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Rama09 [41]
3 years ago
8

Given the returns for two stocks with the following information, calculate the correlation coefficient of the returns for the tw

o stocks. Assume the expected return for Stock 1 is 10.8 percent and 9.7 percent for Stock 2. Do not round intermediate computations.
Business
1 answer:
julsineya [31]3 years ago
3 0

Answer:

The correlation coefficient of the returns for the two stocks is 0.231

Explanation:

From the question given, we apply the method called co variance

Co variance is referred to as when the co-movement of variables are measured.  

The co variance is defined as:

ρ₁,₂=Cov₁,₂/σ₁ x σ₂

The Expected return of stock 1 μ1= 0.4 x 9+0.5 x 11+0.1 x 17=10.8%

The Expected return of stock 1 μ2=0.4 x 11+0.5 x 8+0.1 x 13=9.7%

The Variance of stock 1 σ²₁ is:

1 σ²₁=0.092 x 0.4+0.112 x 0.5+0.172 x 0.1−0.1082σ12=0.092 x 0.4+0.112 x 0.5+0.172 x 0.1−0.1082

=0.012180-0.011664 =0.000516

The standard deviation of stock 1 σ₁ =2√0.0005162 =0.022716 =2.2716%

Thus,

The Variance of stock 2 σ²₂ is:

2 σ²₂= 0.112 x 0.4+0.082 x 0.5+0.132 x 0.1−0.09722 =0.009730-0.009409=0.000321

The standard deviation of stock 2 σ₂ =2√0.000321 =0.017916=1.792%

Cov₁,₂=0.4 x (0.09−0.108)x (0.11−0.097)+0.5 x(0.11−0.108)x(0.08−0.097)+0.1 x(0.17−0.108)x(0.13 8)x(0.13−0.097) =-0.000094-0.000017+0.000205 =0.000094

Therefore,

ρ₁,₂=0.000094/((0.017916)x(0.022716)) =0.231

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Answer:

Applied overhead = $380,250

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Explanation:

Firstly, we know that the formula for overhead rate is ;

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It also means that to get the predetermined overhead rate, the expected cost will be distributed along a cost driver. Hence;

Labor hours = $396,500/61,000 = $6.5

The above rate would then be applied to the actual labor hour for the period

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It therefore means that the applied overhead for the period is $380,250

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Suppose that five years ago you borrowed $300,000 using a 30-year fixed-rate mortgage with an annual interest rate of 10% with m
Elenna [48]

Answer:

Please check the explanation below.

Explanation:

Rate of Interest =10% or 0.83% monthly

Monthly Payment under this plan=PMT(0.0083, 360, 300000) =$2,632.71

Loan outstanding after 5 years of payments =$289,723

New Interest Rate =8.5% or 0.7083% monthly

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New Monthly Installment =PMT(0.007083,300,289723) =$2,332.93

Monthly savings in installment reduction =$2,632.71 - 2,332.93 =$299.78

a. Net present value of refinancing = -0.05x289,723 + 299.78x{(1-(1+0.007083)-300)/0.007083}

                                                  = -14,486.15 + 299.78x124.1886

                                                  = -14,486.15 + 37,229.25

                                                  = 22,743.10

b. With new monthly installment, balance outstanding at the end of 8th year =$278,258

Net Present Value of Refinance = -0.05x289,723 + 299.78x{(1-(1+0.007083)-36)/0.007083}

                                                  = -14,486.15 + 299.78x31.68

                                                  = -14,486.15 + 9,446.46

                                                  = -4,989.68

c. For refinance loan to have net present value positive, let n payments are required,

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14,486.15 = 299.78x{(1-(1+0.007083)-n)/0.007083}

14,486.15x0.00783/299.78 =(1-(1.007083)-n)

0.3423 = 1-(1.007083)-n

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Taking Log both sides,

n = log(1.5204)/log(1.007083)

n = 59.36

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a. reserve requirements, the discount rate, and open-market operations.

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Additionally, money supply comprises of checks, cash, money market mutual funds (MMF) and credit (mortgage, bonds and loans).

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                                                                             Number of grooming order

                                                                             <u>            28,000          </u>

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Therefore, the activity rate  = 7 per grooming order

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a. Total activity availability

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  Total activity availability (A x B)                               20,000

b). Total activity availability                                     20,000

Less: Orders actually processed                        <u>   (17,800)   </u>          

Unused capacity                                                     2,200

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a). Amount paid to the agent (A                       28,000

Number of agents (B)                                      <u>          5    </u>

Total activity availability in dollars (AxB)        140,000

b). Unused capacity (A)                                       2,200

Activity rate (B)                                                 <u>           7 </u>

Unused capacity in dollars (AxB)                    15,400

                                                 

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