1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
SVETLANKA909090 [29]
3 years ago
9

Consider a risky portfolio. The end-of-year cash flow derived from the portfolio will be either $70,000 or $200,000 with equal p

robabilities of .5. The alternative risk-free investment in T-bills pays 6% per year.
a. If you require a risk premium of 8%, how much will you be willing to pay for the portfolio? (Round your answer to the nearest whole dollar amount. Omit the "$" sign in your response.)

Price________$

b.Suppose that the portfolio can be purchased for the amount you found in (a). What will be the expected rate of return on the portfolio? (Round your answer to the nearest whole number. Omit the "%" sign in your response.)

Rate of return______%

c.Now suppose that you require a risk premium of 12%. What is the price that you will be willing to pay? (Round your answer to the nearest whole dollar amount. Omit the "$" sign in your response.)

Price_______$
Business
1 answer:
xenn [34]3 years ago
4 0

Answer:

A) 964,286

B) 14

C) 750,000

Explanation:

The portfolios expected return = (0.5 x $70,000) + (0.5 x $200,000) = $35,000 + $100,000 = $135,000

If the risk free investment yields 6% per year, and you require a risk premium of 8%, then the total interest rate that the portfolio yields must be 6% + 8% = 14%

you will be willing to pay: $135,000 / 14% = $964,286 for the portfolio

if the risk premium increase by 4%, then the price of the portfolio will decrease to: $135,000 / 18% = $750,000

You might be interested in
If someone introduces himself using a formal introduction, you should _____.
stich3 [128]

Answer:

Follow his lead and address him formally

Explanation:

If someone addresses you formally, that is because that person expects the conversation to be formal, or because you both are in a formal enviroment, for example, a work meeting. For this reason, the best to do in such situation is to address the other person formally as well.

6 0
2 years ago
7. Which situation indicates a mixed economy?
STatiana [176]

Answer:

C Services are provided by both private and public sectors.

Explanation:

In a mixed economy, the private sector has the freedom to participate in economic activities, although the government has a role to play.  A mixed economy allows the private sector to own the factors of production hence are free to decide what business they wish to run. Consumers have the liberty to select their suppliers.  There is competition in the market place as profits motivate entrepreneurs.

The government is involved in the provision of public goods such as roads, hospitals, and schools. It provides regulatory services to the private sector to ensure fairness in the economy.

5 0
2 years ago
Being promoted is likely to change your priorities because you will have _______. a. to begin dressing and acting much more form
frutty [35]

The correct option is b. new responsibilities to learn and people will expect much from you.

Getting promoted is most likely to cause you to reevaluate your priorities as you will have more obligations and higher expectations.

<h3>What is job promotion?</h3>

Promotion in the context of a career means raising a worker's position or rank within a hierarchical structure. Promotion in the context of marketing denotes a distinct form of advancement.

The term "promotion" is used in a variety of settings; two of the most common ones are when talking to a career promotion and when discussing the marketing strategy of promoting a product.

Some key features of promotion are-

  • An employee who has demonstrated remarkable performance or who has acquired the required skills and knowledge to take on more responsibility at work is typically given a job promotion.
  • In the latter scenario, the worker might have to put in a certain number of hours with the organization before becoming qualified for a promotion.
  • For instance, a person who starts out as an analyst at an investment bank might need to serve three years in the this capacity before being given consideration for promotion to a coordinate and control.
  • A promotion may come with increased perks and management control over other employees in addition to a pay raise.

To know more about promotion, here

brainly.com/question/20317314

#SPJ4

4 0
1 year ago
Find the difference in height between the top of a hill 973 feet high and a crack caused by an earthquake 79 feet below sea leve
s2008m [1.1K]
The difference in height between the hill 973 feet above sea level and the crack 79 feet below sea level is:

 

Difference in height = 973 - (-79)

 

Which is equal to 1052 feet.

4 0
3 years ago
Interest rates rise faster in Scotland (GBP) than they do in the United States (USD). Which nation’s currency appreciates? Which
patriot [66]

There is very simple logic between demand and supply. When demand is high, price rises and currency appreciates in its value. On the other hand, price should decline if import rate is mare compared with export rates. As prices of U.S goods increases which ultimately goes to international market where producers have to pay domestic currencies. Americans will demands comparatively less expensive goods. So it will result in supplying more dollars to foreign exchange market.

Finally, increasing demand of pounds. Finally, U.S dollars appreciates and pound depreciates. Trade value is amount by which total import value deviates from export value. Due to changes in interest rates results in trade imbalance in U.S. There is not greater effect on Scotland as it is key player in transporting of energy products to rest of U.K.

6 0
3 years ago
Other questions:
  • At what stage of the creative process does a director work to create a metaphor for a production?
    12·1 answer
  • Suppose over the last year that the price of recycled aluminum increased from $800 a ton to $900 a ton. over the same time a mea
    14·1 answer
  • Which of the following makes decisions about interest rates and the growth of the money supply? A. Federal Advisory Council B. F
    9·1 answer
  • A city wants to raise revenues to build a new municipal swimming pool next year. The mayor suggests that the city raise the pric
    10·1 answer
  • Basic FLows, Equivalent Units
    11·1 answer
  • Present and future value tables of $1 at 3% are presented below:
    14·1 answer
  • Sutton Corporation, which has a zero tax rate due to tax loss carry-forwards, is considering a five-year, $6,000,000 bank loan t
    12·1 answer
  • Which of the following is generally true about savings vehicles
    15·2 answers
  • Jardine Consulting Co. has the following accounts in its ledger: Cash, Accounts Receivable, Supplies, Office Equipment, Accounts
    14·1 answer
  • SEND HELP PERSONAL FINANCE TIMED TEST
    5·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!