM

Where,

  • rRF is the risk free rate
  • beta is the stock/portfolio's beta or measure of risk
  • rpM is the risk premium on market

r = 5.82% + 1.3 * 6%

r = 0.1362 or 13.62%

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B Deliberate

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Planning involves thinking ahead of events. It entails preparing beforehand for future activities.  Managers will engage in planning to ensure the business meets its objectives.

There are different types of plans. Manager can make short term or long term plans which are based on time. Strategic plans are about methodology or procedure. Deliberate is not a type of planning.

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3 years ago
Phipps Company borrowed $25,000 cash on October 1, 2016, and signed a nine-month, 8% interest-bearing note payable with interest
anzhelika [568]

Answer:

The correct option is C,$500

Explanation:

The amount of interest accrual is the interest on the sum borrowed from October 1 2016 to 31 December 2016,that is 3 months of interest,which is computed below:

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accrued interest =$25,000*8%*3/12=$500

The accrued interest is to be debited interest expense  because it is an increase in expense  and credited to interest payable as a liability

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3 years ago
A country in South America has large reserves of copper and tin. Mining forms the pillar of its economy. A major part of its rev
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3 0
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An investment should be undertaken A) if the present value of the expected income stream associated with the investment is great
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Answer:

A) if the present value of the expected income stream associated with the investment is greater than the full cost of the investment project.

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