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3 years ago

In a portfolio of three randomly selected stocks, which of the following could NOT be true; i.e., which statement is false?

Business

1 answer:

Tpy6a [65]3 years ago

5 0

Answer: b. The beta of the portfolio is higher than the highest of the three betas

Explanation:

The beta of a portfolio is calculated as a weighted average of the individual betas of the individual stocks. As such, the highest individual beta will be the upper limit of the portfolios entire beta.

For instance.

3 stocks A, B and C have betas of 1, 1.3 and 2 respectively.

A has a weight of 1%, B has a weight of 1% and C has a weight of 98%.

The portfolio beta will be;

= (0.01 * 1 ) + ( 0.01 * 1.3) + ( 0.98 * 2)

= 1.98

Even if the stock with the highest beta had an advantage of weighing such a high figure, it it mathematically impossible for the portfolio beta to be higher than it.

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Suppose a person's utility is only a function of their consumption of diet soda and they do not care which brand, diet coke (dc)

Lera25 [3.4K]

Answer: b). falls from a positive amount to another positive amount

Explanation: Given that diet coke and diet pepsi give the consumer equal level of satisfaction. Diet coke and diet pepsi are substitutes, since, the consumer does not care about consuming diet pepsi and diet coke. For substitute goods the consumer will buy the cheapest of the two. When pdc (price of diet coke) rises but it remains less than pdp(price of diet pepsi) then the consumption of dc will decrease but it will still be above the consumption of dp. Since it is still relatively less expensive than diet pepsi. So the consumer will buy diet coke than diet pepsi, which means consumption of diet coke, dc falls from one positive amount to another positive amount.

8 0

3 years ago

Clarissa wants to fund a growing perpetuity that will pay $6000 per year to a local museum, starting next year. She wants the an

likoan [24]

Answer:

She needs $150,000 to fund this perpetuity.

Explanation:

In this question we need to find the present value of this perpetuity. Because this is a growing perpetuity we will need to use the formula of present value of a growing perpetuity.

PV of growing perpetuity = Payment/ R-G

The payment is the current payment the perpetuity will pay which is 6,000, R is the interest rate which is 10% and G is the growth rate of the perpetuity which is 6%. Now we will input these values in the formula in order to find the present value of the perpetuity.

6,000/0.1-0.06

=6,000/0.04

=150,000

4 0

3 years ago

the policy loan provision means that a. an individual can take out a loan on his term policy. b. the death benefit will be incre

Alenkasestr [34]

According to the policy loan clause, the policy owner may borrow any sum up to the policy's cash value. As a result, choice (C) is the best way to respond.

<h3>What is policy loan?</h3>

A policy loan is given out by an insurance provider and is secured by the cash value of the borrower's life insurance policy. A "life insurance loan" is another name for it. They used to be renowned for having cheap interest rates, but that isn't necessarily the case now.

Even though they have limitations, policy loans typically provide easy access to money. When a universal or whole life insurance policy has built up cash value, policy loans may be taken out.

Hence, option (C) is the accurate one.

Learn more about policy loans, from:

brainly.com/question/14971100

#SPJ1

5 0

1 year ago

Daley Company estimates uncollectible accounts using the allowance method at December 31. It prepared the following aging of rec

makkiz [27]

Answer:

$25,650

Journal entries

Explanation:

The computation and the journal entries are as follows

The estimated balance of the allowance for Doubtful Accounts is shown below:

= Total account receivable × estimated percentage

= $570,000 × 4.5%

= $25,650

The journal entry is shown below:

a. Bad debt expense A/c Dr $13,650 ($25,650 - $12,000)

To Allowance for doubtful debts $13,650

(Being bad debt expense is recorded)

b. Bad debt expense A/c Dr $24,650 ($25,650 + $1,000)

To Allowance for doubtful debts $24,650

(Being bad debt expense is recorded)

7 0

3 years ago

The following information is available for Wildhorse Co. for the month of January: expected cash receipts $59,320; expected cash

ziro4ka [17]

Answer:

Ending cash balance$8,230

Explanation:

Preparation of basic cash budget for the month of January.

Wildhorse Co CASH BUDGET for the month of January

Beginning cash balance$11,890

Add: Cash receipts $59,320

Total cash available $71,210

($59,320+$11,890)

Less: Cash disbursements ($66,850)

Excess of available cash over cash disbursements $4,360

Financing needed $3,870

($8,230-$4,360)

Ending cash balance$8,230

Therefore the basic cash budget for the month of January will be $8,230

5 0

3 years ago