All categories

3 years ago

In a simple CAPM world, which of the following statements is/are correct?

Business

1 answer:

aev [14]3 years ago

4 0

Answer: I, II, III, IV

Explanation:

CAPM is used for pricing of risky securities and also for the generation of expected returns for an asset given the risk involved with regards the assets and the cost of capital

In a simple CAPM world, the correct statements are:

I. All investors will choose to hold the market portfolio, which includes all risky assets in the world

II. Investors' complete portfolio will vary depending on their risk aversion

III. The return per unit of risk will be identical for all individual assets

IV. The market portfolio will be on the efficient frontier and it will be the optimal risky portfolio

Therefore, I, II, III, IV is the best option.

You might be interested in

Rufina [12.5K]

Answer:

The risk of recession will most likely cause the company's shareholders to demand a higher return.

Explanation:

If the company loses some customers, more might be attracted to the company. However, if the prices drop, the price might stay low and cause the financial value of stock to drop. Once the stock drops, the entire company loses money along with their stock, which is determined by their profit and loss.

8 0

3 years ago

Write a program that calculates the minimum fixed monthly payment needed in order pay off a credit card balance within 12 months

salantis [7]

Answer:

monthly payment = (total amount owing+interest to be paid) / 12 months

Explanation:

Monthly repayments include the total amount owing on the credit card, plus the interest to be paid. This amount should then be divided into 12 monthly payments in order to get one constant amount to be paid each month for the 12 month period. We will assume there are no other factors affecting the amount, other than interest.

The formula to calculate the monthly repayments in the credit card is as follows:

(total amount owing + interest) / 12 months

For example, say the amount owing was $100 and the total interest to be paid was $20; the monthly repayment would be calculated as ($100+ $20) / 12 months. This would mean the credit card holder pays $120/12 = $10 per month in order to repay the debt.

6 0

3 years ago

First City Bank pays 6 percent simple interest on its savings account balances, whereas Second City Bank pays 6 percent interest

stiv31 [10]

Answer:

You will have $10,306 more

Explanation:

In this question, we are asked to calculate the difference in the amount of money we will earn if the same deposit amount is made in two different banks with different interest payment scheme

Firstly, Calculate the amount in the account as follows:

Future value = Interest + Amount = (Am ount x Period x Rate) + Amount = ($54,000 x 10 x 6%) + $54, 000 = $32,400 + $54,000 = $86,400

Therefore, the future value is

$86,400

Now, we calculate the amount by using the compounding as follows:

Future value = Amount x (1+ Rate)^n =

$54,000 * (1+0.06)^10

= $54,000 * 1.791 = $96,706

Therefore, the compound future value is

$96,706

The difference in amount is calculated as follows:

Difference in amount = $96,706 - $86,400 = $10,306

5 0

4 years ago

The Federal Reserve conducts a $30 million open-market purchase of government bonds. If the required reserve ratio is 15 percent

PIT_PIT [208]

Answer

a. 200 million

b. 30 million

The answer and procedures of the exercise are attached in the image below.

Explanation

Please consider the data provided by the exercise. If you have any question please write me back. All the exercises are solved in a single sheet with the formulas indications.

4 0

4 years ago

An internal study by the Technology Services department at Lahey Electronics revealed company employees receive an average of 6.

Tju [1.3M]

Answer:

Explanation:

measure of how many times an event is likely to occur within "X" period of time. the closest answer is letter B. Example if the fastfood had an average of 500 customer every Wednesday what is the probability that 700 customers will come every Wednesday?.

3 0

3 years ago